Bombay High Court
Metal Distributors Ltd., Bombay And ... vs Union Of India And Others on 17 November, 1987
Equivalent citations: 1988(15)ECC165, 1988(33)ELT321(BOM)
JUDGMENT Pendse, J.
1. These are two cross-appeals preferred against judgment dated July 6, 1983 delivered by Mr. Justice Bharucha in Writ Petition No. 622 of 1983 and both the appeals can be conveniently disposed of by common judgment.
2. The facts which gave rise to filing of the petition, are as follows :
M/s. Metal Distributors Ltd., imported 764 metric tonnes of alloy steel scrap between October 15, 1979 and May 7, 1980. In respect of the import 26 bills of entries were presented to the Customs authorities seeking clearance for home consumption. In March and April 1980 the goods were initially inspected by the Customs authorities and reports of inspection were endorsed on the original bills of entries. Subsequently, the importer made representation to the Collector of Customs and thereafter between June 1981 to August 1981 the imported goods were reinspected in accordance with the directions of the Collector. According to the importer the goods were liable to be assessed under Tariff Item No. 73.03/05 and liable to basic customs duty at the rate of 30% ad valorem, auxiliary duty at the rate of 5% and additional duty at the rate of Rs. 225/- per metric tonne. The Customs authorities, however, assessed the goods under Tariff Item 73.15(1)(2) and 73.17/19(1) and the basic duty was determined at the rate of Rs. 325/- per metric tonne. According to the importer, the correct amount of duty was Rs. 25,49,834.60, while according to the Customs authorities duty payable was Rs. 1,29,037.77. As the importer was keen to seek clearance at an early date, the duty as demanded by the Customs authorities was paid under protest between June and August 1981. The Customs authorities also imposed a fine of Rs. 13,20,500/- for breach of the import regulations as it was the claim of the Customs authorities that what was imported was not scrap but alloy in various forms.
3. The importer filed 26 refund applications between November 21, 1981 and January 1982 claiming that the duty charged by the Customs authorities was without any authority of law and the importer was compelled to pay the duty under protest only to seek early clearance. The claim made by the importer was obviously correct and therefore the customs authorities between January 9, 1983 and February 17, 1983 refunded an amount of Rs. 77,52,145.72. As the Customs authorities failed to refund the balance amount, the importer instituted petition filed under Article 226 of the Constitution of India in this Court on March 1, 1983 and the relief sought was direction to the respondents to pay the balance sum of Rs. 26,35,853.84 and also an amount of Rs. 13,20,500/- paid in respect of fine illegally collected. The importer also sought payment of the amount along with interest at the rate of 18% per annum from the date of the payment till realisation. The petition was admitted on April 13, 1983 by Mr. Justice Bharucha by passing a speaking order. The learned Judge observed that the conduct of the respondents in not making refund is gross and there is no rational why for more than one year the refund was not granted. The learned Judge also found that though the importer sought an inspection of the endorsement made upon the duplicate bills after reinspection as per the order of the Collector, the respondents scrupulously avoided to give that inspection even after the date and time was fixed. The inspection of the record was not given on the spacious ground that the record was not traceable. The learned Judge felt that the respondents were trying to delay making payment on one pretext or other and thereupon directed the respondents to deposit in Court the aggregate amount of Rs. 39 lakhs towards credit of the petition.
4. At the hearing of the petition, it was realised that the refund, which was not granted, was in respect of 6 refund applications. Out of these refund applications, in respect of nine applications the Department had no answer whatsoever. The learned single Judge found that the order passed by the Assistant Collector of Customs on February 23, 1983 rejecting the claim for refund was totally unsustainable. The learned Judge found that the duplicates of the nine bills of entries were not available to the Assistant Collector and in spite of it, it was assumed that the goods which were imported were not scrap. The learned Judge held that the refund as claimed by the importer in respect of nine bills of entries by no stretch of imagination could have been denied. In respect of the remaining seven bills of entries, the Customs authorities refunded a part of the amount. The total amount of refund sought in respect of these seven bills of entries was Rs. 27,20,956.63 and the refund granted was to the tune of Rs. 25,13,365.99 leaving behind balance of Rs. 2,07,590.64. As regards these seven bills of entries, the importer claimed that the goods imported were identical as those covered by other nine bills of entities, while the Department claimed that part of the goods covered by the seven bills of entries was not scrap but alloy in different forms. The learned single Judge did not accept the claim of the respondents even in respect of the seven bills of entries. The learned Judge further found that the fine of Rs. 13,20,500/- imposed on the importer was wholly unsustainable. The learned Judge felt that the amount should be refunded along with interest at the rate of 12%, and on the strength of this finding the following operative order came to be passed :-
"In the result, the impugned order dated 23rd March, 1983 is quashed and set aside. A writ shall issue to the respondents directing them to pay to the petitioners the sum of the Rs. 39,56,353.84 and interest upon the amount of Rs. 37,48,763.20 at the rate of 12% p.a. from the date of the refund applications till today aggregating to Rs. 6,70,251.07 and further from today till payment or realisation."
