1. The petition, makes a complaint that the respondents have arbitrarily and illegally withheld the amount of refund in the sum of Rs. 1,35,39,000/- due and payable to the petitioners which is in defiance of the order of the Customs Excise and Gold (Control) Appellate Tribunal (West Zonal Bench) at Mumbai ('Tribunal' for short) and, constitutes breach of principles of judicial discipline which require that the orders of the higher authorities are required to be followed unreservedly by the subordinate authorities.
The Facts :
2. The facts of the case in short are that the petitioners, a partnership firm imported various consignments of rough marble blocks. Two adverse adjudication orders; dated 31st August 2001 and 13th September 2001; came to be passed by the Commissioner of Customs, the respondent No.4 against the petitioners imposing redemption fine of Rs. 1.01 crore and Rs. 42,84,000/- with penalty in the sum of Rs. 29.40 lakh and Rs. 4.00 lakh on 16 consignments plus 1 consignment respectively, covered by the adjudication orders.
3. Being aggrieved by the above adjudication orders, the petitioners preferred two separate appeals before the tribunal. The Tribunal, by a common speaking order dated 16th April 2002 reduced the redemption fine to Rs. 25 lakh and Rs. 7 lakh and amount of penalty to Rs. 7.50 lakh and Rs. 2 lakh, respectively, with the result, petitioners became entitled to claim refund of a total amount amounting to Rs. 1.35 crore.
4. On 17th April 2002, petitioners addressed a letter to respondent No.,4 requesting him to refund the amount of fine and penalty consequent to the above order passed by the Tribunal. Pursuant to the request made by the petitioners, refund order dated 17th July 2002 came to be prepared and issued by the Assistant Commissioner of Customs, Appraising Group. The petitioners were asked to file an affidavit-cum-indemnity bond, which the petitioners executed on 8th May 2002 indemnifying therein that if any claim arises the petitioners would be liable to satisfy the same. In spite of execution of the relevant documents no refund payment was made to the petitioners. Consequently, petitioners again addressed another letter dated 22nd July 2002 to the Chief Commissioner of Customs protesting non-issuance of cheque in pursuance of the refund order. This letter did not yield any fruits. The petitioners left with no alternative approached this Court under Article 226 of the Constitution of India challenging the act of the respondents withholding the amount of refund due and payable to the petitioners with a prayer to direct refund of the amount to which the petitioner are entitled with interest thereon for delayed payment.
Events pending petition:
5. The present petition filed by the petitioners on 2nd August 2002 came up for hearing on admissions before this Court on 13th August 2002 with advance service to the respondents. This Court after hearing parties to the petition passed the following order:
'Having heard parties for some time, prima facie; we are of the opinion that the Respondents cannot retain the amount of refund in the sum of Rs. 1,35,39,000/- which the Petitioner is claiming. We direct the Respondents to deposit this amount with this Court within two weeks from today.'
Pursuant to the above order the amount specified in the order came to be deposited with this Court on 27th August, 2002.
6. The petition in question came up for further hearing before this Court on 2nd September, 2002. The petitioners insisted for interim order in the nature of permissions to withdraw the amount deposited by the Revenue with this Court. While opposing the prayer for refund, Revenue pressed into service pendency of the reference application being Custom Application No.27 of 2002 filed under section 130-A of the Customs Act, 1962 arising out of the order of the Tribunal, implementation of which the petitioners were seeking. Learned counsel appearing for the Revenue also requested for grant of fifteen days time to enable them to move the Tribunal to seek stay of the order of the Tribunal giving rise to the claim of refund in favour of the petitioners, Accordingly, time was granted to the Revenue to enable them to move the Tribunal seeking stay. The petition was adjourned for four weeks.
7. The above matter again came up for further hearing on 25th April 2003 along with Customs Application No.27 of 2002 (O.S.). Same were taken up for hearing Mr.R.V. Desai, learned counsel appearing for the Revenue during the course of hearing customs applications/references sought adjournment on the ground that for want of time no orders could be obtained by the Revenue from the Tribunal on the application seeking stay of the order of the Tribunal giving rise to the refund in favour of the petitioners. At this stage, learned counsel for the petitioners opposed the request for adjournment in view of ensuing long summer vacation and in the event of adjournment prayed for interim relief with permission to withdraw the amount of refund deposited with this Court. This prayer was strongly opposed by the Revenue. Learned counsel for the petitioners pointed out to us that in all other similar connected matters Revenue had actually refunded the amount of refund as directed by the Tribunal without any security and actually paid refund amount to all other claimants/assesses except petitioners. It was also brought to our notice that reference applications were filed in all case of other claimants only after permitting them withdrawal of such amounts and actual payment thereof.In this backdrop, considering the prima facie case made out by the petitioners on merits, this Court was of the opinion that the petitioners were also entitled to have the same treatment. The petitioners were permitted to withdraw the amount of refund subject to furnishing bank guarantee of any nationalised bank by way of security. Since this court was heading for summer vacation, all connected references were ordered not to be treated as part-heard and directed to be placed for final hearing along with this petition after summer vacation.
