9911796707
TMI Blog2023 (12) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be apposite to notice the following essential facts. 2. The petitioner is stated to be engaged in the business of import and trading of assorted gold jewellery and holds a valid Importer Exporter Code [IEC]. On 13 August 2009, the Agreement on Trade in Goods under the Framework Agreement on the Comprehensive Economic Cooperation [FTA] with the Association of Southeast Asian Nations [ASEAN], including Indonesia was entered into with India granting preferential treatment to goods imported from ASEAN countries. For purposes of implementing the terms of the FTA, the Customs Tariff [Determination of Origin of Goods under Preferential Trade Agreement between the Government of Members States of the Association of South-East Asian Nations (ASEAN) and the Republic of India] Rules, 2009 [2009 Rules] came to be notified on 31 December 2009. 3. As per the provisions made in the 2009 Rules, the Certificate of Country of Origin [COO Certificate] was to constitute the principal basis for the purposes of extension of preferential treatment. In extension of the FTA, the respondents proceeded to issue Exemption Notifications dated 01 June 2011 and 7 March 2012 granting benefit of "nil" rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Ultimately, and in terms of a communication dated 27 January 2021, the fourth respondent apprised the petitioner that the COO Certificates had been submitted for verification and that the aforesaid request addressed to the Directorate of Revenue Intelligence [DRI] was ultimately received on 17 September 2020 and which body had apprised the said respondent of the verification request having been duly forwarded. The fourth respondent thus stated that the provisional assessment proceedings would be finalized only upon receipt of the verification report from the DRI. 8. However, and as would be evident from the record even after the issuance of this communication, no further steps were taken by the respondents for finalizing the pending assessment. This led to the petitioner preferring an appeal assailing the communication of 27 January 2021 and for appropriate directions being framed commanding the third respondent to finalize the pending assessment. The aforesaid appeal ultimately came to be disposed of by the Commissioner in terms of an order dated 09 February, 2023 directing the respondents to finalize the provisional assessment as early as possible. The request of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed or re-assessed, as the case may be] and if the amount so paid falls short of, or is in excess of, 79[the duty 80[finally assessed or re-assessed, as the case may be]], the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be; (b) in the case of warehoused goods, the proper officer may, where the duty 81[finally assessed or re-assessed, as the case may be] is in the excess of the duty provisionally assessed, require the importer to execute a bond, binding himself in a sum equal to twice the amount of the excess duty. [(3) The importer or exporter shall be liable to pay interest, on any amount payable to the Central Government, consequent to the final assessment order 83[or re-assessment order] under subsection (2), at the rate fixed by the Central Government under Section [28-AA] from the first day of the month in which the duty is provisionally assessed till the date of payment thereof. (4) Subject to sub-section (5), if any refundable amount referred to in clause (a) of sub-section (2) is not refunded under that subsection within three months from the date of assessment of duty finally 85[or-re-assessment of du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons to be recorded in writing, allow a further period not exceeding three months, on his own or at the request of the importer or the exporter, in case the documents or information are not made available within the time period specified in sub-regulation (1). (4) The Additional Commissioner or Joint Commissioner of Customs, may further extend the time period referred for another three months, in case the documents or the information required to be submitted by the importer or the exporter or requisitioned by the proper officer have not been made available within the period as allowed above by the proper officer. (5) The Commissioner of Customs, may extend the time period further as deemed fit, in case the documents or the information required to be submitted by the importer or the exporter or requisitioned by the proper officer have not been made available even after the extension of time under sub-regulation (4). (6) The documents or information required to be furnished by the importer or the exporter or requisitioned by the proper officer may be submitted in one instance. (7) The importer or the exporter or his authorised representative or Customs Broker shall inform the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 18 of the Act, falls short of the duty finally assessed or re-assessed, as the case may be, and the importer or the exporter has not paid the deficiency, the shortfall shall be adjusted from the security, if any, obtained at the time of provisional assessment, under intimation to the importer or the exporter,: Provided further that, if the amount so adjusted or paid falls short of the duty finally assessed or re-assessed, as the case may be, the importer or exporter of the goods shall pay the shortfall in terms of the provisions of section 18. (2) The Bond executed at the time of provisional assessment with security, if any, shall be cancelled after finalisation of provisional assessment and the security shall also be returned, if there are no pending dues. (3) Where the final assessment is contrary to the provisional assessment, the proper officer shall pass a speaking order following principles of natural justice. (4) Where the final assessment confirms the provisional assessment, the proper officer shall finalise the same after ascertaining the acceptance of such finalisation from the importer or the exporter on record and inform the importer or exporter in writin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to submit the necessary documentation or furnished complete information. The detention of the goods and the initiation of provisional assessment proceedings thus appear to have been commenced solely for the purposes of the Customs authorities verifying the COO Certificates. The respondents have also failed to place for our consideration any material which may have been viewed in support of them doubting the COO Certificates which had been submitted by the petitioner. The record would reflect that although the imported goods were subjected to provisional assessment in January, 2016 those assessment proceedings had not been concluded till the time the writ petition was finally heard. It is thus manifest that the respondents have failed to conclude the assessment proceedings despite more than seven years having elapsed from the time the decision to follow the route placed in terms of Section 18 of the Act was taken. 14. That leaves the Court to examine whether the inordinate delay as caused in conclusion of the provisional assessment proceedings could be said to be justified. We find ourselves unable to hold in favour of the respondents on this score for the following reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suing Authorities in Indonesia and the same were duly shared with field formations vide letter dated March 17, 2016 in response to the DRI Hqrs.'s aforementioned letter dated July 28, 2015. 5. This is for you information and necessary action in this regard. As above Heera Lal Copy to: The Assistant Commissioner, Provisional Assessment Finalization Cell, Air Cargo Complex, N.S.C.B.I. Airport, Kolkata 700052 for information please." 