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Vishal Oil And Lubricants Co. vs. The Commissioner Of Customs (Import)

Writ Petition (Civil) · 2026:DHC:8385-DBDecided 28 Sept 2026New Delhi Bench
W.P.(C) 7004/2026CNR: DLHC010229892026
Justice Anil Kshetarpal · Justice Shail Jain

Background

The petitioner imported goods declared as "Bitumen" in 2015, but customs found the consignment was actually "Used Oil," leading to seizure and confiscation proceedings. Despite the petitioner repeatedly asking for prompt adjudication, the Show Cause Notice issued in 2015 wasn't finally decided until an Order-in-Original in February 2023, over seven years later, which confirmed duty already paid, allowed redemption of the goods on payment of a fine, and imposed penalties. Afterward, the Customs EDI System showed a mounting "interest" demand exceeding Rs. 15 lakh, calculated as if it had been outstanding continuously since the original 2015 assessment.

Decision Breakdown

The Court held that interest cannot be charged for a period during which the underlying liability itself had not yet been legally determined. Since the confiscation-related liability only crystallised with the 2023 Order-in-Original, Customs could not calculate interest as running from the 2015 assessment date. The petition was partly allowed: the Court directed Customs to exclude the period from May 2015 to 28.02.2023 from interest computation and to recompute interest only from the Order-in-Original's date onward, crediting amounts already paid, within four weeks.

Lesson Learnt

A citizen or business cannot be made to pay interest for a period during which a government department itself failed to decide the underlying liability: prolonged bureaucratic delay cannot be silently converted into an interest burden on the person who was waiting for a decision.

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