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CASE NO.: Appeal (civil)  1882 of 2004

PETITIONER: M/s. O.N.G.C. Ltd

RESPONDENT: Commnr. Of Customs, Mumbai

DATE OF JUDGMENT: 01/08/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: JUDGMENT O R D E R   I.A. NO. 4 IN CIVIL APPEAL NO. 1882 OF 2004

S.B. SINHA, J :                  Appellant is a public sector undertaking wholly owned and controlled  by the Central Government.  It obtained the services of M/s. SEDCO Forex  Int. Drilling Inc. for obtaining requisite information which would assist it in  the matter of exploration of oil and gas.  The information so gathered was  recorded in 3-D Seismic Tapes.  On the amount paid therefor, custom duty  was sought to be levied.  An exemption was claimed by the appellant from  payment of custom duty in terms of an exemption notification issued by the  Central Government in that behalf.  As despite such claim, assessment  proceedings were initiated and completed, the matter came upto this Court  and by a judgment and order dated 24.08.2006, contention of the appellant  was accepted by this Court and the orders of assessment were set aside.

       During pendancy of the Civil Appeals before this Court, a sum of Rs.  54,72,87,536.00 was realised by way of custom duties and interest thereon,  etc. as per the following details:

\023(i) 14.09.2004              Rs. 25,00,00,000.00 adjusted towards duty (ii)    30.03.2004              Rs. 17,72,87,536.00 appropriated towards interest (iii)   24.02.2005              Rs. 12,00,00,000.00 adjusted towards interest         Total                   Rs. 54,72,87,536.00\024

       An application has now been filed for a direction to the respondent to  pay interest on the said sum with effect from the date of recovery till the date  of the appellant.

       Mr. S. Ganesh, learned senior counsel appearing on behalf of the  Appellant, would submit that keeping in view the fact that the appellant had  to deposit a huge amount during pendency of the Civil Appeals, interest of  justice would be met if this Court directs the respondent to pay interest at the  rate of 12% per annum on the said amount.  It was submitted that interest  should be directed to be paid by way of restitution, as has been held by this  Court in South Eastern Coalfields Ltd. v. State of M.P. and Others [(2003) 8  SCC 648].

       Mr. Rajiv Dutta, learned senior counsel appearing on behalf of the  respondent, on the other hand, would submit that the Central Government  did not make any investment of the amount received by it by way of indirect  tax but expended the same for the welfare of the people and, thus, no interest  should be directed to be paid in the instant case.

       Appellant is a public sector undertaking.  Respondent is the Central

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Government.  We agree that 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.  Reference in this connection may  be made to 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.

       Respondent, therefore, is directed to pay a sum of Rs.  9,51,21,999.50/- by way of interest.  Such amount should be paid within a  period of six weeks from date.  The application is disposed of accordingly.   No costs.