8. It appears that Revenue moved an application on 19th September 20002 to seek stay or the order of the Tribunal dated 16th April 2002, which came to be rejected by the order of the Tribunal dated 23rd October, 2002.
9. Being aggrieved by the above order, the Revenue approached this Court with a writ petition filed under Article 226 of the Constitution of India to challenge the order of the Tribunal, being Writ Petition No. 7049 of 2002, Union of India v. Marmo Classic. The same was ordered to be heard along with other connected matters.
10. Accordingly, after summer vacation, both these writ petitions along with all other connected customs (reference) applications were taken up for final hearing on 9th June, 2003.
11. Having heard the parties at length all the customs applications, which were filed under section 130-A of the Customs Act came to be decided against the Revenue vide our judgment dated 3rd July 2003 for the reasons recorded therein. After having decided those customs application these two writ petitions were taken up for final hearing for being decided on their own merits.
Submissions:
12. Shri R.V. Desai, learned senior counsel appearing for the Revenue fairly stated that in view of the adverse decision in the customs application, it would not be possible for the Revenue to contend that the petitioners were not entitled to refund based on the order of the Tribunal. He, however, opposed the prayer made by the petitioners for grant of interest on the amount of refund which was due to the petitioners. Hence parties were heard on the question whether petitioners are entitle to claim interest on the amount of refund which was withheld by the Revenue in spite of the order of the Tribunal dated 6th April 2002.
13. Mr. Kantawala, learned counsel for the petitioners, at the outset, submitted that peculiar facts and circumstances of the instant case would justify grant of interest in exercise of discretionary powers of this Court conferred under Article 226 of the Constitution of India so as to remove discrimination practised by the states in the matter of grant of refund. In order to demonstrate patent discrimination practised by the Customs department by way of affidavit dated 28th November 2002 refund order dated 28th March 2002 issued by the Assistant Commissioner of Customs, Appraising Group, Mumbai in favour of Stonemann Marble Industries for Rs. 1,39,60,000/- is brought on record and shown to us. This refund order was issued pursuant to the final order passed by the tribunal in respect of the appeal filed by Stonemann Marble Industries who had imported Rough Marble Blocks and had suffered redemption fine and penalty. Pursuant to this order of the Tribunal refund amount of Rs. 1,39,60,000/- came to be paid on 5th April, 2002 without any security to Stonemann Marble Industries.
14. Mr. Kantawala further pointed out that the Tribunal while deciding appeal of the present petitioners followed its own decision and reduced the amount of redemption find and penalty imposed in the adjudication order. However, Customs Department refused to honour the decision of the Tribunal rendered in the case of petitioners and refused to refund that amount to the petitioners in spite of refund order drawn in favour of the petitioners on 17th July 2002.
15. Mr. Kantawala, learned counsel for the petitioners further brought on record and shown to us that pursuant to similar order of the Tribunal in case of import of the identical type of goods by one Kargwal Corporation, a refund order dated 4th June 2002 for Rs. 35,000/- was issued in their favour and amount was paid to them without any security. Mr. Kantawala also brought to our notice one more instance wherein one more refund order dated 13th September 2002 for Rs. 97,74,001/- came to be issued in favour of Stonemann Marble Industries; whereas in case of the petitioners in spite of drawing refund order, respondents refused to issue refund cheque and applied for stay before the Tribunal and resisted refund payment before this Court and insisted for security by way of bank guarantee for which the petitioners were required to pay huge amount by way of guarantee commission to their bankers.
16. Mr. Kantawala also brought to our notice that the aforesaid refund payments were made in the above three cases much before filing of the reference applications before this Court. He submits, in case of Stonemann Marble Industries orders of the Tribunal were complied with a consequential refund monies arising pursuant to the final orders passed by the Tribunal were paid without any reservation.
