1973 (3) TMI 58 - SC - Customs

Whether the High Court ought to have granted in the circumstances of the case the relief asked for by the appellant-company in its writ petition? Held that - The refusal to return the excess duty on the ground that the appellant-company had not applied within time provided by the Act was clearly unsustainable. Since there was not and could not be any dispute with regard to the invoice price being the real value there was no point in filing any appeal; nor could the omission to file any such appeal be a proper or valid ground for refusing relief to the appellant-company, when there remained no longer any dispute between the parties as to the invoice price being the real value of the imported items. For the reasons aforesaid, we are satisfied that the High Court was not right in refusing the relief, in spite of its being satisfied that the excess duty was charged without any basis in law and also that the respondents could not lawfully retain the excess duty. In the circumstances we set aside the judgment of the High Court and allow the appeal.

Summary

Issues Involved:
1. Applicability of Section 40 of the Sea Customs Act, 1878.
2. Legal entitlement to the refund of excess customs duty.
3. Whether the High Court should have granted relief in the writ petition.
4. The role of invoice price as the real value under Sections 29 and 30 of the Sea Customs Act, 1878.

Issue-wise Detailed Analysis:

1. Applicability of Section 40 of the Sea Customs Act, 1878:
Section 40 stipulates that no customs duties or charges paid through inadvertence, error, or misconstruction shall be returned unless a claim is made within three months from the date of payment. The appellant-company contended that Section 40 did not apply to their case because the excess duty was not paid through inadvertence, error, or misconstruction but was demanded on the grounds that the invoice price was not the real value of the imported goods. The Supreme Court agreed with this contention, noting that the excess duty was charged in violation of Sections 29 and 30 and in excess of jurisdiction, as the real value of the goods was their invoice price. Consequently, Section 40 was deemed inapplicable.

2. Legal Entitlement to the Refund of Excess Customs Duty:
The appellant-company argued that it had a legal right to the return of the excess duty, as the duty was charged without the authority of law. The Supreme Court concurred, emphasizing that the Customs authorities had already refunded excess duty on certain items, acknowledging that the excess duty was levied without jurisdiction. The Court held that since Section 40 did not apply and no other provision barred the refund, the appellant-company had a corresponding legal right to recover the excess duty.

3. Whether the High Court Should Have Granted Relief in the Writ Petition:
The High Court had denied relief, suggesting that the proper remedy was to file appeals against the erroneous assessments under Section 188 of the Act. However, the Supreme Court found this reasoning flawed, as there was no longer any dispute regarding the invoice price being the real value of the imported items. The Court held that the High Court should have granted the relief sought in the writ petition, given that the excess duty was charged without any legal basis.

4. The Role of Invoice Price as the Real Value Under Sections 29 and 30 of the Sea Customs Act, 1878:
Sections 29 and 30 require the owner of imported goods to state the real value in the bill of entry and allow the Customs Collector to ascertain the real value from documents like invoices. The appellant-company had declared the real value based on the manufacturer's invoices, which the Customs authorities initially refused to accept. However, the Government of India, in its revision decision, directed that the invoice price should be accepted as the real value. The Supreme Court affirmed that the Customs authorities' refusal to accept the invoice price and the subsequent charging of excess duty were unlawful and beyond their jurisdiction.

Conclusion:
The Supreme Court set aside the High Court's judgment, allowing the appeal and directing the respondents to refund the excess duty to the appellant-company. The Court emphasized that the Customs authorities had no legal basis to retain the excess duty and that the appellant-company was entitled to the refund. The respondents were also ordered to pay the appellant-company's costs incurred both in the Supreme Court and the High Court.