5. Against the judgment delivered by the learned single Judge the importer has filed Appeal No. 135 of 1983, while the Department has filed Appeal No. 731 of 1983. First, we will deal with the appeal filed by the Union of India. The appeal came up for admission before Mr. Justice Kania, as he then was, and Mr. Justice Mehta on October 5, 1983 and the Division Bench admitted the appeal only in part by giving a speaking order, which we quote hereinbelow :
"In respect of 9 bills of entry of which the duplicates were not produced in the trial court or before us and where the applications for refund were rejected in toto, we agree with the reasoning and conclusions of the learned trial Judge. In respect of the 7 bills of entry where a partial refund has been allowed, duplicates of the said bills of entry, except the bill of entry No. 1909/1 have been produced in the trial Court. The reasoning in respect of the aforesaid 9 bills of entry, duplicates whereof were not produced, also applies in respect of the bill of entry No. 1909/1. In view of this, we admit the appeal only in respect of the said six bills of entry, where partial refund has been allowed to the respondents and which have been produced in Court. It is clarified that bill of entry No. 1909/1 is not included in these bills. The rest of the appeal is dismissed summarily.
Mr. Lokur applies for leave to appeal to the Supreme Court. Mr. Dhanuka opposes the application. In our view, in this appeal there is no substantial point of law, which needs to be interpreted by the Supreme Court of India. Application rejected."
In view of the order passed by the Division Bench, Shri Shah, learned counsel appearing on behalf of the Department, did not dispute that the claim in dispute in appeal relates only to six bills of entries, numbers of which are (1) 1603/118, (2) 1606/80, (3) 1606/80, (4) 1361/25, (5) 1603/90 and (6) 13450159. The total amount not refunded in respect of these six bills of entries was Rs. 1,02,989/-. Shri Shah submitted that the goods covered by these six bills of entries was not merely scrap as in case of other nine bills of entries, for which the learned single Judge directed refund as claimed. Shri Shah urged that part of the goods covered by these six bills of entries was not scrap but metal alloy in different forms, like rods, bars, flats, billets etc. We inquired from the learned counsel as to what is the basis on which this assertion is made because it was claimed by the importer all along that the goods imported under 26 bills of entries were identical. Shri Shah referred us to the observation made by the learned single Judge that the impugned order (that is order passed by the Assistant Collector declining refund) suggest that some of the goods covered by these seven bills of entries were not of the kind the petitioners claimed. We are afraid that the observation made by the learned single Judge is not very accurate. We called upon Shri Shah to point out anything from the impugned order dated February 23, 1983 of the Assistant Collector of Customs to sustain the observation made by the learned single Judge and Shri Shah very fairly stated that there is no such suggestion in the entire order.
