Delhi High Court
United News Of India vs Union Of India (Uoi) on 29 January, 2004
Equivalent citations: 110(2004)DLT95, 2004(73)DRJ278, 2004(93)ECC607, 2004(168)ELT442(DEL)
Author: Badar Durrez Ahmed
Bench: Badar Durrez Ahmed
JUDGMENT B.C. Patel, C.J.
1. The petitioner being aggrieved by an order made by Government of India (Department of Revenue and Banking) on 4.6.1976 (Annxure-A1), has filed this petition.
2. In a nutshell the facts are that the petitioner deposited an amount of money with the respondent on 19.1.1974 in anticipation of payment of duty as it was likely to receive goods, which were dispatched from United Kingdom. The petitioner was anticipating delivery of 69 bales of paper. However, only 51 bales were delivered to the petitioner. Thereafter, the petitioner approached the authority under the Customs Act for issuance of "short landing certificate", which was issued to the petitioner only on 11.6.1974. It is on the strength of this certificate that the petitioner submitted an application for refund of the excess amount on 9.9.1974. This application was submitted in respect of 18 bales, which he did not receive and for which "short landing certificate" was issued by the appropriate authority. There is no dispute with regard to the aforesaid aspects.
3. The application of the petitioner came to be rejected on the ground that the claim for refund was received in the Customs House on 16.9.1974 while the duty was paid on 19.1.1974. In view of this, it was considered that the claim was made after the expiry of the time limit of six months prescribed in Section 27(4) of the Customs Act, 1962 (hereinafter referred to as "the Act"), and, the claim was rejected as being time barred. The petitioner failed at all stages and hence the writ petition.
4. It is the contention of the petitioner that initially when he deposited money, it was not "duty". So far as "duty" is concerned, the same is defined in Section 2(15) of the Act, which reads as under:-
""duty" means a duty of customs leviable under this Act."
5. Section 12 of the Act makes it very clear that the duty of customs can be levied on the goods imported into India or exported from India. The said section reads as under:-
"Dutiable goods- (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods imported into, or exported from, India.
(2). The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government."
6. Chapter V provides for the valuation of goods for the purposes of assessment; date for determination of rate of duty; tariff valuation of imported goods; date for determination of rate of duty and tariff valuation of export goods. Section 17 refers to assessment of duty. Section 18 refers to provisional assessment of duty. Section 15 is required to be taken into consideration as the rate of duty and tariff valuation on the date on which the goods are imported will be the decisive factor for determination of the goods entered for home consumption. Section 15(1)(a) being relevant, we reproduce the same hereinunder:-
"In the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section."
7. The other part of the section is not necessary and, therefore, we are not reproducing the same. Therefore, the assessment will have to be made, in case of goods entered for home consumption, as on the date on which a bill of entry is presented. It is on that date only that the importer would be liable to pay customs duty.
8. In the instant case, we put a question to the counsel for the Revenue that under what provision of law the amount was received from the petitioner on 19.1.1974. It was stated that there is no such provision. Therefore, when the amount was paid in anticipation of arrival of goods, it was to be just credited in the name of the payer, and, the recipient would be in the capacity of a trustee. He can appropriate the required amount only on importation of goods and not otherwise.
9. In the instant case, only 51 bales were delivered to the petitioner and, therefore, it was open for the Revenue to deduct the amount of duty on the goods, namely, 51 bales entered for home consumption from the amount deposited by the petitioner to that extent only. It was the duty of the respondent to return the balance amount to the petitioner. The cause of action for demanding customs duty would arise only after 51 bales were imported into India and not before that. Our attention was drawn to Annexure-A1-3 (at page 13). Note No. 3 thereof reads as under:-
"Complete documentary evidence which has a bearing on the claim should be furnished in the first instance, failing which the claim is likely to be summarily rejected."
10. Thus with a view to see that the claim is not summarily rejected, the petitioner was required to furnish "short landing certificate", which is dated 11.6.1974. Obviously, before that date, the petitioner could not have submitted his application. Therefore, considering this date, it cannot be said that the application of the petitioner was barred by limitation in view of Section 27(4) of the Act.
11. Considering this case from another angle, when in anticipation of payment of duty on arrival of goods for home consumption the amount was deposited, then in that case, it cannot be said that the amount was paid in view of the assessment made by the Competent Authority for customs duty, nor such deposit can be regarded as "duty" in view of the provisions, which we have referred to hereinabove. When the petitioner had paid the amount in anticipation of arrival of goods, the goods themselves, at that time had not been imported into India. Since any amount collected by way of "duty" must be relatable to the taxable event i.e., importation of goods into India, hence, an amount deposited by way of anticipated payment cannot be regarded as "duty" until importation of goods actually takes place. And, when the delivery of goods is not to the extent expected, the importer would be entitled to the return of the amount not represented by actual importation. In such a case, it cannot be said that the petitioner was entitled to get the refund of "duty" because no "duty" was assessed and no "duty" was paid by him in so far as the undelivered goods are concerned.