17. Mr. Kantawala further submitted that the Tribunal while deciding the appeal filed by the present petitioners relied upon its earlier decision in the case of Jai Bhagwati Impex against which the S.L.P. preferred was dismissed by the Apex Court vide its order dated 8th July 2002. In all other cases other than the present one references were filed only after payment of refund amount.
18. Mr. Kantawala also submitted that there was a colossal loss of interest on the amount of refund which, in fact, was lying with Revenue Authorities without earning any interest despite a refund order having been prepared and issued as far back as on 17th July 2002. He submits that it is logical to infer that the refund order was prepared and sanctioned, only after the competent authority had decided to accept the order passed by the Tribunal. As such act of withholding the amount of refund was absolutely arbitrary. The petitioners as such had no option but to approach this Court.
19. The petitioners submit that the amount due and payable, amounting to Rs. 1,35,39,000/- could not be utilised by them due to the arbitrary act of withholding the said amount. Kantawala pointed out that the amount was deposited in this Court on 13th August 2002 by the Revenue only because of specific order directing deposit was made by this Court; appreciating the fact that in all other cases refund was granted even without any security even though those other persons were similarly circumstanced and that references were filed in their cases only after permitting them to lift the amount of refund. He, thus, submits that Revenue cannot take advantage of their own wrong doing and cannot make petitioners to suffer or cause to suffer interest loss on the amount which was due to them in these trying times.
20. Mr. Kantawala also submitted that the Revenue was unnecessarily litigating the same issue again and again and had chosen to willfully disobey the order of the Tribunal. The reference applications were filed in spite of the knowledge that the Apex Court had upheld the identical order passed by the Tribunal in the case of Jai Bhagwati Impex by dismissing S.L.P. filed at the instance of the Revenue. In that case, the redemption fine was reduced from Rs. 1.05 crore to Rs. 35.00 lakh and proportionately penalty was reduced from Rs. 10 lakh to Rs. 3.5 lakh. He thus prayed for grant of interest at such rate as this Court deemed fit and proper. He placed reliance on the judgment of this Court in the case of Shri Balaji Automobiles v. Union of India, : 2002ECR7(Bombay) in support of his prayer.
21. Per Contra, Mr. R.V. Desai, learned counsel for the Revenue contended that Revenue was bonafidely challenging the order of the Tribunal before this Court from which the right of the petitioners to claim refund arose. He also urged that the Tribunal did not grant interest, as such this Court while seeking implementation of the order of Tribunal should not grant interest on the amount of refund. He placed reliance on the Apex Court judgment in the case of State of Punjab v. Kisan Dayal Sharma, : AIR1990SC2177 and also pressed into services one judgment of the Gujrat High Court in the case of Satellite Engineering Ltd. v. Asstt. Collector of Central Excise, : 1991ECR387(Gujarat) in support of his submission.
22. Mr. Desai also canvassed that there is no provision under the Customs Act for payment of any interest on redemption find and personal penalties, therefore the demand of the petitioners for interest is unsustainable. He, thus submitted that for want of specific provision in the statue for payment interest demand of the petitioners for interest is unsustainable, as such no interest should be awarded in favour of the petitioners. Mr. Desai urged that in the present case it was not the duty which was collected by the Revenue, but it was the redemption fine and penalty imposed upon the petitioners for the contravention of the provisions of the Custom Act, therefore, the genesis of the matter has to be taken into consideration before passing any order of interest. He submitted that since refund arises due to the reduction of redemption find and penalty by the Tribunal, which was under challenge by way of customs application, as also by writ petition against refusal of stay, which were pending before this Court, as such the demand for interest for this period is wholly unsustainable. Our attention was also invited by Mr.Desai to the various judgments of the Apex Court such as Union of India v. E.Merck (India), : 1998(97)ELT218(SC) ; Union of India v. Orient Enterprises, : 1998(99)ELT193(SC) ; V.V.S. Sugras v. Govt. of A.P., : [1999]2SCR925 . Reliance was also placed on the judgment of the Kerala High Court in the case of Kurumer Betta Estate v. I.T.O., : [2002]257ITR328(Ker) by Mr. Desai in support of his submissions.
23. Mr. Desai also contended that it is a well settled law that a writ petition under Article 226 for the purposes of interest is not at all maintainable. What cannot be done under the statue cannot be done via Article 226 of the Constitution is the last submission advanced by Mr. Deasi.
