1986 (11) TMI 55 - HC - Customs

Issues Involved:
1. Refund of additional customs duty paid.
2. Validity of the notification reducing customs duty.
3. Application of Section 27(1) of the Customs Act.
4. Jurisdiction of the High Court under Article 226 of the Constitution.
5. Precedents regarding refund of taxes paid under mistake.

Detailed Analysis:

1. Refund of Additional Customs Duty Paid:
The petitioner, a company incorporated under the Indian Companies Act, sought a refund of additional customs duty paid on imported copper tubes used as raw material in manufacturing Oil and Temperature Gauges. The tubes landed in India between 24th September 1984 and 9th January 1985, and additional customs duty was paid at the rate of 28% under tariff entry 26(A). However, a notification dated 17th September 1984 exempted pipes and tubes of copper from duty in excess of 9% ad valorem. The petitioner claimed that the excess duty paid amounted to Rs. 1,70,201.50P.

2. Validity of the Notification Reducing Customs Duty:
The notification (No. 199/84-C.E., dated 17.9.1984) reduced the customs duty on copper alloy capillary tubes to 9%. The petitioner argued that the additional customs duty levied and collected over and above this rate was without the authority of law, violating Article 265 of the Constitution, which states, "No tax shall be levied or collected except by the authority of law."

3. Application of Section 27(1) of the Customs Act:
Section 27(1) of the Customs Act provides a six-month period for claiming a refund of any duty paid. The petitioner's refund applications were dismissed as being out of time. However, the petitioner invoked the extraordinary jurisdiction of the High Court under Article 226 of the Constitution, arguing that the duty was paid under a mistake of law, not under protest, and thus Section 27(1) should not apply.

4. Jurisdiction of the High Court under Article 226 of the Constitution:
The High Court's jurisdiction under Article 226 was invoked to protect constitutional rights and enforce constitutional obligations. The petitioner cited the Supreme Court judgment in State of Madhya Pradesh and another v. Bhailal Bhai & others, which held that taxes paid under a mistake of law must be refunded, and the High Court can order such a refund under Article 226.

5. Precedents Regarding Refund of Taxes Paid Under Mistake:
The court referred to several precedents, including:
- State of Madhya Pradesh v. Bhailal Bhai & Ors.: The Supreme Court held that taxes paid under a mistake of law must be refunded, and the High Court can order such a refund under Article 226.
- Barmalt (India) Pvt. Ltd. v. Union of India & Others: The Division Bench of the High Court dealt with a similar claim for refund of excise duty, rejecting the plea of unjust enrichment and emphasizing the court's power to order refunds.
- I.T.C. Limited v. Superintendent of Central Excise & Others: The Division Bench held that excess realisation of excise duty is outside statutory authority and the time limit under Section 27(1) does not apply.

Conclusion:
The court concluded that the excess customs duty was collected without the authority of law, as the applicable duty rate was 9% per the notification. The petitioners were entitled to a refund of the excess duty paid. The writ petition was allowed, and a mandamus was issued directing the respondents to refund Rs. 1,70,201.50P or the verified amount within six months. The writ petition was disposed of, with parties bearing their own costs.

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