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PETITIONER: UNION OF INDIA & ORS.

       Vs.

RESPONDENT: M/S. ORIENT ENTERPRISES & ANR., ELEPHANTA OIL & VANASPATIIND

DATE OF JUDGMENT:       04/03/1998

BENCH: S.C. AGRAWAL, S. SAGHIR AHMAD

ACT:

HEADNOTE:

JUDGMENT:                             WITH                   CIVIL APPEAL NO. 914/92                       J U D G M E N T      The common  question   that falls  for consideration in these appeals  in whether  a writ petition under Article 226 of the  Constitution of  India seeking the relief of payment of interest  on delayed  refund of  the amount  paid by  the assesses towards  the  customs  duty,  redemption  fine  and penalty under  the Customs  Ac t. 1962 (hereinafter referred to as ‘the Act’) was maintainable. Civil Appeal No. 3374/91.      M/s. Orient Enterprises, respondent No. 1. had imported consignments  of   skimmed  milk  powder  from  Canada.  The Collector of  Customs, Cochin,  issued show  cause notice on the basis that there was undervaluation of the prices in the invoices. The  Collector of  Customs  passed  an  order  for confiscation of  the goods  but permitted the respondents to redeem to  goods  on  payment  of  redemption  fine  of  Rs. 8,00,000/-. A penalty of Rs. 2,00,000/- was also imposed. On the basis  of the  higher price  of goods,  as assessed, the respondents were  also required  to pay  the  difference  in customs duty  to the  extent of  Rs. 34,464.23. The assessee filed an  appeal against  the said order of the Collector of Customs before  the Central  Board  of  Excise  and  Customs (hereinafter referred  to as  ‘the Board’).  The said appeal was dismissed  by the Board. Thereafter the assessee filed a revision petition  before the  Central Government  which was transferred  to   the  Customs  Excise  and  Gold  (Control) Appellate  Tribunal.,   (hereinafter  referred  to  as  ‘the Tribunal’) and it was treated as an appeal by the Tribunal;. By Order  dated August  14, 1985  the Tribunal  allowed  the appeal and  held that  the goods  had been lawfully imported and the  valuation declared was correct. The appeal filed by the Revenue  against the  said judgment  of the Tribunal was dismissed by  this Court  on December  10, 1996.  After  the passing of  the adjudication  order  by  the  collector  the respondents deposited a sum of Rs. 10, 34, 464, 23 on August 29, 1979.  Since the  said amount  that was deposited by the respondent was  not refunded  to them  after the judgment of the  Tribunal   dated  August   14,  1985,  the  respondents

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approached the  Tribunal for directions regarding the refund of the  said amount  and the Tribunal, by order dated May 8, 1987 directed  the Collector  of Customs,  Cochin, to refund the said amount of Rs. 10, 34, 464, 23 within a period of 60 days. The  said amount  was refunded  on August 29, 1987. On November 21,  1989 the writ petition which has given rise to this appeal  was filed  by the respondents in the Delhi High Court. In  the said  writ petition ht respondents sought the relief of  payment of  interest on the amount of Rs. 10, 34, 5+5, 23  for the period from the date of payment to the said amount till  the date  on  which  it  was  refunded  to  the respondents. The  said writ peritonia of the respondents has been allowed  b y  the High  Court by Judgment dated May 10, 1991. The  High Court  has directed  the appellants  to  pay interest 0  12% per  annum to  the respondents on the sum of Rs. 10,  35, 000/-  from the  date  of  the  filing  of  the revision application  before the Central Government till the date of payment.      Shri R. Mohan, the learned senior counsel appearing for the appellants has urged that the High Court was in error in entertaining  the   writ  petition   and  giving  directions regarding  payment  of  interest  on  the  amount  that  was collected from  respondent No.1 on the basis of the order of Collector of  Customs and which was subsequently refunded to them in  pursuance of  the judgment  of  the  Tribunal.  The submission is  that under  the provision of the Act, as they stood at  the relevant  time  there  was  no  provision  for payment of  interest on the amount collected on the basis of an order  passed under  the Act  and which  was subsequently required to  be refunded  and  that  such  a  provision  for payment of  interest on  the amount of duty that is refunded has been introduce by Section 27-A which was inserted in the Act by  Act No.22  by Act  No.22 of  1995. It  has also been pointed out  that in  the affidavit  filed on  behalf of the appellants in  reply to  the show  cause notice  in the writ petition before the High Court it was stated.           "It is  further submitted that      the  Customs  Department  does  not      charge any  interest on  the  short      payment of  duty on  goods imported      or exported, No interest is charged      on  delayed   payment  of  fine  or      penalty     imposed      on     the      importer/exporter for violation for      the provision  of the  Customs Act,      1962. Similarly, no interest can be      paid  on  the  amount  refunded  in      pursuance of the order-in-appeal.      Shri Mohan has placed reliance on the decision of the Constitution Bench  of this  Court in Suganmal vs., State of Madhya Pradesh  & Ors.  AIR 1965  SC 1740 wherein this Court has held  that a  writ petition  under Article  226  of  the Constitution of  India solely  parrying for  the issue  of a writ of  mandamus directing  the State  of refund  the money alleged to have been illegally collected by the State as tax is not ordinarily maintainable.      Shri. G.L. Rawal, the learned counsel appearing for the respondents has, however, submitted that since the amount of Rs. 10,  34, 464,  23 had been illegally collected from them and  was  retained  by  the  Revenue,  the  respondents  are entitled to  payment of  interest on the said amount for the period the  respondents were deprived of the said amount and that the  High Court  was justified in entertaining the writ petition and  directing payment  of  interest.  The  learned counsel had  placed before  us the  judgments of the various

