2007 (8) TMI 346 - SC - Customs

Supreme Court exempts appellant from custom duty, orders interest payment citing restitution principle.

The Supreme Court accepted the appellant's claim of exemption from custom duty and set aside the assessment orders. The Court directed the respondent to ... Interest on refund - Held that:- Appellant is a public sector undertaking. Respondent is the Central Government. in principle as also in equity the appellant is entitled to interest on the amount deposited on application of principle of restitution. In the facts and circumstances of this case and particularly having regard to the fact that the amount paid by the appellant has already been refunded, we direct that the amount deposited by the appellant shall carry interest at the rate of 6% per annum - Following decision of Pure Helium India (P) Ltd. v. Oil & Natural Gas Commission [2003 (10) TMI 384 - SUPREME COURT OF INDIA] and McDermott International Inc. v. Burn Standard Co. Ltd. & Ors. [2006 (5) TMI 442 - SUPREME COURT] Issues:1. Claim of exemption from payment of custom duty.2. Realization of custom duties during pendency of Civil Appeals.3. Application for interest on the amount recovered.Analysis:1. The appellant, a public sector undertaking, engaged M/s. SEDCO Forex Int. Drilling Inc. for obtaining information related to oil and gas exploration. The information was recorded in 3-D Seismic Tapes, and custom duty was sought to be levied on the amount paid. An exemption notification by the Central Government was claimed to avoid custom duty. Despite the claim, assessment proceedings were initiated and completed. The Supreme Court, in a judgment dated 24-8-2006, accepted the appellant's contention and set aside the assessment orders.2. During the pendency of Civil Appeals, a sum of Rs. 54,72,87,536.00 was realized through custom duties and interest. An application was filed for directing the respondent to pay interest on this amount from the date of recovery till the date of the appellant. The appellant sought interest at a rate of 12% per annum, citing the principle of restitution, as established in a previous case, South Eastern Coalfields Ltd. v. State of M.P. and Others [(2003) 8 SCC 648]. The respondent argued against paying interest, stating that the amount received was utilized for public welfare without any investment.3. The Supreme Court acknowledged the appellant's entitlement to interest on the deposited amount, applying the principle of restitution. Considering the circumstances and the fact that the deposited amount had been refunded, the Court directed that the amount carry interest at a rate of 6% per annum. The judgment referenced previous cases like Pure Helium India (P) Ltd. v. Oil & Natural Gas Commission [(2003) 8 SCC 593] and McDermott International Inc. v. Burn Standard Co. Ltd. & Ors. [2006 (6) SCALE 220]. The respondent was directed to pay Rs. 9,51,21,999.50 by way of interest within six weeks from the date of the judgment. The application was disposed of without any costs.