Calcutta High Court
Parimal Ray & Anr vs The Commissioner Of Customs (Port) on 17 February, 2015
Author: I.P. Mukerji
Bench: I.P. Mukerji
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
Present :
THE HON'BLE JUSTICE I.P. MUKERJI
W.P. No. 1288 of 2013
Parimal Ray & Anr.
Vs.
The Commissioner of Customs (Port), Customs House & Ors.
For the petitioners:- Mr. Ajay Krishna Chatterjee; senior adv.
Mrs. Sutapa Roy Choudhury; adv.
Mr. Anurag Basu; adv.
Mr. Nirmalya Dasgupta; adv.
For the respondent:- Mr. R.N. Das; senior adv.
Mr. Subir Kumar Saha; adv.
Heard on:- 05.02.2015
Judgment on:- 17.02.2015
I.P. MUKERJI, J.
A Thailand based company, Italian Thai Development Public Company Limited and an Indian Public Company, ITD Cementation India Limited having its place of business in Salt Lake City, Kolkata decided to establish a Joint Venture Organisation - ITD-ITD CEM JV. This Joint Venture is unincorporated. For all purposes they are represented by the first and second writ petitioners. The reference to the petitioners in this judgment will also include the Joint Venture ITD- ITD CEM JV.
Kolkata Municipal Corporation was inviting tenders, in or about 2008 for its Drinking Water Supply Project. The Corporation invited offers for designing and supplying of reinforced cement jacketed pipe cast monolithically, with a 1626 mm outside diameter, spirally welded carrier steel pipes with cement mortar lining inside to be laid by micro tunneling/pipe jacking system at about 7.0 m to 8.0 m depth below the ground level for an approximate length of 15.80 km along BT Road from Park Road to BT Road Junction to Tallah Pumping Station with a small stretch of about 0.50 km between Palta Indira Gandhi Water Treatment Plant and Park Road. The Joint Venture Company was successful in tendering. They were awarded Contract No. 25 dated 13th April, 2009 by the Corporation.
The dispute in this case is not with regard to the above contract but with regard to whether Customs duty was payable on the importation of tunnel boring machines by the petitioners. By and under three Bills of Entry these tunnel boring machines were imported. Rs.360.46 lakhs were paid as Customs duty. The bills of entry were dated 15th December 2009, 21st December 2009 and 31st May 2010. This suggests that these machines were contemporaneously imported.
This writ application was filed on 24th December 2013, much more than three years after importation of the goods or payment of duty. It is the writ petitioners' case that this large amount of Customs duty was paid by mistake. They want refund of this entire sum.
According to learned counsel for the petitioners, Mr. Ajay Krishna Chatterjee this period of delay does not matter. In equity the petitioner is entitled to refund of the entire money paid, without any limitation of time. Mr. Chatterjee has built his case upon a notification dated 17th March 2012 issued by the Central Government. It was issued in exercise of its powers under Section 25 (1) of the Customs Act 1962. Under it the Central Government has the power to exempt the whole or part of the customs duty or exempt such duty subject to certain conditions.
Column 2 of this notification refers to the chapter or heading or sub- heading of the Schedule to the Customs Tariff Act, 1975. Under these headings could be found "9801" which relates to Drinking Water Supply Projects for supply of water for human or animal consumption. The entire duty for importation of this project was exempted. Similarly, under heading 84 were provided tunnel boring machines. These machines also enjoyed hundred per cent duty exemption.
At this point of time the petitioners feel that they made their classification erroneously. The correct classification according to them is stated by them at page 8 of the petition. The said goods were properly classifiable under Serial No. 512 of Chapter 9801 read with Chapter 84 or any other chapter of the said notification. The duty in that case would be nil. The entire amount of Rs.3,60,45,561 was paid in excess which should be refunded to them.
Although this point was not even taken in the affidavit-in-opposition, considering his submissions, I allowed Mr. Das, learned senior advocate to take it by filing a supplementary affidavit. The point is this: Reliance was placed upon the Project Import Regulations of 1986. These regulations were framed in exercise of powers enjoyed by the Central Board of Excise and Customs under Section 157 of the Customs Act, 1962. These regulations make it explicit that they would apply to assessment and clearance of goods under heading 98.01 of the First Schedule to the Customs Tariff Act, 1975. Under these regulations assessment could only be made under heading No. 98.01 if one or specific contracts were registered with the customs. Mr. Das argued that this contract between the petitioner and the Kolkata Municipal Corporation was not so registered. In those circumstances, the petitioner was not entitled to claim any exemption under the said exemption notification relating to heading No. 98.01.
In any event according to Mr. Das a claim for refund had to be made within time by the petitioner under Section 27 of the Customs Act 1962. The petitioner had merely made an application before the customs on 4th June 2013 seeking refund which could not be taken as a proper application under Section 27 for refund. In any event, it was hopelessly out of time. I will discuss the cases cited by the parties when I discuss the merits of the matter.
If one examines the various classification lists one would tend to form an opinion that the description "Drinking Water Supply Projects for supply of water for human or animal consumption" under 9801 is very general. It can cover a wide class and description of goods.
The entry against 84 or any other chapter under Serial No. 397 "tunnel boring machines" describes specifically the goods imported by the petitioners. It is well-known that in classifying goods the classification number and description which specifically or most closely describe the goods are applicable for its classification and calculation of duty.
The tunnel boring machines imported by the writ petitioners fits into this description. It is not the respondents' case that the petitioners imported something else. Now, the Project Imports Regulations 1986 specifically stated that goods under heading No. 98.01 were to be assessed under those regulations and that any contract in relation to importation of those goods had to be registered with the authorities.
