Confiscated Currency Need To Be Returned With Interest On Release: CESTAT

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has observed that the amount seized in cash by the authorities is to be refunded along with the interest.

The bench of Rachna Gupta (Judicial Member) has observed that the appellant is entitled to a refund of interest on the principal amount at the rate of 12% from the date of its seizure.

The tribunal has observed that, as per Article 300A of the Constitution of India, no person shall be deprived of his property save by the authority of law. When confiscation orders for disputed currency are lifted, it is clear that the currency is the appellant's property. He cannot be deprived of it and is entitled to benefits arising out of the property. Hence, interest accrued on the amount in question during the period it was in fixed deposit is the property of the owner of the amount.

The premises of the appellants/assessee were searched pursuant to the intelligence against the main notice, M/s. Real Paint, on the allegations that the appellant is engaged in the sale of goods manufactured and clandestinely cleared by said M/s. Real Paint.

During the search, goods along with an amount of Rs. 12,53,500 in Indian currency were seized by the anti-evasion team by seizure memo. The sum seized was fixed in a deposit with Syndicate Bank on March 5. The confiscated currency and goods were proposed to be confiscated via common cause notice. The proposal was confirmed.

The appeal arose out of the order of the Commissioner (Appeals), by which the appellant was held entitled to interest on the delayed payment of refund upon the expiry of three months from the date of receipt of the refund application till the date of refund of duty.

The tribunal has held that since the amount in question was not the amount of pre-deposit required under Section 35F of the Central Excise Act, Section 35FF has been wrongly invoked by the Commissioner (Appeals). The Commissioner (Appeals) has committed an error in holding that since there is no provision to grant interest on the seized currency notes while refunding the said currency, the interest from the date of seizure cannot be granted.

The tribunal observed that retention of the interest with the Department will rather be the unjust enrichment of the Department and will amount to the deprivation of the appellant of his property, currency notes being the appellant's property in terms of Article 300 A of the Constitution of India.

Case Title: Matta Paints And Hardware Store Versus The Commissioner

Citation: Excise Appeal No. 51493 Of 2022

Date: 02-12- 2022

Counsel For Appellant: Advocate Apoorv Phillips

Counsel For Respondent: Authorised Representative Dibey Sethi

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