2008 (7) TMI 382 - HC - Customs

Court orders interest payment, criticizes delays, demands accountability in Central Excise Department. Tribunal orders refund.

OMKAR EXPORTS Versus UNION OF INDIA

OMKAR EXPORTS Versus UNION OF INDIA - 2009 (240) E.L.T. 355 (Guj.) Issues Involved:1. Legitimacy of the refund claim of Rs. 7.50 lakhs.2. Entitlement to interest on the refunded amount.3. Jurisdiction and responsibility of the respondent authority.4. Conduct and administrative delay by the respondent authority.Issue-wise Detailed Analysis:1. Legitimacy of the Refund Claim of Rs. 7.50 LakhsThe petitioner claimed a refund of Rs. 7.50 lakhs, which was allegedly recovered by the Directorate General of Central Excise Intelligence (DGCEI) officers between 18-6-2001 and 15-9-2001. The respondent argued that the amount was voluntarily deposited by the petitioner. The Commissioner (Appeals) and the Tribunal both upheld that the amount was illegally paid to the credit of the Central Government and ordered its refund. The Tribunal emphasized that the Revenue had no authority to keep the deposit without initiating proceedings to confirm the duty due.2. Entitlement to Interest on the Refunded AmountThe petitioner sought interest on the refund from 10-8-2001. The Commissioner (Appeals) ruled that the petitioner was not entitled to interest under the Central Excise Act or the Customs Act. However, the court noted that after the Tribunal's order on 30-11-2007, the respondent should have refunded the amount promptly. The court ruled that from 1-1-2008, the amount should bear interest at 5% per annum until actual payment, rejecting the respondent's argument that interest should only be computed after a 90-day statutory period.3. Jurisdiction and Responsibility of the Respondent AuthorityThe respondent authority argued that the refund claim pertained to a drawback and not excise duty, suggesting the petitioner approach customs authorities. The court found this stance incorrect and dishonest, highlighting that the DGCEI is a limb of the Central Excise Department, and the respondent should have processed the refund claim. The court criticized the respondent for administrative delays and misguidance.4. Conduct and Administrative Delay by the Respondent AuthorityThe court noted significant administrative lapses by the respondent authority, including a nearly four-year delay without initiating any legal steps and a two-year delay in responding to the refund claim. The court found the respondent's conduct in handling the refund claim to be dishonest and an attempt to shift responsibility unjustly. The court directed the respondent to pay the interest and suggested recovering the amount from the responsible officer to avoid loss to the exchequer.ConclusionThe petition was allowed, directing the respondent to pay interest at 5% per annum from 1-1-2008 until actual payment. The court criticized the respondent's conduct and administrative delays, emphasizing the need for accountability within the Central Excise Department.