Bombay High Court
J.L. Morrisson So. & Jones (India) Ltd., ... vs Union Of India And Others on 29 July, 1987
Equivalent citations: 1988(19)ECR214(BOMBAY), 1988(36)ELT3(BOM)
ORDER
1. Under two bills of entry dated September 20, 1978 and October 5, 1978 the petitioners imported two consignments of methyl cellulose. At the time of clearance of the said goods the petitioners were under an erroneous belief that the same was subject to excise duty under Item No. 15A(2) of the First Schedule to the Central Excise and Salt Act, 1944, and they paid an additional duty under Customs Tariff Act, in respect of each of the aforesaid consignments, as follows :
(1) Bill of Entry No. 1977, dated 20th September, 1978. Rs. 33,541.40/-
(2) Bill of Entry cash No. 467, dated 5th October, 1978. Rs. 2,388.54/-
2. After the aforesaid amounts of additional duty were paid by the petitioners, they realised that the said methyl cellulose was not classifiable under Item No. 15A of the First Schedule to the Central Excise and Salt Act, 1944, and the same was not subject to duty under that tariff entry. The petitioners say that the said methyl cellulose fell for classification under residuary entry of the First Schedule to the said Act viz. Item No. 68. However, by virtue of a notification issued under the provisions of Section 3(6) of the said Act read with Section 25(1) of the Customs Act, 1962, the Central Government had exempted all goods imported falling under Item No. 68 of the First Schedule to this Central Excises and Salt Act, 1944, from the whole of the additional duty payable thereon.
3. Therefore, by a letter dated July 11, 1979, the petitioners claimed a refund of Rs. 33,541.40/- erroneously paid by them as an additional duty on the said material. Similarly by an identical letter, also of the same date, the petitioners also claimed a refund of Rs. 2,388.54/- as aboved. The Assistant Collector of Customs by his order dated July 19, 1979, rejected the claim for refund on the ground that the applications for refund were not received within six months from the date of the payment of duty and that, therefore, the claim for refund was time barred under Section 27(1) of the Customs Act, 1962. The petitioners went in appeal against the said order and by an order dated October 4, 1979, the Collector of Customs agreed that no duty was payable on this material and, therefore, the levy of countervailing duty on these items was without jurisdiction and he, therefore, passed an order that there is no question of limitation and allowed the appeal, and ordered the refund of the countervailing duty collected by the department. It appears that soon thereafter the petitioners received the amount for the department.
4. However, by a show cause notice dated January 22, 1980, the Assistant Collector of Customs informed the petitioners that the amounts were erroneously refunded and that he called upon the petitioners to show cause under Section 28 of the Customs Act, 1962, as to why the amounts specified above in the said notices be not recovered from the petitioners. The petitioners by their reply dated July 27, 1980, pointed out that the collection was without jurisdiction and, therefore, without the authority of law and that the amounts have been rightly directed to be refunded to the petitioners and that, therefore, there is no question of recovering the amount back from the petitioners.
5. Thereafter the petitioners received a show cause notice dated August 4, 1980 from the Additional Secretary to the Government of India indicating thereby that the Government proposes to review the said order passed by the Collector of Customs on October 4, 1979. To this notice the petitioners filed their two replies, one on October 8, 1980 and thereafter a detailed reply dated January 16, 1981 and pointed out that there was no question of any recovery of the amounts from the petitioners. By an order dated October 30, 1981, the Additional Secretary to the Government of India reversed the order passed by the Collector and he observed as follows :
"As regards the question of applicability of time limit prescribed under Section 27(1) of the Customs Act, 1962 the Government observe that importers' advocate does not contend that the impugned goods are not classifiable under any of the Items 1 to 68 of the Central Excise Tariff. His contention is that the goods would be classifiable under Item 68 of the Central Excise Tariff and since the goods falling under Item 68 of the Central Excise Tariff were exempt from the levy of additional duty of customs the levy was without jurisdiction and hence time limit prescribed under Section 27(1) of the Customs Act, 1962 would not apply. The Government consider that time limit prescribed under Section 27(1) of the Customs Act, 1962 would apply to all goods once it is conceded that they fall ab initio within the purview of the tariff these could not be taken to attract the provisions of Limitation Act in preference to the limitation under Section 27(1) of the Customs Act merely by application of any exemption Notification. The Government further observe that with the introduction of Item 68 in the Central Excise Tariff, w.e.f. 1-3-1975, which covers "All other goods, not elsewhere specified ...." all the goods have become excisable and, therefore, there can be no question of the levy being treated as a case of mistake of law or levy outside the tariff more so when in the present case it is not disputed that the goods are classifiable under Item 68 of Central Excise Tariff if not under Item 15A of Central Excise Tariff.