Shri Shah then submitted that the endorsement made on the bills of entries after reinspection as directed by the Collector would indicate the nature of the goods. The submission was correct, and therefore, we called upon Shri Shah to produce for our examination the six bills of entries. Initially Shri Shah stated that out of the six bills of entries, only three are available and at a later stage the learned counsel stated that only two are available, and the two bills of entries, which according to Shri Shah were available, were bills of entry No. 1606/80 and No. 1345/159. When we inspected these bills, it was noticed that the bill of entry shown to us did not bear number 1345/159 but 1345/158, and therefore, it was obvious that what was shown to us was not the bill of entry which was filed by the importer. That leaves for examination only one bill of entry bearing No. 1606/80. Now what was shown to us was a photostat copy of the original bill of entry with an endorsement which was made when the goods were initially inspected. We inquired from Shri Shah as to where is the endorsed entry after reinspection of the goods and Shri Shah stated that the entry is not available. Shri Dhanuka, learned counsel appearing on behalf of the importer, invited our attention to the affidavit of Shri N.M. Mulla, Assistant Collector of Customs, wherein it was categorically admitted that on the representation of the importer the goods were re-examined and the reports of the re-examination were recorded on duplicate bills of entries. We called upon Shri Shah to produce for our examination the duplicate bills of entry regarding the report of re-examination and Shri Shah stated, after taking instructions from the officers who were present in Court, that the duplicate copy is not available. It only indicates that the Department has maintained no record whatsoever and though a representation was made before the appeal Court that six bills of entries were available and would support the claim of the department, at the time of hearing before us not a single bill of entry was made available and therefore we are unable to accept the submission that the goods covered by these bills of entries were not identical as those covered by other nine bills of entries. In our judgment, the appeal preferred by the Department is without any merit and must stand dismissed.
6. That takes us to the appeal preferred by the importer and on whose behalf Shri Dhanuka made three submissions. The learned counsel urged that the single Judge should have granted interest from the date of payment till realisation and should not have restricted only from the date of refund applications till realisation. Second submission is that the learned Judge should not have deprived the importer of interest on the amount of Rs. 2,07,590.64 which was the balance amount of refund due in respect of seven bills of entries. The third submission is that the learned Judge should have awarded interest at the rate of 18% per annum and not only at the rate of 12%. As regards the last submission about the quantum of rate of interest we are unable to accede to the submission of Shri Dhanuka. It was the discretion of the learned trial Judge to decide as to what should be the rate of interest, and it is not permissible for the appeal court to disturb that discretion unless there are sound reasons to do so. In our judgment, it cannot be suggested that the rate determined at the rate of 12% per annum was so low as requires interference in the appeal. The claim of the importer for award of interest at the rate of 18% per annum therefore must be turned down.
The submission of Shri Dhanuka that the learned Judge ought to have granted interest from the date of payment till realisation deserves acceptance. As mentioned hereinabove the correct duty payable was Rs. 25,49,834.60 while the duty recovered by the Customs authorities was Rs. 1,29,23,037.77. The difference was so large that it cannot be suggested that the petitioner did not suffer any prejudice for being compelled to pay such a heavy duty. Now, duty was paid by the importer under protest between June and August 1981 and immediately between November 1981 and January 1982 refund applications were filed. Not only the learned single Judge but even the Assistant Collector came to the conclusion that the day recovered by the Customs authorities was without any authority of law. In the face of this conclusion and in the face of the conduct of the Department in not refunding what was due to the importer, we fail to appreciate why the importer should be deprived of interest from the date of payment till the date of filing of the refund applications. In our judgment, the importer is entitled to interest from the date of payment of the duty till the date of refund of such duties.
7. Shri Dhanuka is also right in his submission that the learned single Judge should not have deprived the importer of the interest on the amount of duty which was not refunded in respect of seven bills of entries. As mentioned hereinabove the difference of duty not refunded was Rs. 2,07,590.26. The learned Judge held that the importer is entitled to the refund of this amount of duty but did not grant interest on this amount without assigning any reason. In our judgment, once it is found that the principal amount was due to the importer, then the amount should have been made to pay by the respondents along with interest. In our judgment, the importer is entitled to this relief and the order of the learned single Judge is required to be modified to that extent by partly allowing the appeal preferred by the importer.
8. Accordingly, appeal No. 731 of 1983 filed by the Department is dismissed with costs. Appeal No. 135 of 1983 is partly allowed and it is directed that the respondents shall pay to the petitioners a sum of Rs. 39,56,353.84 along with interest at the rate of 12% per annum from the date of payment till the date of realisation. It is made clear that as the importer had paid duty from time to time between June and August 1981, the interest will be calculated in respect of payment made on different dates. The respondents had already deposited Rs. 39 lakhs in Court as per the directions of the learned single Judge and that amount has already been withdrawn by the importer. The respondents shall now pay the balance amount due to the importer in accordance with the judgment within six weeks from to day. There will be no order as to costs.