Consideration:
24. Having heard the parties at length, it would be appropriate to note the undisputed facts available on record. It is not in dispute that the petitioner's were entitled to refund in the sum of Rs. 1.35 crore, in pursuance of the judgment and order of the Tribunal dated 16th April 2002. The judgment and order of the Tribunal in petitioners case was based on its earlier judgment in the case of Jai Bhagwati Impex Private Ltd.; whereby refund of the similar amount and in the similar set of facts was ordered by the Tribunal. The S.L.P. preferred against the said judgment of Tribunal to the Apex Court by the Revenue was dismissed. It is also not in dispute that other three refund claims of 2 different parties were granted by the respondents and amounts were refunded without any security, the details of which are as under.
(i) The refund order dated 28th March 2002 was issued in favour of Stonemann Marble Industries for an amount of Rs. 1,39,60,000/- and amount was refunded without any security (see Exh. A and B with the affidavit dated 28th November 2002.
(ii) Refund order dated 4th Jue 2002 for Rs. 14,32,000/- was issued in favour of Kargwal Corporation and amount was refunded to them without any security (see Exh. C to the above affidavit).
(iii) Refund order dated 13th September 2002 for Rs. 97,74,000/- was again issued in favour of Stonemann Marble Industries and amount was refunded without any security (see Exh. D to the above affidavit).
25. It is also not in dispute that References in case of above assessees were preferred before this Court only after allowing them to lift the amount of their respective claims, that too without security and/or without keeping any reservation and/or subject to result of the reference by this Court. It is also not in dispute that the petitioners were called upon to execute affidavit-cum-indemnity bond, which the petitioners had executed in favour of the Revenue on 8th May 2002 (Exh. E to the petition). The refund order was prepared on 17th July 2002 and refund and sanctioned in favour of the petitioner (Exh. D to the petition) by the Assistant Commissioner of Customs, (A.G.)., Mumbai. However the refund amount was not paid to the petitioners and Revenue chose to move Tribunal seeking stay to the effect and operation of the final order of the Tribunal which gave rise to the refund in favour of the petitioner. The Tribunal rejected prayer for stay vide its order dated 23rd October 2002, against which Revenue came before this Court by way of Writ Petition No. 7049 of 2002. It is also not in dispute that the revenue was before this Court in reference against the judgment of the Tribunal which were acted upon by them without keeping any reservation. The References preferred were without any merit which ultimately come to be dismissed by a reasoned order dated 3rd July 2003: wherein we were constrained to observe as under:
'.... It is not disputed by the Revenue that the facts in the case of the Respondents i.e. Marmo Classic and the facts in the case of Stonemann Marble Industries and Jai Bhagwati Impex Pvt. Ltd. are similar. On perusal of the orders passed by the Tribunal in the case of Stonemann Marble Industries and Jai Bhagwati Impex Pvt. Ltd., it is seen that the Tribunal has reduced the redemption fine and penalty by taking into account the margin of profits and the demurrage incurred by the importers of the said consignments. It is pertinent to note that the Tribunal in similar circumstances have taken a uniform view to restrict the redemption fine of 20% of the CIF value and penalty to 5% of the CIF value. Under these circumstances, it is evident that the decision of the Tribunal is essentially based on finding of fact. The Tribunal has reduced the redemption fine and penalty by taking into account its earlier decision as well as the margin profit and the amount of demurrage incurred on the goods. It is not disputed by the Revenue that the CEGAT has power to reduce the redemption fine and penalty..........
In this view of the matter, we see no merits in the Customs applications filed by the Revenue........'
