M/S. Krush Exim vs. Commissioner Of Customs & Ors.

Facts

Two writ petitions were filed by M/s. Krush Exim and M/s. Sushmuna Traders seeking directions for the release of INR 1,50,00,000/-. These amounts were deposited by the petitioners during investigations initiated by the respondents (Commissioner of Customs & Ors.) following seizures of goods on February 6, 2015. The petitioners claim these deposits were made under protest due to pending export shipping bills. Show Cause Notices were issued, leading to Orders-in-Original. Despite the proceedings ultimately concluding in favour of the petitioners, the respondents failed to refund the deposited amounts, prompting these writ petitions. The respondents did not dispute that the proceedings had concluded in favour of the petitioners.

Held

The Court allowed the writ petitions, directing the respondents to refund the total amount of INR 1,50,00,000/- to the petitioners forthwith. The Court reasoned that amounts deposited under protest during the course of investigation, especially when the proceedings ultimately conclude in favour of the assessee, cannot be retained by the revenue. The Court found no legal justification for the respondents to continue holding these amounts. The reasoning was based on established precedents from the Delhi High Court itself, including Commissioner of Customs (I & G) V. Ericsson India Private Limited, Team HR Services Pvt. Ltd. V. Union of India, and Sapphire Intrex Limited vs. Union of India and Others. These judgments emphasized that such deposits do not partake of the character of tax or duty and that retaining them would violate principles of unjust enrichment and restitution. The refund is to be accompanied by statutory interest from the date of deposit to the date of actual disbursement. Issues concerning the amendment of shipping bills and the grant of detention certificates were expressly left open for independent pursuit.

Key Issues

1. Whether the respondents are legally justified in retaining amounts deposited by the petitioners during the course of investigation, especially when the proceedings have concluded in favour of the petitioners? The petitioner argued that the refusal to refund the deposited amounts is arbitrary and unjust, citing previous High Court judgments that mandated refunds of amounts deposited under protest during investigations or proceedings that concluded favorably for the assessee. They relied on the principles of unjust enrichment and restitution, as well as statutory provisions and circulars emphasizing due process in tax recovery. The petitioner cited Commissioner of Customs (I & G) V. Ericsson India Private Limited, Team HR Services Pvt. Ltd. V. Union of India, and Sapphire Intrex Limited vs. Union of India and Others. The respondents did not dispute the facts that the proceedings concluded in favor of the petitioners and that the amounts were deposited during the investigation. No specific arguments were recorded for the respondents regarding their justification for retaining the funds.