Metal Distributors Ltd. vs Union of India

Pendse, J.—Petitioner No. 1 are a limited Company and carry on business as metal distributors and importers of diverse ferrous and non- ferrous metals. Pursuant to contracts arrived at between the petitioners and foreign suppliers during October 1979 and February 1980, the foreign suppliers shipped diverse quantities of goods, the total of which was 733.212 metric tons. The goods were shipped by different steamers and upon importation, the petitioners filed 26 bills of entries for clearance for home consumption. The goods were liable to payment of duty under Tariff Entry 73.03/05 and were assessable for customs duty at 30%, auxiliary duty at 5% and additional duty at Rs. 225/- per metric ton. The Customs Department claimed that the goods were liable to be assessed under Tariff Item No. 73.15(1) and (2) and liable to pay customs duty at the rate of 220% per metric ton, auxiliary, duty at the rate of 5% and additional duty at the rate of Rs. 325/- per metric ton.

The goods were inspected and were cleared in the year 1981 and on June 20, 1981, the petitioners paid the sum of Rs. 1,29,23,037.77 in respect of goods covered under 26 bills of entry. At the time of clearance, it was noticed that there was short delivery and such short delivery was certified by Bombay Port Trust authorities by issuing the certificate. On calculation of the amounts, the petitioner were entitled to the refund of Rs. 2,20,132.86 in respect of duty paid in respect of short landing.

The petitioners filed refund applications on March 1, 1982 furnishing requisite particulars, It is also required to be stated that the petitioners had paid duty on June 20, 1981 under protest. The Assistant Collector of Customs, Bombay, by impugned order dated April 8, 1982 rejected the application on the ground that the claim for refund was lodged after expiry of six months from the date of payment of duty and consequently was barred by limitation as prescribed u/s 27(1) of the Customs Act. The order of the Assistant Collector is under challenge in this petition filed under Article 226 of the Constitution of India.

Shri Mehta, learned Counsel appearing on behalf of the petitioners, submitted that the impugned order cannot be sustained. The submission is correct and deserves acceptance. It is not in dispute and, indeed the respondents have not cared to file any return in answer to the petition that part of the goods covered by 26 bills of entry were short landed and Customs Department recovered the duty by ignoring that aspect. The petitioners paid the duty under protest and subsequently filed refund applications. The refund application could not have been thrown out on the ground of bar of limitation u/s 27 of the Act for more than one reason. In the first instance, when the duty was paid under protest the bar of limitation is not attracted. Shri Mehta is justified in relying upon decision of one of us (Pendse, J.) reported in Indian Dairy Corporation Vs. Union of India, in support of the submission. Secondly, even otherwise, the recovery was without any authority of law as the fact of short landing is not in dispute and consequently, though the Assistant Collector may be right in refusing to grant refund with reference to Section 27 of the Act, the said bar is not applicable when the petitioners approach this Court under Article 226 of the Constitution of India. In these circumstances, the impugned order passed by the Assistant Collector cannot be sustained.

The Counsel appearing on behalf of the Department submitted that the Assistant Collector has not ascertained the accuracy of the amount of refund claim of the petitioners and, therefore, the matter is required to be remitted back. The submission is correct and deserves acceptance.

Accordingly, rule is made absolute and the impugned order passed by the Assistant Collector of Customs on April 8, 1982 and identical orders passed in respect of other bills of entry are set aside and the Assistant Collector is directed to re-examine the applications for refund for the purpose of ascertaining the claim to be granted. It is made clear that the Assistant Collector shall not refuse to grant the claim on the ground that the applications for refund were barred. The Assistant Collector is directed to calculate the amount of refund and pass appropriate orders within a period of two months from the date of the receipt of the writ and thereafter pay the amount to the petitioners forthwith. In case, the Assistant Collector fails to pass appropriate order within the stipulated period and pay the amount with interest at the rate of 15% per annum from today till the date of payment. The respondents shall pay the costs of the petition.