Delhi High Court
Anandji Haridas & Company Pvt. Ltd. vs Union Of India And Others on 16 May, 1986
Equivalent citations: 1987(11)ECC121, 1987(12)ECR770(DELHI), 1986(26)ELT224(DEL)
JUDGMENT
1. This judgment will also dispose of civil writ petition No. 407A of 1972 as the common question involved in both these petitions is whether the respondents were legally justified in rejecting the applications for refund on the ground of limitation.
2. The petitioner is a private Ltd. Co. registered under the Companies Act, 1956. It manufactures various products from iron & steel and other materials imported from abroad as well as from indigenous materials available in India. On or around 31st March, 1965, the petitioner imported certain Tin Mill Black Rejects Waste/Waste and Coil ends. The said goods arrived in Bombay on 6th May, 1965 and were cleared by the Customs on 4th June, 1965. The Customs Authorities levied duty by treating the goods imported by the petitioners as per item 63(20)(a) 2(ii) but recovered higher duty as became clear subsequently. At the time when the duty was levied, the petitioners were under the bona fide impression that the Authorities had correctly levied the duty on the goods imported and it was in accordance with the Tariff item applicable. However, subsequently on or around 24th February 1966, the Collector of Customs issued a public notice incorporating the main features of the Central Board of Excise and Customs Tariff Ruling No. 23 of 1965, which inter alia, reads as follows :
For the purpose of assessment of flat products of iron and steel falling under sub-items (ii) and (iii) of item 26AA of the Central Excise Tariff and for the purpose of giving to them the benefit of the exemptions in the Government of India, Ministry of Finance, Notification No. S2/65 CE dated 28-2-1965 or 133/65 = CE dated 20-8-1965 as the case may be, the following definitions may be adopted until further orders :
(i) Plate A hot or cold rolled flat product, rolled from ingot or slab in rectangular cross-sections of thickness 5 mm and above and width 600 mm and above and supplied in straight lengths.
(ii) Sheet A hot or cold rolled flat product, rolled in rectangular cross-sections of thickness below 5 mm and of width 600 mm and above and supplied in straight lengths.
(iii) Strips (a) Narrow stips. A hot or cold rolled flat product (other than hoops/rolled in rectangular cross-sections of thickness 10 mm and below 600 mm with rolled sheared or trimmed edges and supplied in straight length or in coil form only.
(iv) Hoops (bailing hoop iron) hot rolled flat product rolled in rectangular cross-sections of thickness less than 3 mm and width less than 75 mm.
(v) Skalp Hot rolled strip with mill edge slightly beveled and used for making welded tubes.
The scope of this ruling shall not extend to a date prior to 20-8-1965."
3. Thereafter by a public notice dated the 11th April 1966, an amendment to the above mentioned ruling was issued. The said amendment reads as follows :
"In the last sentence of the Public Tariff No. 6 dated 24-2-1966, for the date 20-8-1985 read the date 28-2-1965."
Soon after the aforesaid public notice and the amendment, the petitioners realised that the goods imported by them were liable for duty only at the rate of Rs. 90/- and not at the rate of Rs. 360/- as levied and paid at the time of the clearance by the petitioners. The petitioners, therefore, preferred a refund application dated 6-3-1966, inter alia, claiming refund in keeping with the said ruling of the Central Board of Excise and Customs.
4. The Principal Appraiser of Customs by his order dated 5-3-1966 rejected the refund application of the petitioners on the ground that the refund application was not received within six months from the date of payment of duty i.e. 4th July, 1965 and as such the same was time barred in accordance with the provisions of section 27(1) of the Customs Act 1962. The petitioners preferred an appeal before the Appellate Collector of Customs. The said appeal was dismissed and it was observed by the Appellate Collector that the provisions of section 27(1) of the Customs Act, were mandatory. The revision filed by the petitioners before the Central Government met with the same fate.
5. The short question for decision in this case is whether the period of limitation mentioned in section 27(1) of the Act was applicable to the facts or this case. It is a settled law that tax/duty can be collected only by authority of law according to Article 265 of the Constitution of India. Any payment which has been received by the respondents in excess, what was legally due to them, cannot thus be regarded as having been collected in accordance with law. The Supreme Court had the occasion to deal with the provisions of section 40 Sea Customs Act in Patel India (P) Ltd. v. Union of India & Others, . It was held in that case that the provisions of section 40 would not apply where excise duty has been assessed and recovered without the authority of law. It was observed :
"Section 40 on which the Union of India relied in its return, provides that no customs duties or charges which have been paid, and of which, repayment wholly or in part, is claimed in consequence of the same having been paid through inadvertance, error or misconstruction, shall be returned, unless such claim is made within three months from the date of such payment. The Section clearly applies only to cases where duties have been paid through inadvertance, error or misconstruction, and where refund application has to be made within three months from the date of such payment."
Similarly this Court in Vazir Sultan Tobacco Co. v. Union of India, 1981 E.L.T. 140 (Del.) had the occasion to consider Rules 11 and 173J of the Central Excise Rules. After analysing the provision it was held that the payment of excise duty would be payment authorised by law and not any payment in excess thereof. The present case is much stronger than the cases referred to above. In the present case, the ruling was given retrospective effect originally from 20th August 1965. By the subsequent amendment made on 11th April 1966 a further retrospective effect was given from 28th February 1965. If the provisions of section 27(1) of the Act were applicable there was no fun in giving the retrospective effect from the date from which the claim had already become time bar. In such cases the obvious order to be passed should have been the administrative order allowing the refund of such duties which, in law, were not payable. The provisions of section 27(1) of the Act were obviously not applicable because the duty which was levied could, in law, not be charged on the date when the goods were imported by the petitioners.
6. There is yet another difficulty and i.e. that the applications of the petitioners have been rejected only on the ground of limitation and none of the authorities have gone into the question whether the goods imported by the petitioners were covered by ruling 23 of 1965. In case the Authorities come to the conclusion that the goods imported were covered, the petitioners are certainly entitled to the refund in accordance with the said ruling.
7. For the reasons recorded above, the rule is made absolute and the case is sent back to the Assistant Collector of Customs, Appraising Department, New Customs House, Bombay to determine whether the goods are covered by ruling 23 of 1965 and if so, to allow the refund forthwith. It is further directed that the Assistant Collector will take into consideration that the case is an old one and would decide the matter finally within four months from to-day. The petitioners will be entitled to their costs. Counsel's fee Rs. 500/- in each petition.