1986 (12) TMI 39 - HC - Customs

Central Excise Tariff Item 68 - Scope of - Alcohols of all sorts - Meaning of - Classification of goods - Refund

Summary

Issues Involved:
1. Constitutionality of Section 27 of the Customs Act, 1962.
2. Legality of the Assistant Collector's order rejecting the refund claim as barred by limitation under Section 27(1) of the Customs Act.
3. Determination of whether the imported item falls under Tariff Item 68(a) and is thus exempt from additional duty.
4. Availability of alternate efficacious remedy for the petitioner.
5. Entitlement to refund of duty paid under mistake of law.
6. Entitlement to interest on the refund amount.

Issue-wise Detailed Analysis:

1. Constitutionality of Section 27 of the Customs Act, 1962:
The petitioner initially sought a declaration that Section 27 of the Customs Act, 1962, is unconstitutional. However, the petitioner's counsel did not advance any submissions regarding this issue. Therefore, this issue was not addressed in the judgment.

2. Legality of the Assistant Collector's Order:
The Assistant Collector of Customs rejected the refund claim on the ground that it was barred by limitation under Section 27(1) of the Customs Act. The petitioner argued that the duty was paid under a mistake of law, and thus, the period of limitation under Section 27(1) would not apply. The court held that if the duty is paid under a mistake of law, the claim for refund is not governed by the limitation period set out under Section 27(1) of the Customs Act. The court referenced the Supreme Court decision in D. Cawasji & Co. & Ors. v. State of Mysore and another and other relevant cases to support this view.

3. Determination of Tariff Item 68(a):
The petitioner contended that the imported item, being alcohol, falls under Tariff Item 68(a) and is thus exempt from additional duty. The court examined the plain language of Tariff Item 68(a), which excludes "alcohol, all sorts" from duty. The court rejected the Department's argument that Tariff Item 68(a) is restricted only to ethyl alcohol. The court emphasized that the term "alcohol, all sorts" is clear and unambiguous, covering every kind of alcohol. The court also noted that the Central Board of Excise and Customs had accepted the Tribunal's decision that all types of alcohol are excluded from Tariff Item 68(a).

4. Availability of Alternate Efficacious Remedy:
The Department argued that the petitioner had an alternate efficacious remedy of filing an appeal against the Assistant Collector's order. The court rejected this preliminary objection, stating that no worthwhile purpose would be served by driving the petitioner to file an appeal, as the refund application was rejected solely on the ground of limitation.

5. Entitlement to Refund of Duty Paid Under Mistake of Law:
The court held that duty paid under a mistake of law is recovered without authority of law, and the claim for refund is not barred by the limitation period under Section 27(1) of the Customs Act. The court noted that the petitioner filed the refund application within three years from the date of knowledge of the mistake. The court rejected the Department's argument that the petitioner was guilty of laches for not filing the refund application earlier.

6. Entitlement to Interest on the Refund Amount:
The petitioner sought interest on the refund amount at the rate of 18% per annum. The court directed the Department to refund the amount within one month. If the amount was not paid within this period, the Department was ordered to pay interest at the rate of 15% per annum on the refund amount until the date of repayment. The court did not grant the petitioner's claim for interest at the rate of 18%.

Conclusion:
The court set aside the Assistant Collector's order dated September 26, 1986, and directed the respondents to refund the amount of Rs. 15,688.94 to the petitioner within one month. If the refund was not made within this period, the Department was ordered to pay interest at the rate of 15% per annum on the refund amount until the date of repayment. The respondents were also ordered to pay the costs of the petitioner.