1 hvn IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 2840 OF 1990 Garden Silk Mills Ltd and Anr. ... Petitioners Versus Union of India and Ors. ... Respondents Mr. Jas Sanghavi i/by R.G. Sheth & Co. for the Petitioners. Mr. P. S. Jetly with Mr. R.B. Pardeshi for Respondents. CORAM : F.I. REBELLO & D.G. KARNIK, JJ. DATED : JULY 30, 2009 P.C. Rule was issued on 27.9.1990. An interim relief was granted in terms of Prayer Clause (c) which reads as under : “That pending the hearing and final disposal of this petition the Respondents their agents and servants be restrained by an order and injunction of this Hon’ble Court from demanding and collecting interest under the provision of Section 61(2) of the Customs Act, in 2 respect of the goods approximately weighing 43875 kgs. Of 75 DBN Polyester Filament Yarn (described in Exhibit “H” hereto) and on future warehoused consignments on which no duty of customs or additional duty of Customs is payable.” The issue was whether the interest was payable on the duty in respect of warehoused goods. When the Petition was filed this court had taken a view that the interest is payable on the amount of duty payable at the time when the goods were warehoused till they are cleared at the rate prevailing under the Customs Tariff Act on the basis of notional duty. This issue came up for consideration before the Supreme Court in Pratibha Processors Versus Union of India, 1996 (88) E.L.T. 12 (S.C.). The learned court took a view that interest would not be payable. The Petitioners in the meantime at the time of clearing the goods had paid interest. The Petitioners thereafter applied for refund of interest. By order dated 30th July, 1990 the Petitioners were informed that under Section 27 of the Customs Act as it then stood, there was no provision for refunding the interest and accordingly the application was rejected. It is against that order the Petitioners have moved this Court. It is clear therefore, that when the Petitioners were called upon to pay duty it was based on the judgment of this court which has subsequently been over ruled by the Supreme Court. The Petitioners applied for refund in the year 1990 3 itself. If the interest was not payable and if the Petitioners for the purpose of clearing the goods had paid interest, the respondents could not have retained the interest amount on the ground that under section 27 there was no power to refund the interest. Section 27 has since been amened by Amendment Act No. 40 of 1991. Power has been conferred for refund of duty and interest. Apart from that further refund of interest would also be subject to the principles of unjust enrichment. This court has reiterated the said position in United Spirits Limited Vs. Commissioner of Customs, in Customs Appeal No. 56 of 2008 decided on 25th June, 2009. Considering the above, the present petition can be disposed of in the following terms : The impugned orders at Exh. C, D, E and F to the Petition are set aside. Respondent No. 3 after giving an opportunity to the Petitioners as to why the principle of unjust enrichment should not be applied, pass appropriate orders according to law at any rate not latter than sixteen weeks from today. Rule made absolute accordingly. In the circumstances of the case, there shall be no order as to costs. (D.G. KARNIK,J.) (F.I. REBELLO,J.)