2000 (2) TMI 100 - HC - Central Excise

Summary

Issues:
Claim for interest on delayed refund of excise duty under Article 226 of the Constitution of India.

Analysis:
1. Background: The petitioners sought a writ of mandamus for interest on delayed refund of excise duty. The duty was levied on drills manufactured by the petitioner, which was later found to be wrongly levied. The appeal for refund was allowed, but the refund was delayed until 1989.

2. Legal Provisions: The respondent resisted the claim based on the absence of a provision in the Act for interest on wrongfully withheld amounts. However, a new provision, Section 11BB, inserted in the Act in 1995, allows for interest on wrongfully levied duty, albeit not retrospectively.

3. Principle of Equity: The court recognized the principle of equity that parties suffering losses due to wrongful withholding should be compensated. Referring to previous judgments, the court emphasized the need for justice and compensation in such cases.

4. Precedents: The court cited cases like Elpro International Ltd. and Union of India v. Coromandal Prodorite Ltd., where courts upheld the power of Article 226 to ensure justice and equity, even in the absence of specific provisions.

5. Contrary View: The respondent relied on a judgment by the Allahabad High Court disallowing interest on refund of duty. However, the court distinguished the present case due to the wrongful levy and delay in refund, justifying the award of interest.

6. Judgment: The court allowed the petition, directing the respondent to pay interest at 12% p.a. on the sum from the date of rejection of the refund claim until the actual payment. Additionally, costs were awarded to the petitioners, and any security amount paid was to be refunded.

This detailed analysis of the judgment highlights the legal arguments, principles of equity, precedents, and the final decision of the court regarding the claim for interest on the delayed refund of excise duty.