J B Metal Industries PVT. LTD. Through Its Director vs. Commissioner Of Central Excise, Delhi-Ii & Anr.

Held

The Court held that the petitioner is entitled to the accrued interest on the seized currency. The Court noted that the Revenue did not deny that the seized cash was kept in a fixed deposit account and that interest had accrued. A letter dated 17.9.2018, shown to the Court, confirmed that the accrued interest amounted to Rs. 26,87,863/-. The Court directed the respondents to release this sum to the petitioner within two weeks. The reasoning appears to be that since the petitioner was ultimately exonerated and the confiscation orders were quashed, the interest earned on the wrongfully detained funds rightfully belongs to the petitioner. The ratio decidendi is that when revenue detains funds which are later found to be wrongfully detained, the interest accrued on such funds during the period of detention must be paid to the assessee.

Facts

The petitioner, J B Metal Industries Pvt. Ltd., seeks a direction for the respondents to pay interest accrued on currency seized from its manufacturing unit. The Directorate General of Central Excise Intelligence seized Indian currency amounting to Rs. 23,15,000/- on 21.9.2005, suspecting it to be sale proceeds of clandestinely cleared goods. The seized cash was deposited in an interest-bearing account. Subsequent investigations led to show cause notices and orders of confiscation, which were affirmed by the Commissioner but later quashed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) by an order dated 28.10.2016. The petitioner was exonerated in related cases. The seized currency was released to the petitioner on 23.03.2017. The petitioner's request for the accrued interest for the period of detention was declined, leading to the present petition.

Key Issues

1. Whether the petitioner is entitled to the interest accrued on the seized currency during the period of its detention by the revenue authorities, from 21.9.2005 to 23.3.2017, given its eventual exoneration from duty liability and quashing of confiscation orders by CESTAT? Petitioner's Contention: The petitioner argued that since it was completely exonerated from duty liability by the CESTAT, it is entitled to the interest earned on the seized currency during the entire period of detention. The petitioner highlighted that the seized cash was kept in an interest-bearing fixed deposit account. Revenue's Contention: The Revenue contended that the right to claim interest should only commence from the date the CESTAT set aside the lower authorities' findings. However, the Revenue did not deny that the seized cash was kept in a fixed deposit account and that interest had accrued on it.