By TIOL News Service

BANGALORE, NOV 03, 2017: IN the matter of the Writ Petitions filed, the High Court had passed detailed interim orders in this case, after hearing both the sides.

The gist of the orders and the issue involved is as below -

+ Deputy Commissioner (Refunds) had rejected the applications of the petitioner-company seeking refunds of Rs.58,02,005/- and Rs.5,82,63,745/- respectively,solely on the ground that Review application was filed by the Customs Department before the Hon'ble Supreme Court against the aforesaid judgment dated 26.03.2015 = 2015-TIOL-74-SC-CUS (SRF Limited).

+ The said Review petition also came to be dismissed by the Hon'ble Supreme Court on 15.07.2016. But since, the respondents, suomotu , did not take any action for refund of the aforesaid amounts due to the petitioner-company, the petitioner had approached the High Court.

Taking a prima-facie view, the High Court opined that the respondent-Department ought to have taken suo-motu action to refund the amount of duty due to the petitioner-company atleast after the rejection of their Review petition by the Supreme Court; that even otherwise, mere filing of the Review petition by the Department before the Supreme Courtcould not justify the withholding and rejection of the refund applications, particularly, when there is no dispute from the side of the respondent-Department about the legal position that the facts of the present assessee, are squarely covered by the decision of Supreme Court in the case of SRF Limited.

The respondent-Department was, therefore, called upon to show-cause as to why the responsibility should not be affixed on the erring officials in not taking prompt action for making the refunds due to the petitioner-assessee, without requiring it to approach the court of law and why the costs of litigation incurred by the petitioner-assessee may not be recovered from such erring officials.

In its latter Interim order dated 09.12.2016, the High Court observed -

+ It is surprising that the respondent-Deputy Commissioner (Refunds) Mr.Ravindra Joshi, has passed an order running into 23 pages refusing to refund the excess customs duty paid by the petitioner-assessee under protest, which became due to be refunded to it in pursuance of the judgment of the Hon'ble Supreme Court in the case of SRF Limited -versus- Commissioner of Customs, Chennai, decided on 26.03.2015 -2015-TIOL-74-SC-CUS , while holding that though the refund is due to the petitioner-assessee Company in terms of the said Supreme Court judgment and quantum was also determined, but taking shelter under Section 28-D of the Customs Act, 1962 in Chapter V-A, which applies only if the duty is paid under Section 28-C of the Act, which is not applicable in the present case, since the duty was paid at the rate of 12.5% under protest by the petitioner-assessee only awaiting the decision of the Supreme Court in the aforesaid case and once that decision came in favour of the petitioner-assessee in the case of SRF Limited, this Court in the previous order dated 20.09.2016 had clearly expressed that the respondent-authority can pass an appropriate order for refunding the excess customs duty paid by the petitioner-assessee.

+ The respondent-authority has shown audacity to refuse to refund on the ground that Section 28-D allows a presumption that the incidence of excess customs duty has been passed to the customers, whereas no such presumption is available to be drawn in the present case and no other evidence has been brought on record by the said authority to establish that such incidence has been passed by the petitioner Company to its customers.

+ This clearly amounts to contempt not only of this Court's order but also the judgment of the Hon'ble Supreme Court indeed.

The respondent Deputy Commissioner (Refunds) was further directed to deposit the said amount of Rs.59,800/- (being the costs incurred by the petitioner company) from his personal resources before the next date of hearing.

In its subsequent Interim order dated 15.12.2016, the High Court ordered that the sum of Rs.5,82,63,745/- and Rs.58,02,005/- be credited to the Bank Account of the petitioner-Company forthwith and compliance reported on 16.12.2016.

The refund amounts were credited in the bank account of the petitioner company, the petitioner informed, however, they also sought interest.

Affidavits dated 06.01.2017 offering unconditional apology were filed by both the respondents.

The High Court, therefore, observed -

“8. Having heard the learned counsel for the parties and in view of the aforesaid, this Court is not inclined to take a lenient and casual approach in the matter, as the respondent officials cannot be allowed to go around and bypass the binding precedent of the Hon'ble Supreme Court in such matters and since the amount in question was paid by the petitioner clearly ‘under protest', from their own resources awaiting the decision of the Hon'ble Supreme Court at that point of time, there was no question of allowing any further enquiry at the end of said Deputy Commissioner and refuse the refund on that ground. The amount actually was refunded after the order dated 14.12.2016 was passed by the respondent Deputy Commissioner, Mr. Ravindra Joshi but the tenor of the said order as well as the Affidavit filed in respect of the contempt notices issued by this Court, do not fully satisfy and inspire any confidence that the respondents, in letter and spirit abide by the judgment of the Hon'ble Supreme Court and still seek a refuge from this Court to keep open for them to hold an enquiry in the matter, which cannot be permitted."

The petition was disposed with the following directions:

(i) The cost of litigation amounting to Rs.59,800/- deposited by the respondent Deputy Commissioner (Refunds) shall stand forfeited and the same be made over to the petitioner - company as costs.

(ii) The respondent Department shall further pay the costs of Rs.1 lakh to the petitioner as damages for their unnecessary and casual approach in trying to avoid the benefit of the binding precedent of the Supreme Court decision to the petitioner Company.

(iii) The respondent Deputy Commissioner will determine the quantum of interest payable to the petitioner under Section 27A of the Act on such refund made to the petitioner from the date of deposit till the date of refund, within the period of one month from today and pay the same to the petitioner Company and a compliance report will be submitted in this court.

(iv) In view of the refund actually made now to the petitioner upon the considered order passed by the respondent himself holding the petitioner company entitled to the refund and refund having been made, no further enquiry in the matter at the end of Deputy Commissioner is justified.

(v) The respondents are not being punished under the contempt law for the time being, in view of the refund of the custom duty already made to the petitioner company, with a note of caution to them in that regard, for their future discharge of duties and for abiding by the binding precedents of constitutional courts in true letter and spirit.

(See 2017-TIOL-2298-HC-KAR-CUS)