In the circumstances Government observe that there was no lack of jurisdiction though while acting within jurisdiction the assessing authority may have erroneously classified the goods or may have wrongly interpreted the scope of exemption notification or may have even inadvertantly overlooked the notification and thus denied the benefit of the same to the importers. In that view of the matter the Government hold that the assessing authority had not acted without jurisdiction or in excess of jurisdiction, and that the time limit prescribed under Section 27(1) of the Customs Act, 1962, is correctly applicable in this case. In circumstance the Government hold that the Appellate Collector of Customs ought not to have gone into the merits of the appeal, as there was bar of limitation at the thereshold inasmuch as the application for refund of duty was filed beyond the period prescribed in Section 27(1) of the Customs Act, 1962 which is mandatory."
It is against this order that the present writ petition was filed by the petitioners.
6. Mr. Talyarkhan pointed out that there is no controversy in the present case that the material was classifiable under residuary Item No. 68 of the Central Excise Tariff and by virtue of the notification, admittedly, such goods when imported in India were exempt from the whole of the additional duty leviable thereon under Section 3 of the Customs Tariff Act. Therefore, it is clear that the department could not have recovered such a duty at all as the same would be without the authority of law. If that is so he submitted that there can be as question of limitation and the petitioners have been rightly refunded the amount of duty.
7. Mr. Talyarkhan also drew my addition to a case of the Supreme Court in the case of Shiv Shanker Dal Mills v. State of Haryana, , and the relevant portion is as follows :
"The petitioners who had, under mistake, paid larger sums which, after the decision of this Court holding the levy illegal, have become refundable, demand a direction to that effect to the market committees concerned. There cannot be any dispute about the obligation or the amounts since the market committees have accounts of collections and are willing to disgorge the excess sums. Indeed, if they file suits within the limitation period, decrees must surely follow. What the period of limitation is and whether Article 226 will apply are moot as it evident from the High Court's judgment, but we are not called upon to pronounce on either point in the view we take. Where public bodies, under colour of public laws, recover people's money, later discovered to be erroneous levies, the Dharma of the situation admits of no equivocation. There is no law of limitation, especially for public bodies, on the virtue of returning what was wrongly recovered to whom it belongs. Nor is it palatable to our jurisprudence to turn down the prayer for high prerogative writes, on the negative plea of 'alternative remedy' since the root principle of law married to justice, is ubi jus ibi remedium."
8. In an identical case Mrs. Sujata Manohar, J., expressly held that where the levy is without the authority of law or without jurisdiction Section 27(1) cannot be attracted. This is the case of Atul Products Ltd. v. Union of India, reported in 1985 (22) E.L.T. 714 (Bom.).
9. Mr. Rege submitted that it could be perhaps proper for a Court to say that the application for refund was not governed by any limitation eventhough the levy was recovered under an error of law or error of fact, but as far as the Collector was concerned, it was not open to him to say that such recovery was not governed by provisions of Section 27(1) of the Act. In my view, it is not open to the Government to advance an argument of this type. If the collection of taxes is without the authority of law, it is for the every authority concerned to take that thing into account. If, therefore, the Collector in the present case came to the conclusion that because of the notification there could have been no countervailing duty, he was right when he said that the collection was without jurisdiction and, therefore, there is no question of limitation and that, therefore, the amount was rightly ordered to be refunded.
10. In fact all such arguments had been negatived by various judgments, some of which had been cited before the Government at the time when the arguments were advanced. However, the Government did not agree with the contentions and that is how the petitioners have been compelled to file the present petition. This conduct also has been deprecated by our Court and Mr. Talyarkhan has referred to a judgment in the case of The Svadeshi Mills Co. Ltd. v. Union of India and Others, reported in 1982 ELT 237 = 1982 E.C.R. 165 D.
11. In the result, the petitioners must succeed. I, therefore, pass the following order :
Rule is made absolute in terms of prayers (bi) and (bii).
However, in the circumstances of the case, there will be no order as to costs.