1986 (1) TMI 113 - HC - Customs

Summary

Issues:
1. Classification of imported goods under Indian Customs Tariff
2. Refund of duty paid after expiry of six months
3. Applicability of proviso to Section 27 of the Customs Act
4. Power of the court under Article 226 of the Constitution to order refund of tax or duty illegally recovered

Analysis:

Issue 1: Classification of imported goods under Indian Customs Tariff
The appellant imported consignments of "Crys-tex Insoluble Sulphur" between November 1969 and April 1971. Customs authorities imposed duty under Item No. 28 of the Indian Customs Tariff. The appellant contended that the goods should be classified under Item No. 28(3). The Appellate Collector of Customs upheld the appellant's contention for two consignments and ordered a refund of duty. The Government withdrew a notice challenging this decision. The appellant then sought refunds for other consignments but faced rejection due to a six-month refund claim limit.

Issue 2: Refund of duty paid after expiry of six months
The Assistant Collector refused refund for five consignments, citing the six-month limit from the date of payment. The appellant's appeals and revisional applications were unsuccessful, leading to a writ application under Article 226 of the Constitution challenging the authorities' decisions. The court noted that the proviso to Section 27 of the Customs Act, which exempts payment under protest from the time limit, did not apply as the appellant did not protest at the time of payment.

Issue 3: Applicability of proviso to Section 27 of the Customs Act
The court found that the proviso to Section 27 of the Customs Act did not apply since the duty was not paid under protest. The appellant's failure to protest at the time of payment for the consignments in question rendered the proviso inapplicable. The court distinguished between involuntary payment and payment under protest, emphasizing that only the latter exempts from the time limit for refunds.

Issue 4: Power of the court under Article 226 of the Constitution to order refund of tax or duty illegally recovered
The appellant argued that even if the refund claims were time-barred, the court should order a refund based on the illegality of duty recovery. Citing a Supreme Court decision, the appellant sought a mandate for refund. However, the court differentiated the case at hand from the precedent, emphasizing that the power under Article 226 is guided by established legal principles. The court highlighted that the bar of limitation may extinguish a party's right to refund, and in such cases, the court may decline to order a refund under its writ jurisdiction.

In conclusion, the court dismissed the appeal, holding that the appellant's right to obtain a refund had been extinguished, and it was a sound exercise of discretion to refuse the prayer for a refund mandate.