16. As is manifest from the aforenoted communication, it is evident that the DRI had forwarded the verification request to the Competent Authority in Indonesia on 20 October 2015 and the issuing authorities had reverted back affirming the COO Certificates which had been submitted by the petitioner and that such information had been duly shared with field formations vide letter dated 17 March 2016. It is thus an undisputed fact that the COO Certificates stood duly verified as far back as March 2016. The fact that the DRI had duly circulated the verification reports is also evident from the communication of the Customs authorities dated 27 January 2021 which had taken note of the DRI letter dated 17 September 2020 in terms of which they ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuance of such 'instructions' to the MMTC to withhold the BG/security amount, Mr. Aggarwala submitted, on the strength of the above decisions, that the Petitioner should nevertheless be asked to furnish some form of security to the DRI if it were to withdraw the instructions given to the MMTC. 15. The above submissions have been considered by the Court. At the outset, it requires to be noticed that this Court in its order dated 13th April, 2018 itself made it very clear to the DRI that it had not stayed the proceedings pursuant to the SCN. This Court also required the Petitioner to cooperate in those proceedings. Although according to Mr. Aggarwala, the Petitioner's representative did not appear in the adjudication hearings, the partner of the Petitioner, who is present in the Court states that he did appear on 26th April, 2019 in the adjudication proceedings and that no further date of hearing has been communicated to him. 16. However, even assuming that the Petitioner failed to appear on the dates fixed in those proceedings, the Adjudicating Officer was supposed to proceed and pass the adjudication order in accordance with law. There was no restraint on him from doing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DRI in its counter affidavit, as providing a legal basis for such instructions. xxxx xxxx xxxx 24. For the aforementioned reasons, the Court finds no justification in law for continuation of the impugned instructions of the DRI to the MMTC by its letters dated 29th October, 2015 and 17th December, 2015. The said instructions are hereby quashed. MMTC will now proceed in the matter as if the two instructions dated 29th October, 2015 and 17th December, 2015 of the DRI are no longer operational. MMTC shall release the security/BG amount to the Petitioner, to the extent it is entitled in accordance with law, forthwith and in any event not later than 10 days from today." 18. From the above it is evident that the Court had deprecated the practice adopted by the respondents and had also struck down the instructions issued by the DRI. 19. We note that interest has been duly recognized as being a necessary corollary to a wrongful retention of capital. We deem it apposite to extract the following passages from the decision of a Division Bench of the Allahabad High Court in Wig Brother (Builder & Engineers) & Anr. Vs Union of India & Ors. 2003 SCC OnLine All 773. "27. It may be ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e must be paid to the appellant within two months from the date of this judgment. 9. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence, equity demands that A should not only pay back the principal amount but also the interest thereon to B." 21. We further note that the issue of interest being paid on monies unjustifiably retained, albeit in the context of pre-deposits, again fell for consideration of the Supreme Court in Sandvik Asia Ltd. v. CIT (2006) 2 SCC 508. While dealing with the liability of the department to bear that burden in case of unjustified retention of monies, the Supreme Court had observed as follows:- "29. In our view, there is no question of the delay being "justifiable" as is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act, 1962-Clarifications: 1. The issue relating to refund of pre-deposit made during the pendency of appeal was discussed in the Board meeting. It was decided that since the practice in the Department had all along been to consider such deposits as other than duty, such deposits should be returned in the event the appellant succeeds in appeal or the matter is remanded for fresh adjudication. 2. It would be pertinent to mention that the Revenue had recently filed a special leave petition against Mumbai High Court's order in the matter of NELCO Ltd., challenging the grant of interest on delayed refund of pre-deposit as to whether: (i) the High Court is right in granting interest to the depositor since the law contained in Section 35-F of the Act does in no way provide for any type of compensation in the event of an appellant finally succeeding in the appeal, and, (ii) the refunds so claimed are covered under the provisions of Section 11-B of the Act and are governed by the parameters applicable to the claim of refund of duty as the amount is deposited under Section 35-F of the Central Excise Act, 1944. The Hon'ble Supreme Court vide its order dated 26-11-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on will be initiated against the defaulting officers concerned, a direction was also issued to all concerned to note that the defaulter will entail an interest liability if such liability accrues by reason of any orders of the tribunal/court such orders will have to be complied with and it may be recoverable from the officers concerned. All the Commissioners were advised implementation of these instructions and ensure their implementation through a suitable monitoring mechanism. It is also specifically mentioned that the Commissioners under the respective jurisdiction should be advised that similar matters pending in the High Courts must be withdrawn and compliance reported and that the Board has also decided to implement the orders passed by the Tribunal already passed for payment of interest and the interest payable shall be paid forthwith. 46. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money had been unjustifiably withheld by the Department for 17 y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is loss, or be made whole in respect of his injury; the consideration or price of a privilege purchased; something given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the giving back an equivalent in either money which is but the measure of value, or in actual value otherwise conferred; a recompense in value; a recompense given for a thing received; recompense for the whole injury suffered; remuneration or satisfaction for injury or damage of every description; remuneration for loss of time, necessary expenditures, and for permanent disability if such be the result; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer." 48. There cannot be any doubt that the award of interest on the refunded amount is as per the statutory provisions of law as it then stood and on the peculiar facts and circumstances of each case. When a specific provision has been made under the statute, such provision has to govern the field. Therefore, the court has to take all relevant factors into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich would be refunded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/foreign company. 38. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, therebeing no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund ..... X X X X Extracts X X X X X X X X Extracts X X X X
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