26. The Narration of the above facts would go to show that the petitioners were failing in the same group or class of persons who were granted refund without any protest or security, but a discriminatory treatment was given to the petitioners by withholding the amount of refund to which they were entitled and on the top of it when the petitioners prayed for grant of interim relief while opposing the prayer of the Revenue for adjournment of the petition, when it was part heard, the Revenue opposed their prayer and insisted for security by way of bank guarantee of a nationalised bank which the petitioners furnished. Thus, the petitioners were made to incur bank guarantee charge. No differentia between the case of the petitions with the of others could be pointed out by the Revenue. In the similar set of facts, this Court was required to consider the question of grant of interest on delayed payment of refund by the Revenue in the case of Shri Balaji Automobiles (supra); wherein this Court after considering the earlier judgments of the Apex Court in the case of Burmah Construction Co. v. The State of Orissa, : AIR1962SC1320 and State of M.P. v. Bhailal Bhai : [1964]6SCR261 held thus:
'The only question which needs consideration is whether petitioner is entitled to claim interest for delayed payment of refund amount. In order to answer this question, it is necessary to turn to section 27A of the Customs Act. Till the insertion of Section 27A in the Customs Act by Act 22 of 1995, there was no right to claim payment of interest on delayed refund under the Act. After amendment as noticed, this statutory obligation can certainly be enforced by issuing writ of mandamus. In this view of the matter, remedy of writ is very much available to the petitioner. No doubt, this power is to be exercised keeping in view the self imposed restrictions but at the same time if a person is deprived of his right to use his money., such deprivation has to be compensated as held by the Apex Court in the case of (LIC) v. Gangadhar Ranade - : (1978)ILLJ322SC . In view of the matter, it is not in dispute that the petitioner was deprived of his liquidity in the business for no justifiable reasons. Thus, we propose to accept the submissions made by the learned Counsel for the petitioner and grant simple interest to the petitioner of the period 21-5-1997 to 4-12-2001 at the rate of 6% p.a. on the amount of refund, if paid within 60 days from the dated of receipt of writ of this judgment, otherwise the refund amount shall carry interest @ 10% p.a. instead of 6% p.a. as granted herein.'
27. In this case, claim for refund was not at all in dispute. As a matter of fact, it was obligatory on the part of the Revenue to refund the said claim in pursuance of the order of the Tribunal dated 16th April 2002. In spite or sanction of refund order and in spite of executing affidavit-cum-indemnity bond, the Revenue refused to hand over refund cheque which compelled the petitioners to approach this Court. Had the respondents paid the amount of refund, petitioners would nt have approached this Cour. The prayer for stay made before the Tribunal was rejected by it. During the pendency of the reference proceedings, there is no provision for grant of stay to the order giving rise to reference. In these circumstances, there was absolutely no justification for the Revenue to delay refund to the petitions. All the other similarly circumstanced assessees were paid their refund claims arising out of identical order without keeping any reservation or without seeking any security. Then in that event, question arises as to why petitioners were not extended the same treatment by the Revenue. As a matter of fact. judgments against which references had been filed were based on its earlier judgment of the very same Tribunal in the case of Jai Bhagwati Impex Pvt. Ltd., against which S.L.P. was dismissed. Therefore, it was clear that reference was sought against the judgment and order of the Tribunal which was accepted by the Revenue. This Court, normally does not entertain petition under Article 226 of the Constitution of India to enforce civil liability but, where amount of claim was not in dispute and when similarly circumstanced persons were given refund, there was no reason for the Revenue to withhold the amount to which petitions are entitled. The Revenue was expected to obey and follow the order of the Tribunal. Tendency on the part of the Revenue not to obey the order of the Tribunal and to protract litigation, so as to delay refund claims, is on rise and in every alternate case of refund, the claimants are required to approach this Court for refund. In these circumstances, in our opinion, the petitioners were wrongfully deprived of (SIC) refund claim by the Revenue. It is no doubt true, as submitted by Mr. Desai, learned Counsel for the Revenue, that the Tribunal did not award interest. The argument of Mr. Desai, that there is no provision in the Customs Act for payment of interest on redemption fine and personal penalties imposed, is misplaced in view of the fact that the amount of redemption fine and penalty was reduced by Tribunal. Then, in that event, to the extent of the amount, it ceased to be amount of redemption fine and penalty and it becomes refundable which can conveniently be termed as the property of the petitioners. As such, the said property could not have been withheld by the Revenue by delaying refund claim to which the petitioners were entitled. It is no doubt true that powers of this Court in writ jurisdiction is required to be exercised keeping in view the self imposed restriction but at the same time if a person is deprived of his right to use his money, such derivation has to be compensated as held by the Apex Court in the case of L.I.C. v. Gangadhar Ranade, : (1978)ILLJ322SC . In this view of the matter, the petitioners were deprived of his liquidity for no justifiable reason. Thus, we accept the submission of the learned Counsel for the petitioners and grant simple interest to the petitioners from the dated of the petition till dated of payment i.e. from 2nd August 2002 to 27th August 2002 at the rate of 6% per annum as was awarded (SIC) this Court in the case of Shri Balaji Automobiles (Supra), if paid within 60 days from the date of receipt of writ of this judgment, otherwise the refund amount shall carry interest @ 10% p.a. instead of 6% p.a. as granted herein.
Accordingly, petition is allowed. Rule is made absolute with no order as to costs.