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High Courts  in which  direction have been given for payment of  interest   while  directing   refund  of  tax  illegally collected from the assessed.      In Suganmal  (supra) this  Court has  laid down  that a writ petition  under Article  226 of the Constitution solely praying for  the issue  of a  writ of mandamus directing the State to  refund that  money is  not ordinarily maintainable for the  simple reason  that a  claim for  such a refund can always be  made in  a suit  against the  authority which had illegally collected  the money as a tax. This Court has made a distinction between a direction for refund given by was of consequential order  in a  case where  the legality  of  the assessment is  questioned and  a case  where the petition is only  for  the  purpose  of  seeking  refund.  It  has  been observed. :-           "We do  not consider it proper      to extend  the principle justifying      the consequential  order  directing      the  refund   of  amount  illegally      realised,  when   the  order  under      which the amount had been collected      has been  set aside,  to  cases  in      which only orders for the refund of      money are  cought. The  parties had      the right  to question  the illegal      assessment orders  on the ground of      their         illegality         or      unconstitutionality and, therefore,      could take action under Article 226      for   the   protection   of   their      fundamental right  and the  Courts,      on  setting  aside  the  assessment      orders, exercise their jurisdiction      in proper  circumstances  to  order      the consequential  relief  for  the      refund   of   the   tax   illegally      realised. We  do not  find any good      reason  to  extend  this  principle      and,  therefore,   hold   that   no      petition for the issue of a writ of      mandamus    will     be    normally      entertained  for   the  purpose  of      merely ordering  a refund  of money      to  the   return   of   which   the      petitioner claims a right."      The Court  has emphasised that there was no legal right in the  appellant who  had filed  the writ petition to claim the refund under the relevant statute.      In the  present case also till the inserting of Section 27-A in  the Act  by Act  22 of  1995  there  was  no  right entitling payment  of interest  on delayed  refund under the Act, Such  a right  was conferred  for the first time by the said provision.  Act 22  of 1995 also inserted Section 28-AA which provides for payment of interest on delayed payment of duty by  a person  who is  liable to  pay the  duty. Thus at relevant time  there was  no statutory  right entitling  the respondents to payment of interest on delayed refund and the writ petition  foiled by them was not for the enforcement of a legal  right av  available to  them under any statute. The claim for  interest was  in the  nature of  compensation for wrongful  retention  by  the  appellants  of  money  the  at collected from  the respondents  by  way  of  customs  duty, redemption fine and penalty. In view of the law laid down by this Court  in suganmal  (supra) a writ petition seeking the relief of  payment of  interest on  delayed  refund  of  the

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amount  so   collected  could   not,  in   our  opinion,  be maintained., The  decision on which reliance has been placed by Shri  Rawal were  cases where  the legality of the orders requiring payment  of tax  or duty  were challenged  and the High Court in exercise of its jurisdiction under Article 225 of the  Constitution, while  setting aside the  said orders, has directed  the refund  of the  amount so  collected  with interest. The  direction for  payment of  interest in theres cases was by was of consequential relief along with the main relief of  setting aside the order imposing the tax or duty. Those cases  stand  on  a  different  footing  and  have  no application to  the present  case. The appeal is, therefore, allowed, the  impugned judgment  of the  High Court  is  set aside and  the writ petition filed by the respondents before the High Court is dismissed. No order as to costs. Civil Appeal No. 914/92.      Elepahnta Oil  a Vanaspati  Industries, respondent No.1 herein, was  earlier known  as M/.  Jain Sudh Vanaspati Ltd. The said  respondent had  imported inedible Beef tallow. The Collector of  Customs,  Bombay,  after  issuing  show  cause notice to the respondent passed the order dated May 28, 1983 whereby he  held that  the goods  imported by the respondent were liable  for confiscation  as the import was contrary to the provision  of the  Import Policy  and gave option to the provision of  the Import  Policy  and  gave  option  to  the respondent to  redeem the same on payment of redemption fine of Rs.  1, 09,  60, 000/-. The respondent deposited the said redemption fine  and obtained  the delivery  of  goods.  The appeal filed  by the  respondent-company  against  the  said order of  the Collector  was  allowed  by  the  Tribunal  by judgment dated  February 14,  1990. Special  Leave Petitions Nos. 14605  and 14606/90  filed by  the Revenue  against the said judgment  of the  Tribunal were dismissed by this Court by Order  dated November  19, 1990. The amount of Rs. 1. 09, 60, 000/-  which was deposited by the respondent-company was refunded to  them in two instalments on January 29, 1991 and March 6,  1991.  Thereafter  on  May  31,  21991,  the  writ petition which  has given  rise to  this appeal was filed by the respondents  in the  Delhi High  Court. In the said writ petition the  respondents sought  the relief  of payment  of interest on the amount of Rs. 1. 09, 60, 000/- from the date of deposit  of the said amount till the date of refund 0 Rs. 14.5% per  annum or  on such  rate of interest not less that 12% per annum. The said writ petition of the respondents has been allowed  by the  High Court  by the  impugned  judgment dated November  1, 1991  and the High Court has directed the appellants to  pay to  the respondent  interest 0 Rs. 17. 5% per annum  on the  amount of  Rs. 1,  09, 60, 000/- from the date of deposit of the said amount till it was refunded.      While dealing  with Civil  Appeal No.  3374/91 we  have held that  a writ  petition seeking  relief of  interest  in respect of  the amount  deposited towards redemption charges under an  adjudication order  which amount had been refunded after the  said order  was set aside could not be maintained under Article  226 of  the Constitution  of India.  For  the reasons given  in the said judgment the impugned judgment of the High  Court cannot be sustained and has to be set aside. The appeal  is, therefore,  allowed the impugned judgment of the High  Court is  set aside and the writ petition filed by the respondents is dismissed. No order as to costs.