Case Law Details
M S Bharat Udyog Vs Union of India & Ors. (Delhi High Court)
In the case of M S Bharat Udyog Vs Union of India & Ors., the petitioner challenged an order dated 20.11.2023, which rejected their request for a refund of a pre-deposit amount of Rs. 22,35,800. This amount had been deposited by the petitioner for the purpose of appealing against an order-in-original dated 31.03.2012. The petitioner contended that since the order-in-original had been set aside and the matter remitted for re-adjudication, they were entitled to a refund of the pre-deposit amount.
The petitioner’s argument was that they had deposited the amount with the intention of appealing against the original order, and since the order had been overturned, they should get their deposit back. The petitioner had initially furnished a Bank Guarantee to secure the provisional release of a consignment. Subsequently, when the order-in-original was passed, the petitioner approached the Tribunal for an appeal. The Tribunal allowed the encashment of the Bank Guarantee to be adjusted towards the pre-deposit amount. However, once the order-in-original was set aside, the petitioner argued they should be returned to the position they were in before the original order, which included getting back the pre-deposit amount.
The respondent argued that the Bank Guarantee was furnished for securing the provisional release of the consignment, not as a pre-deposit. However, the Tribunal had permitted the encashment of the Bank Guarantee for adjustment towards the pre-deposit amount.
The court found merit in the respondent’s contention, based on the principle of restitution, which aims to place parties in the same position as they were immediately preceding the day the subject order was passed. In this case, the petitioner had secured the release of the consignment by furnishing the Bank Guarantee before the order-in-original was passed. Thus, the court concluded that the petitioner should be relegated to the position they were in immediately before the passing of the original order. This meant that if the petitioner sought a refund of the pre-deposit amount, they would need to furnish a Bank Guarantee of the same amount to the department, so that the department was placed in the same position as it was before the passing of the original order.
In light of this reasoning, the petitioner’s counsel decided not to press for the refund of the amount and instead agreed to await the outcome of the adjudication. However, they requested the court to issue a direction to the department to expedite the adjudication proceedings.
Consequently, the court disposed of the petition, directing the Adjudicating Authority to expeditiously dispose of the proceeding in accordance with the law.
In essence, the case revolved around the principle of restitution and whether the petitioner was entitled to a refund of the pre-deposit amount in light of the overturning of the original order. The court’s decision was based on restoring the parties to their positions before the passing of the original order, which meant that the petitioner would not immediately receive a refund but would await the outcome of further adjudication proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 20.11.2023, whereby the request of the petitioner seeking refund of the pre-deposit of Rs.22,35,800 has been rejected as being premature.
2. As per the petitioner, said amount was deposited by the petitioner for the purposes of availing of the remedy of an appeal against an order-in-original dated 31.03.2012. Learned counsel submits that the petitioner intended to appeal against the said order and since there was already a Bank Guarantee with the department of the said amount, he had requested the Custom Excise and Service Tax Appellate Tribunal to appropriate the amount of the Bank Guarantee towards the pre-deposit. He submits that by order dated 09.09.2013, the Tribunal accepted the request of the petitioner and permitted the department to en cash the Bank Guarantee and appropriate the amount towards the pre-deposit amount. He submits that by final order dated 02.06.2016, the order-in-original dated 31.03.2012 was set aside and matter remitted for re-adjudication. He submits that that he is entitled to refund of the said amount, which was deposited towards the pre-deposit.
3. This is disputed by learned counsel fore respondent who submits that the Bank Guarantee was furnished for securing provisional release of the consignment and not as a pre-deposit, however, keeping in view the fact that Bank Guarantee was already with the department, Tribunal permitted encashment of the same for appropriation towards the pre-deposit amount.
4. We find merit in the contention of learned counsel for respondent for the reason that the principle of restitution is that parties have to be placed in the same position as existing immediately preceding the day on which the subject order is passed.
5. Petitioner had secured release of the consignment by furnishing a Bank Guarantee much prior to the order-in-original being passed. After the order-in-original was passed, petitioner approached the Tribunal by way of an appeal. The Tribunal noticing that a Bank Guarantee was already furnished, permitted encashment of the same for adjustment towards the pre-deposit amount. Once the order-in-original is set aside, petitioner has to be relegated to the position that was obtaining immediately prior to the passing of the order-in-original. The position existing immediately preceding the passing of the order-in-original, was that petitioner had furnished a Bank Guarantee in the sum of Rs.22,35,800/- for provisional release of consignment. In case petitioner seeks refund of the said amount, petitioner would be required to furnish a Bank Guarantee of the same amount to the department so that the department is also placed in the same position as obtaining on the day immediately preceding the passing of the order-in-original.
6. In view of the above, learned counsel for petitioner submits that he shall not press his application for refund of the amount and await the outcome of the adjudication, however, prays that a direction be issued to the department to expedite the adjudication proceedings.
7. In view of the above, petition is disposed of, directing the Adjudicating Authority to expeditiously dispose of the proceeding in accordance with law.
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