1989 (5) TMI 71 - HC - Customs

Issues Involved:
1. Jurisdiction of Customs Authorities in assessing import duty under the incorrect tariff item.
2. Applicability of the limitation period under Section 27(1) of the Customs Act, 1962.
3. Authority of the High Court to order a refund under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Jurisdiction of Customs Authorities in assessing import duty under the incorrect tariff item:
The petitioner, a manufacturing company, imported cable impregnating compound containing more than 70% Petroleum Mineral Oil. The Customs Authority assessed and collected import duty under Heading No. 38.01/19(1) of the Customs Tariff Act, 1975, instead of Heading No. 27.10(1). The petitioner argued that the correct tariff item should have been 27.10(1), which would have resulted in a lower duty rate. The Customs Authority did not conduct any tests and assessed the duty incorrectly, leading to an excess payment of Rs. 44,446.38. The High Court concluded that the assessment under Heading 38.01/19(1) was without jurisdiction, as the correct classification was under Heading 27.10(1).

2. Applicability of the limitation period under Section 27(1) of the Customs Act, 1962:
The petitioner applied for a refund on November 22, 1979, which was beyond the six-month limitation period stipulated in Section 27(1) of the Customs Act. The Assistant Collector of Customs, the Appellate Collector of Customs, and the Customs, Excise & Gold (Control) Appellate Tribunal all rejected the refund claim on the ground of limitation. The High Court noted that the Supreme Court in Miles India Ltd. v. The Assistant Collector of Customs held that quasi-judicial authorities are bound by the statutory time limits and cannot resort to the general law of limitation. However, the High Court also referenced other Supreme Court decisions indicating that when a tax is paid without the authority of law, the general law of limitation should apply, and a claim within three years from the date of discovery of the mistake is not barred.

3. Authority of the High Court to order a refund under Article 226 of the Constitution:
The High Court examined whether it could order a refund under Article 226 of the Constitution despite the statutory limitation. The petitioner contended that the Customs Authorities had illegally assessed the duty under an incorrect tariff item and that the excess duty was paid under a bona fide mistake. The High Court referred to the Supreme Court's decision in Salonah Tea Co. Ltd. v. Supdt. of Taxes, which established that the High Court has the power to direct a refund in cases where the tax was paid by mistake of law and the refund claim was made within three years of discovering the mistake. The High Court concluded that it had jurisdiction to order the refund and directed the Customs Authorities to refund the excess amount with interest.

Conclusion:
The High Court allowed the writ petition, declared the assessment under Heading No. 38.01/19(1) as without jurisdiction, and directed the Customs Authorities to refund the excess amount of Rs. 44,446.38 with interest at the rate of 12% per annum from the date of payment till the date of recovery. The Court emphasized that the Customs Authorities' recovery of the excess duty was without authority of law and that the writ court had the jurisdiction to order the refund under Article 226 of the Constitution.

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