MUMBAI, APRIL 16, 2013: THE Settlement Commission passed a final order u/s 127C(5) of the Customs Act, 1962 on 09/11/2009 inter alia granting immunity from prosecution to the applicant and with the following further direction –

"Release of Goods/Sale Proceeds: The Bench holds that the applicant is entitled to release of the seized goods on payment of fine and penalty adjudged as above. Since the seized goods are reported to have already been auctioned, the Bench directs the Revenue to refund to the applicant the amount remaining in balance after adjustment of expenses and charges as payable in terms of Section 150 of the Customs Act, 1962 and further adjustment of fine and penalty adjudged as above."

When it is a matter of refunding any amount, the Department usually looks the other way.

This is what precisely happened in the present case and the applicant had to write to the Commissioner of Customs (Import) to implement the order of the Settlement Commission. This was in January, 2010. Then another representation followed in a fortnight and then a notice by the Advocate in the month of May, 2010.

Since nothing worked, the applicant was constrained to put into action the Ten Rupee note 'miracle'. We are referring to the RTI Act, 2005.

The applicant came to know through documents that the Superintendent of Customs had put up a proposal for the payment of the sale proceeds after adjustment of expenses and charges under Section 150 of the Act on 6 th January 2010; that the Commissioner of Customs granted his approval on 7th May 2010 and on 1st June 2010 a refund order was proposed. However, despite all this movement on the file, no tangible result was obtained i.e no refund was granted.

So, once again a letter was submitted on 16 th December, 2010 seeking implementation of the order of the Settlement Commission.

Because nothing happened for reasons best known , a petition was filed in the Bombay High Court under Article 226 on 27 th June 2011 for implementing the order of the Settlement Commission and for a refund of the balance due with interest.

During the pendency of the proceedings before the High Court, it was informed by the Revenue on 23 rd January, 2013 that an amount of Rs.15,40,309/- was paid to the Petitioner on 20 th May, 2012 and the only surviving issue related to the payment of interest.

An affidavit-in-reply was filed by the Deputy Commissioner of Customs in this regard and it was submitted that the amount paid to the Petitioner pursuant to the order of the Settlement Commission represents the balance of sale proceeds of the goods auctioned or disposed of after adjustments under s.150 of the Customs Act and since the amount paid does not represent the amount of duty or interest, the provisions of Sections 27 and 27A of the Act are not applicable.

The High Court referred to the provisions of sections 27 & 150 of the Customs Act, 1962 and observed -

"9. The Settlement Commission directed the authorities to refund to the Petitioner the balance of the sale proceeds after adjustment of expenses and charges under Section 150 of the Act. This order was passed on 9 November 2009. Though no period was stipulated in the order of the Settlement Commission for the grant of refund, the entire exercise ought to have been carried out within a reasonable period of time. A refund in the present case was not granted to the Petitioner despite several representations. Moreover, as the documents which have been revealed in pursuance of a query under the RTI Act now demonstrate, though a refund was duly sanctioned by the Commissioner, no refund was paid over till the petition was filed. All statutory powers have to be exercised within a reasonable period even when no specific period is prescribed by a provision of law. It can be no defence to urge that the Customs Act, 1962 provides for the payment of interest only in respect of a refund of duty and interest and hence the Petitioner would not be entitled to interest on the balance of the sale proceeds which were directed to be paid by the Settlement Commission. Acceptance of the submission would mean that despite an order of the competent authority having jurisdiction, directing the Department to grant a refund, the Department can wait for an inordinately long period; perhaps for years together without granting a refund in compliance with the directions of the Settlement Commission. This would be destructive to the rule of law and cannot be countenanced. The Petitioner has been deprived of a refund of its monies legitimately due to him in pursuance of an order of the Settlement Commission. There is absolutely no reason or justification for the unexplained delay. Hence, in exercise of the jurisdiction of this Court under Article 226 of the Constitution, an order awarding the payment of interest would be necessary.

10. In the circumstances, we dispose of the petition by directing the Respondents to grant to the Petitioner and pay over, within a period of eight weeks from today, interest computed at the rate of 9 per cent per annum. Since the Commissioner of Customs had approved the proposal for sanctioning the refund on 7 May 2010 (which period would be a reasonable period after the order of the Settlement Commission for the grant of a refund), we direct that the Petitioner would be entitled to interest computed at the rate of 9 per cent per annum from 8 May 2010 until the payment was made to the Petitioner by a cheque dated 23 May 2012."

The petition was disposed of accordingly.

Delayed refund in whose interest : In the matter of return of deposits, the Board has in its circular 802/35/2004-CX dated 08/12/2004 mentioned the following –

"5. Delay beyond this period of three months in such cases will be viewed adversely and appropriate disciplinary action will be initiated against the concerned defaulting officers. All concerned are requested to note that default will entail an interest liability, if such liability accrues by reason of any orders of the CESTAT/Court, such orders will have to be complied with and it may be recoverable from the concerned officers."