1999 (8) TMI 91 - HC - Customs

Summary

Issues Involved:
1. Refund of differential duties on landing charges.
2. Applicability of Customs Notification No. 60/87.
3. Refund of interest charges.
4. Correctness of the CEGAT order binding on the Appellate Authority.
5. Maintainability of the writ petition without exhausting alternative statutory remedies.

Issue-wise Detailed Analysis:

1. Refund of Differential Duties on Landing Charges:
The petitioner challenged the denial of refund of differential duty on landing charges by the Collector of Customs and Central Excise (Appeals), who had rejected the refund based on the CEGAT order dated 16-9-1988. The petitioner argued that the CEGAT had taken an incorrect view on the duty on differential landing charges and denied the refund on untenable grounds. The duty is assessed under Section 14 of the Customs Act, 1962, which includes the cost of transport, loading, unloading, handling charges, and insurance. The petitioner stated that the notional landing charges used for duty assessment were higher than the actual charges, leading to excess duty payment. The petitioner sought a refund of this excess duty, citing a practice where the Customs Department refunded the difference if the actual landing charges were lower than the notional charges. The petitioner pointed out that Rule 9(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, as it stood in 1989, did not provide for notional landing charges, and the actual charges should be considered for duty assessment.

2. Applicability of Customs Notification No. 60/87:
Though the petitioner initially sought a refund under Customs Notification No. 60/87, the present writ petition was restricted to the refund of differential duty on landing charges. Therefore, the applicability of Customs Notification No. 60/87 was not directly addressed in this judgment.

3. Refund of Interest Charges:
The issue of refund of interest charges was also part of the appeals rejected by the Appellate Authority. However, the present writ petition did not pursue this issue and focused solely on the refund of differential duty on landing charges.

4. Correctness of the CEGAT Order Binding on the Appellate Authority:
The petitioner contended that the CEGAT order, which was binding on the Appellate Authority, was incorrect. The CEGAT had rejected the refund claims on the grounds of impracticality and administrative burden, stating that the actual landing charges were not known at the time of duty assessment, and reassessing duties based on actual charges would be cumbersome. The Tribunal also relied on the Gujarat High Court's judgment in M/s. Prabhat Cotton and Silk Mills Ltd. v. Union of India, which emphasized the impracticality of reassessing duties based on actual landing charges. However, the petitioner argued that the Tribunal's reliance on this judgment was misplaced, as it ignored the practice of refunding excess duty and the statutory provisions requiring actual charges to be considered.

5. Maintainability of the Writ Petition Without Exhausting Alternative Statutory Remedies:
The respondents argued that the writ petition was not maintainable as the petitioner had bypassed the statutory appellate remedy. The petitioner countered this by citing the Supreme Court judgment in Filterco and Another v. Commissioner of Sales Tax, Madhya Pradesh and Another, which held that if pursuing an appeal would be futile due to binding superior orders, the High Court should consider the merits of the case. The court agreed with the petitioner, noting that the Tribunal's order was binding, making an appeal futile, and considering the long pendency of the case, it would be unjust to dismiss the petition on the ground of alternative remedy.

Conclusion:
The court concluded that the petitioner was entitled to the refund of excess duty paid due to higher notional landing charges, as the unamended Rule 9(2) required actual charges to be considered. The order of the Tribunal was found to be incorrect in law. However, due to the retrospective amendment of Section 27 of the Customs Act, the petitioner must prove that the liability has not been passed on to someone else to claim the refund. The case was remanded to the concerned authority to re-hear the petitioner and decide the claims based on the observations made in the judgment.