1987 (7) TMI 112 - HC - Central Excise

Refund claim - Methyl cellulose - Additional duty of customs - Duty recovered without authority of law - Limitation

Summary

Issues:
1. Refund of additional duty paid on imported goods under erroneous belief.
2. Rejection of refund claim by Assistant Collector of Customs based on time limitation.
3. Review of Collector of Customs' order by Additional Secretary to the Government of India.
4. Applicability of time limit under Section 27(1) of the Customs Act, 1962.
5. Jurisdiction of assessing authority in classifying goods under the Central Excise Tariff.
6. Legal arguments regarding the recovery of duty without authority of law and limitation.

Analysis:

Issue 1: Refund of additional duty paid on imported goods under erroneous belief
The petitioners imported methyl cellulose under two bills of entry and paid additional duty under the Customs Tariff Act based on an erroneous belief that the goods were subject to excise duty. Subsequently, realizing the error, they claimed a refund as the goods were classified under a different tariff entry exempt from additional duty.

Issue 2: Rejection of refund claim based on time limitation
The Assistant Collector rejected the refund claim citing Section 27(1) of the Customs Act, 1962, stating that the claim was time-barred as it was not filed within six months from the date of duty payment. However, the Collector of Customs later allowed the appeal, acknowledging the error in levy and ordering the refund.

Issue 3: Review of Collector of Customs' order by Additional Secretary
The Additional Secretary to the Government of India initiated a review of the Collector's order, leading to a reversal. The Additional Secretary's decision emphasized the applicability of the time limit prescribed under Section 27(1) of the Customs Act, 1962, despite the exemption notification for goods falling under a specific tariff entry.

Issue 4: Applicability of time limit under Section 27(1) of the Customs Act, 1962
The Government's decision highlighted that the time limit under Section 27(1) applies to all goods falling within the purview of the tariff, regardless of any exemption notifications. The judgment emphasized that the time limit is mandatory and cannot be circumvented based on classification or exemption notifications.

Issue 5: Jurisdiction of assessing authority in classifying goods under the Central Excise Tariff
The assessing authority's jurisdiction in classifying goods under the Central Excise Tariff was scrutinized. The Government's stance was that even if the authority erroneously classified or misinterpreted the tariff, the time limit under Section 27(1) of the Customs Act, 1962, remains applicable.

Issue 6: Legal arguments regarding recovery of duty without authority of law and limitation
Legal arguments presented by the petitioners emphasized that recovery of duty without the authority of law, as in this case, does not fall under the purview of Section 27(1) of the Customs Act, 1962. Reference was made to judicial precedents supporting the view that when the levy is without jurisdiction, the time limit for refund claims does not apply.

In conclusion, the court ruled in favor of the petitioners, emphasizing that the duty recovery was without jurisdiction and, therefore, not subject to the time limitation prescribed under the Customs Act, 1962. The judgment highlighted the importance of authority in tax collection and the obligation to refund erroneously levied amounts.