Now, if the goods imported by the petitioners falls under Chapter 84 specifically and not under 98.01, the regulations did not apply to such import and it was not at all obligatory on the part of the petitioners to register the contract with the authorities. It is true that the petitioners did not register any contract with the customs authorities or with the Central Government. But this did not disentitle them to claim the benefit of the said notification.
Section 27 of the Customs Act, 1962 enacts that any person claiming refund of any duty or interest shall make an application before the expiry of one year from the date of payment of such duty or interest. Mr. Das contended that the only remedy of the petitioners was to make an application under Section 27 of the said Act. The petitioners, not having made such an application could not have filed a writ application in this Court, claiming refund. He added that Section 27 stipulated a fixed period of one year from the date of payment of duty or interest to claim refund. The petitioners did not file any application for refund within that period or at all. The petitioners only made a representation dated 4th June 2013 before the Commissioner. Even if this representation could be called an application under Section 27 of the said Act, this representation was hopelessly barred by the laws of limitation.
I do not agree.
Section 27 only applies when there is over payment of duty or interest under the Customs Act 1962. Therefore, the duty or interest must be leviable under the Customs Act and paid under it. Any excess sum allegedly paid has to be claimed within one year. When the petitioners' case is that the tunnel boring machines were not exigible to any duty, any sum paid into the exchequer by the petitioners was not duty or excess duty but simply money paid into the government account. The government could not have claimed or appropriated any part of this as duty or interest. Therefore, there was no question of refund of any duty by the government. The money received by the government, could more appropriately called money paid by mistake by one person to another which the other person as an obligation to repay, under Section 72 of the Contract Act, 1962.
Now I will consider the point of limitation. A person to whom money has been paid by mistake by another person, becomes at common law a trustee for that other person with an obligation to repay the sum received. This is the equitable principle on which Section 72 of the Contract Act, 1872 has been enacted. Therefore, the person who is entitled to the money is the beneficiary or cesti qui trust. When the said sum of Rs.360.46 lakhs was paid by mistake by the petitioner to the government of India, the latter instantly became a trustee to repay that amount to the petitioner. The obligation was a continuing obligation. When a wrong is continuing there is no limitation for instituting a suit complaining about it. (See Section 22 of the Limitation Act, 1963). The Supreme Court through Mr. Justice Krishna Iyer opined in Shiv Shankar Dal Mills Vs. State of Haryana reported in AIR 1980 Supreme Court 1037 as follows:-
1. 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.
Now is it palatable to our jurisprudence 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.
2. Another point, in our jurisdiction social justice is a pervasive presence; and so, save in special situations it is fair to be guided by the strategy of equity by asking those who claim the service of the judicial process to embrace the basic rule of distributive justice, while moulding the relief, by consenting to restore little sums, taken in little transactions, from little persons, to whom they belong.
This view was followed by our Court in Dulichand Shreelal Vs. Collector of Central Excise & Ors. reported in 1987 (32) E.L.T. 388 (Cal).
Even if I stopped to think of the trustee beneficiary principle and the concept of continuing wrong Part VIII of the Schedule to the Limitation Act 1963, Articles 92-96 pertain to suits relating to trusts and trust property. The Articles do not apply because they are made applicable in cases where the trust property is conveyed to a third party.
For the sake of assumption if we think that Article 113 will apply in such a case, the period of limitation is three years from when the right to suit accrues. The petitioner has specifically pleaded that money was paid by mistake. Now, under Section 17 of the Limitation Act 1963, money paid by mistake can be recovered up to three years from the time the plaintiff discovers the mistake or could have discovered the same with reasonable diligence. The tunnel boring machines were imported between 15th December 2009 and 31st May 2010.
This is how the petitioners have explained their mistake.
10. "On or about September 2012 the said joint venture as a bidder of similar kind of works Project with the Kolkata Municipal Corporation for drinking water for human and animal consumption while processing the said Tender discovered that a sum of Rs.360.46 lakhs was paid under bona fide mistake as 'Customs duty' on account of import of the said Boring Tunnel machines when the same are wholly exempted. Your petitioners state that the said joint venture has already been paid customs duty upon import of any other machines and have not ever raised any dispute. However, upon detection of the factum was being paid by way of customs duty under bona fide mistake the said joint venture immediately their Advocate by a letter dated June 4, 2013 submitted representation before the Respondent No.1 and 2 apprising them of such bona fide mistake committed by the said joint venture and prayed inter alia, for return of the said sum of Rs.360.46 lakhs which is being unlawfully retained as customs duty on account of the import of the said machines which is otherwise exempted. Copy of the said letter dated June 4, 2013 is annexed herein and marked as Annexure P-5".
I accept this explanation and hold that the period of limitation began to run against the petitioners from September 2012. On 4th June, 2013 they made a representation to the Commissioner of Customs (Port) claiming refund of the said amount. This was replied to by the Assistant Commissioner to the effect that no "refund has accrued to you". If you take September 2012 to be the beginning of the period of limitation, the petitioner had, under Article 113 of the Limitation Act 1963, a period of three years to institute a suit from that time. Therefore, in my opinion, the claim in the writ application cannot be said to be barred by the laws of limitation.
In those circumstances, Dunlop India Ltd. Vs. Collector of Customs, Calcutta reported in 1997 (95) E.L.T. 162 (S.C.) does not apply because in my considered opinion the contract there was not registerable under the Project Imports Regulations. For the above reasons, the reply to the representation of the writ petitioner dated 4th June 2013, by the decision dated 20th June 2013 is clearly wrong.
For all those reasons the writ application is allowed. The respondents are directed to refund the said sum of Rs.3,60,45,561/- to the Joint Venture enterprise ITD-ITD CEM JV is within 12 weeks of the communication of this order.
Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(I.P. MUKERJI, J.)