12. It is an admitted position that the petitioner was likely to receive 69 bales but in fact only 51 bales were delivered to the petitioner. Therefore, the goods for which the petitioner had placed an order did not arrive in toto and only 51 bales crossed the customs barriers. Therefore, no question of any custom levy arises in so far as 18 bales are concerned. For these 18 bales, the petitioner's case does not come within the four corners of the Customs Act at all, as no import has taken place for 18 bales for which amount was paid in advance on the assumption that goods will be received. As no import actually took place, the Customs Authorities cannot refuse refund of the money paid by the petitioner in so far as the excess amount is concerned on the ground of limitation, as envisaged under Section 27 of the Act.
13. In a case like this, the Calcutta High Court had an occasion to consider the applicability of Section 27 of the Act in the case of I.C.I. India Ltd. v. Collector of Customs reported as 1992 (60) E.L.T.529 (Cal.). Article 265 of the Constitution of India is required to be perused at this stage. It specifically provides that no tax shall be levied or collected except by authority of law.
14. Our attention was drawn to the decision of Supreme Court in the case of Salonah Tea Company Ltd. etc. v. Superintendent of Taxes, Nowgong & others etc. reported as 1988 (33) E.L.T.249 (S.C.). The Court pointed out that normally speaking in a society governed by rule of law, taxes should be paid by citizens as soon as they are due in accordance with law. Equally as a corollary of the said statement of law it follows that taxes collected without the authority of law as in this case from a citizen should be refunded because no State has the right to receive or to retain taxes or monies realized from citizens without the authority of law. It is further pointed out that normally in a case where tax or money has been realized without the authority of law, the same should be refunded and in an application under Article 226 of the Constitution the Court has power to direct the refund unless there has been avoidable laches on the part of the petitioner. It is true that in some cases the period of three years is normally taken as a period beyond which the Court should not grant relief but that is not an inflexible rule. The Court might consider the delay unreasonable even if it is less than the period of limitation prescribed for a civil action for the remedy. Where delay is more than that period, it will be almost always be proper for the Court to hold that it is unreasonable.
15. In the aforesaid case, the Court held as under:-
"Under Article 113 of the Limitation Act, 1963 the limitation the period of three years from the date the right to sue accrues. It may be noted that in the instant case under Section 23 of the Act, it was provided that the Commissioner shall, in the prescribed manner refund to producer or a dealer any sum paid or realized in excess of the sum due from him under this Act. Section 23 applies only in a case where money is paid under the Act. If there is no provision for realization of the money under the Act, the act of payment was ultra vires, the money had not been paid under the Act. In that view of the matter Section 23 would not apply and the State is liable to refund the tax as being recovered without the authority of law."
16. Keeping the aforesaid aspects in mind, the Court is required to decide that when the petitioner deposited the amount with the respondent in anticipation of arrival of goods and the goods did not arrive in the quantity expected, can the Union of India state that he ought to have made an application within a period, as prescribed in Section 27 of the Act? In the instant case, application was made and it cannot be said that in view of what we have said hereinabove, the claim was barred by limitation prescribed in Section 24 of the Act. He was prosecuting his remedy under the belief that his application for refund would be considered and ultimately when the same was rejected, he has approached this Court. Therefore, there is no question of delay in this case.
17. Money received by the respondent on 19.1.1974 is not the amount realized on the day of arrival of goods for home consumption in India. Therefore, there was no realization of payment of "duty" under the Act. The act of payment of money for goods not received was ultra vires as that amount had not been paid under the Act. Hence, the Act will not apply for retention of that part of money.
18. On behalf of the respondent, it was submitted that in view of the judgments of the Apex Court in the case of Asstt. Collector of Central Excise v. Kashyap Engg. And Metallurgicals Pvt. Ltd. reported in 2002 (142) E.L.T. 518 (S.C.); Union of India and another v. Kirloskar Pneumatic Co. Ltd. reported as paragraph 16 and All India General Mazdoor Trade Union (Regd.) v. Delhi Administration and another 1995 Supp (3) S.C.C.579, the petitioner is not entitled to claim this amount. It is the submission made on behalf of the respondent that keeping the statute in mind, the Court cannot give direction for refund.
