1981 (9) TMI 117 - HC - Customs

Summary

Issues:
- Refund application time-barred under Section 27 of the Customs Act, 1962
- Jurisdiction of recovery of duty
- Writ of mandamus under Article 256 of the Constitution of India

Analysis:
1. The petitioners, a Company, received a gift of 40,000 cartons of butter oil from the United Nations in 1975. Upon arrival at the Port of Bombay, 161 cartons were found missing. The petitioners paid the assessed Customs Duty of Rs. 44,79,374.40 and later filed a refund application for the duty paid on the missing cartons.

2. The Assistant Collector of Customs rejected the refund application as time-barred under Section 27 of the Customs Act, 1962. The petitioners' appeal and revision were dismissed. The petitioners challenged these orders under Article 226 of the Constitution of India, arguing that the recovery of duty was without jurisdiction and illegal.

3. The Court analyzed Section 27(1) of the Act, emphasizing that the limitation period does not apply when duty recovery is illegal or without jurisdiction. Citing precedent, the Court held that the limitation does not apply in such cases. The recovery of duty for missing cartons, found to be without authority, rendered the limitation period inapplicable.

4. The petitioners' counsel argued for a writ of mandamus under Article 256 of the Constitution, asserting that the recovery of taxes without authority cannot be shielded by Section 27's limitation. The Court, however, found it unnecessary to delve into this argument as Section 27 did not apply to the case due to the recovery being without jurisdiction.

5. The Department contended that the assessment was lawful based on the Bill of Entry filed by the petitioners. However, the Court rejected this argument, stating that the petitioners were unaware of the missing cartons at the time of assessment. The Department's claim that the assessment was justified based on the Bill of Entry was dismissed.

6. Consequently, the Court allowed the petition, setting aside the previous orders and remitting the refund application back to the Assistant Collector of Customs for reconsideration on merits within two months. No costs were awarded in the case.