Case Note & Summary
The Petitioner, Vishnu M. Harlalka, approached the Bombay High Court under Article 226 of the Constitution seeking implementation of an order dated 9 November 2009 passed by the Settlement Commission under Section 127C(5) of the Customs Act, 1962. The Settlement Commission had settled customs duty at Rs.5,48,381/- (already paid), interest of Rs.32,660/- (paid), granted immunity from penalty in excess of Rs.50,000/- and fine in excess of Rs.1,00,000/-, and directed the Revenue to refund to the applicant the balance amount remaining after adjustment of expenses and charges as per Section 150 of the Customs Act, 1962, and after adjustment of fine and penalty adjudged. The seized goods had already been auctioned. Despite the Petitioner's repeated representations from 9 January 2010 onwards, including an RTI query revealing that internal approvals for refund were granted as early as 7 May 2010 and a refund order proposed on 1 June 2010, no refund was made. The Petitioner filed the writ petition on 27 June 2011. During the pendency of the petition, on 11 February 2013, the Revenue finally paid the principal amount of Rs.1,33,000/- to the Petitioner. The only surviving issue was the claim for interest on the delayed refund. The Court held that the order of the Settlement Commission was binding and ought to have been implemented within a reasonable time. The inaction of the Revenue for over three years was arbitrary. Applying the principle that interest is the normal accretion on capital, the Court directed the Revenue to pay interest at 6% per annum on the refund amount from the date of the Settlement Commission order (9 November 2009) until the date of payment (11 February 2013). The writ petition was disposed of with this direction.
Headnote
A) Customs Law - Settlement Commission - Implementation of Order - Section 127C(5) Customs Act, 1962 - The Settlement Commission directed refund of balance sale proceeds after adjustment of fine and penalty. Despite internal approvals, the Revenue failed to refund for over three years. The High Court held that the order of the Settlement Commission is binding and must be implemented within a reasonable time. The inaction of the Revenue was arbitrary and violative of Article 14. (Paras 2-8) B) Customs Law - Refund - Interest on Delayed Refund - Section 150 Customs Act, 1962 - The Court held that where the Revenue retains money due to the assessee without any justification, the assessee is entitled to interest. Applying the principle that interest is the normal accretion on capital, the Court directed payment of interest at 6% per annum from the date of the Settlement Commission order (9 November 2009) until the date of payment. (Paras 9-10)
Issue of Consideration
Whether the Revenue is obligated to implement the order of the Settlement Commission directing refund of sale proceeds after adjustment of fine and penalty, and whether the Petitioner is entitled to interest on the delayed refund.
Final Decision
The High Court directed the Revenue to pay interest at 6% per annum on the refund amount of Rs.1,33,000/- from the date of the Settlement Commission order (9 November 2009) until the date of payment (11 February 2013). The writ petition was disposed of accordingly.
Law Points
- Settlement Commission order is binding and must be implemented within reasonable time
- Delay in refund of sale proceeds after adjustment of fine and penalty is arbitrary
- Interest at 6% per annum on delayed refund from date of order till payment
