IMPORTANT POINT
Interest on duty credit scrip repayment cannot be levied without explicit legislative provisions supporting such a demand.

JUDGMENT :

The petitioner is a Private Ltd. Company. According to the petitioner it is engaged in 'placement and supply services of personnel' which was entitled to duty credit scrip as rewards in terms of Chapter 3 of the Foreign Trade Policy (2015-2020) formulated for Service Exports from India in order to encourage/maximise export of certain notified services. Ext.P1 is a copy of public notice No.3/2015-20 dated 01-04-2015 issued by the 2nd respondent enumerating a list of eligible services, rates and conditions for rewards under the Service Exports from India Scheme (hereinafter referred to as ‘the Scheme’).

2. The petitioner was considered eligible and was granted a duty credit scrip having the value of Rs.8,91,934/- (Eight Lakhs Ninety-one Thousand Nine Hundred Thirty-four only). However, on the basis of certain audit objections, the competent authority found that the petitioner was not entitled to the benefit of the Scheme. According to the competent authority, the services rendered by the petitioner could not be considered as ‘placement and supply services of personnel’. Therefore, the petitioner was required to remit back the amount covered by the duty credit scrip issued to the petitioner. According to the petitioner the said amount was forthwith paid by the petitioner without raising any further dispute. The petitioner is before this court being aggrieved by the fact that through Ext.P8 communication the petitioner has been informed that the petitioner is also liable for interest under the provisions of Section 28AA of the Customs Act, 1962 (hereinafter referred to as ‘the 1962 Act’).

3. Sri. John Varghese, the learned counsel appearing for the petitioner submits that the petitioner is not disputing the demand for repayment of the amount covered by the duty credit scrip issued to the petitioner and the entire amount has been remitted by the petitioner without demur following issuance of Ext.P4 order. The petitioner is only aggrieved by the demand for interest. It is submitted that a reading of the statement filed by the respondents in this case would indicate that they are basing the demand for interest on the provisions of Section 28AA of the 1962 Act. It is submitted that since the provisions of Section 28AA of the 1962 Act have not been made applicable by any provision in the Foreign Trade (Development and Regulation) Act, 1992, (hereinafter referred to as ‘the 1992 Act’) the demand for interest in terms of the provisions contained in Section 28AA of the 1962 Act cannot be sustained. The learned counsel for the petitioner relied on the judgment of the Constitution Bench of the Supreme Court in J.K. Synthetics Ltd. V Commercial Tax Officer; (1994) 4 SCC 276, V.V.S. Sugars v. Government of Andhra Pradesh and others; (1999) 4 SCC 192 and Bimal Chandra Banerjee v. State of M.P; (1970) 2 SCC 467 and submits unless the right to collect interest is supported by plenary provisions the demand for interest cannot be justified.

4. The learned Standing counsel appearing for the respondents would submit that the Foreign Trade Policy applicable at the relevant time (01-04-2015 – 31-03-2020) clearly provided in paragraph 3.19 (a) that if any amount is found to be payable by any person who has been granted a benefit under the Scheme such amount will have to be repaid along with applicable interest as contemplated by the provisions of Section 28AA of the 1962 Act. It is submitted that when the policy clearly specifies that the provisions of Section 28AA of the 1962 Act will apply it is not open to the petitioner to contend that the amount of benefit obtained by him is not liable to be refunded together with interest calculated in terms of the provisions of Section 28AA of the 1962 Act.

5. Having heard the learned counsel for the petitioner and the learned Central Government counsel appearing for the respondents, I am of the view that the petitioner is entitled to succeed. No provision of the 1992 Act under which Foreign Trade Policy h