2016 (9) TMI 523 - HC - Customs

Court directs Rewards Committee to reconsider final reward application based on scheme specifics and actual recovery.

Dinesh Arvindbhai Padaria Versus Union of India

Dinesh Arvindbhai Padaria Versus Union of India - 2016 (339) E.L.T. 220 (Guj.) Issues Involved:1. Entitlement to Reward under the Informer Scheme.2. Interpretation of the Reward Scheme.3. Statutory Duty and Issuance of Writ of Mandamus.4. Actual Recovery and Utilization of Cenvat Credit.Detailed Analysis:1. Entitlement to Reward under the Informer Scheme:The petitioner claimed entitlement to a reward for providing information that led to the discovery of excise duty evasion by VFL. The petitioner had already received an advance reward of Rs. 1,00,000 but sought the final reward based on the adjudicated amount of Rs. 9,92,31,857. The Rewards Committee had deferred the final reward, stating that only Rs. 1,73,346 had been recovered through PLA and that further recovery proceedings were pending with the DRT, Mumbai.2. Interpretation of the Reward Scheme:The petitioner argued that the adjudication by the Commissioner of Central Excise and Customs, Surat-II, which confirmed the duty amount of Rs. 1,15,60,118 paid by VFL, entitled him to 20% of this amount as a reward. The petitioner cited the Supreme Court's judgment in Union of India Vs. R. Padmanabhan, emphasizing that while the reward is ex-gratia and discretionary, it should not be arbitrarily denied if it falls within the scheme's parameters.The respondents, represented by Senior Advocate Shri R.J. Oza, contended that the reward could only be based on the actual recovery made by the Department. According to the Reward Scheme, the final reward is determined by the net sale proceeds of seized goods and the amount of additional duty, fine, and penalty recovered. They argued that since only Rs. 1,73,346 had been recovered and the rest was pending in DRT, the final reward could not be granted yet.3. Statutory Duty and Issuance of Writ of Mandamus:The petitioner sought a writ of mandamus to compel the respondents to grant the final reward. However, the respondents argued, citing Supreme Court judgments, that a writ of mandamus could only be issued where there is a statutory duty, which was not the case here. The Reward Scheme is an ex-gratia payment and does not create a statutory obligation on the authorities to grant a reward.The court, referencing Union of India vs. C. Krishna Reddy and D.D. Gandhi Vs. Union of India, reiterated that the reward is discretionary and ex-gratia, and no one has a vested right to claim it. The court emphasized that the Reward Scheme is not a statute but a policy, and thus, a writ of mandamus could not be issued to enforce it.4. Actual Recovery and Utilization of Cenvat Credit:The respondents argued that the amount paid through Cenvat credit could not be equated with actual recovery. The Reward Scheme specifies that the reward is based on the net sale proceeds of seized goods and the amount of duty evaded plus fines and penalties recovered. Therefore, the payment of Rs. 1,15,60,118 through Cenvat credit could not be considered for calculating the reward.Conclusion:The court found that the Rewards Committee had not adequately considered all relevant factors and had deferred its decision pending the outcome of DRT proceedings. The court directed the Rewards Committee to reconsider the petitioner's application for the final reward, taking into account the observations made in the judgment. The committee was instructed to provide a reasoned decision, considering the specifics of the Reward Scheme and the actual recovery made. The petition was disposed of with these directions, and no costs were awarded.