19. In the case of Kirloskar Pneumatic Co.Ltd. (Supra) the duty as demanded by the authorities was paid and the goods were cleared. The application seeking refund was rejected by the authorities. Thereafter, in the year 1987, the assessed filed a writ petition seeking an appropriate writ for refund of excess customs duty levied upon the goods imported and collected. Direction was given to the authorities to dispose of the refund claim on merits and not to reject the refund application on the ground of limitation. In that case, there was a dispute between the respondent, namely, Kirloskar Pneumatic Co.Ltd. (Supra) and the Customs Authorities with respect to classification of the goods. The "duty" that was demanded by the authorities were paid and the goods were cleared. Thereafter, the refund application was filed. Reading the judgment, it is very clear that there was a dispute between the assessed and the Revenue Authorities with respect to classification of the goods after the assessment was made and that dispute was raised after the goods were cleared on payment of duty. Thus, in that case receipt of goods was not disputed, the amount was paid towards duty on assessment and the dispute was with regard to classification. In the instant case, 18 bales were not received. Amount was paid in advance and, therefore, it could not be appropriated as there was no levy of duty for these goods. There is no question of dispute with regard to assessment or that excess customs duty was levied upon the goods imported. If the amount was paid in pursuance of an order of assessment and the assessed was claiming refund, then he was required to make an application for refund, as contemplated under Section 27 of the Act. Even if the amount paid had an attribute of "duty", one would say that he is required to make an application under Section 27. But when the amount was deposited in advance, it cannot be said that he paid the amount in pursuance of an order of assessment or the amount paid by him had the colour of "duty". Keeping these aspects in mind, and the decision of Salonah Tea Company Ltd. etc. (supra), it is required to be stated that the amount was not paid by way of duty, as the goods covered under short landing certificate were not imported.
20. The Revenue relied on the decision of Supreme Court in the case of Paros Electronics (P) Ltd. v. Union of India and another reported as 1995 Supp.(3) S.C.C.578 wherein, in proceedings which emanated for levy of duty, the order had become final. The Court held that without having that order set aside by Competent Court there would be no question of grant of refund merely on the ground that in some other case a different view was taken. It is further pointed out that even if the payment is made under mistake of law, as long as order which became final stands, the authority cannot grant refund. If the application is made under Section 27 of the Act, then the authority, being a creation of the statute, must act within the ambit of that provision and if the application is delayed, he has no alternative but to reject it as barred by limitation. In the instant case, it cannot be said that payment was made under mistake of law. The amount was deposited in anticipation of 69 bales. However, only 51 bales were delivered to the petitioner and, therefore, there is no question that the amount was paid under mistake. It is not the case that the petitioner's case was assessed for entire quantity of 69 bales. The payment made was not under any provision of the Act. It would be appropriated towards duty only on the importation of the goods. Only 59 bales were imported. Hence, appropriation towards duty could be done only in respect of these 51 bales. The balance amount cannot be regarded as payment towards "duty" or a payment under the Act.
21. In Shiv Shankar Dal Mills etc. v. State of Haryana and others, etc. 1980 (1) S.C.R.1170, Krishna Iyer, J. observed that 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 was no law of limitation especially for public bodies on the virtue of returning what was wrongly recovered to whom it belongs. In our jurisprudence it is not palatable to turn down the prayer for high prerogative writs on the negative plea of alternative remedy, since the root principle of law married to justice, is ubi jus ibi remedium. His Lordship observed as follows:
"Since the root principle of law married to justice, is ubi jus ibi remedium. Long ago Dicey wrote:
'The law ubi jus ibi remedium, becomes from this point of view something more important than a mere tautological proposition. In its bearing upon constitutional law, it means that the Englishmen whose labours gradually formed the complicated set of laws and institutions which we call the Constitution, fixed their minds far more intently on providing remedies for the enforcement of particular rights or for averting definite wrongs, than upon any declarations of the Rights of Man or Englishmen?. The Constitution of the United States and the Constitutions of the separate States are embodied in written or printed documents, and contain declaration of rights. But the statesmen of America have shown an unrivalled skill in providing means for giving legal security to the rights declared by American Constitutions. The rule of law is as marked a feature of the United States as of England.'
22. In the opinion of the Court, Section 27 of the Act will not apply in this case as the amount retained by the Union of India was not an amount by way of customs duty assessed in accordance with law. Moreover, presuming that it is "duty" even then the refund application is within the period stipulated, which we have discussed above. It is in these circumstances, that we direct the Union of India to make the payment to the petitioner with interest at the rate of 12% p.a. till the amount is paid.
23. It is argued by learned counsel for the respondent that the amount of interest should be awarded till the filing of the petition because it is not the responsibility of the Union of India to pay interest during the pendency of the petition. This contention is without merit. We make it clear that if the amount with interest, as directed hereinabove, is not paid within a period of eight weeks from today, this amount of interest will be paid by the respondent at the rate of 15% thereafter.
24. The petition stands allowed with aforesaid direction with no order as to cost.