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Issues:
1. Refund of Customs duty for damaged consignment 2. Interpretation of when an export takes place 3. Applicability of Section 27 of the Customs Act Analysis: The judgment revolves around the petitioners, an insurance company, seeking a refund of Customs duty amounting to Rs. 26,62,187.50 for a consignment damaged during export. The consignment was insured for export by the National Agricultural Co-operative Marketing Federation of India Ltd. to an organization of the U.S.S.R. Government. A fire outbreak during the voyage led to damage of the cargo, prompting the petitioners to pay over U.S. Dollars 21,07,520 to the buyers in the U.S.S.R. and receive a letter of subrogation. An agreement was reached for the damaged consignment's sale to the 4th respondents for Rs. 44,50,000, with a shared refund agreement for the export duty. The first issue addressed is the determination of when an export takes place. Citing a Division Bench judgment, it was established that Customs duty on exported goods becomes leviable only when the export is complete, meaning when the goods intended for export leave the territorial waters of India. This distinction between chargeability under Section 12 and assessment under Section 16 is crucial in understanding the point at which Customs duty becomes payable. The next significant aspect of the judgment pertains to the recovery of Customs duty that is not legally leviable. The court referred to previous cases to highlight that if duty has been collected unlawfully, the recovery lacks legal authority. In cases where goods intended for export do not leave Indian territorial waters, Customs duty should not have been levied, and any duty collected under such circumstances is deemed unauthorized. As a result, the court, under Article 226, can order the refund of such Customs duty, aligning with established legal principles. Regarding the applicability of Section 27 of the Customs Act, the court clarified that this provision only applies when Customs duty has been collected and held in accordance with the law. In situations where duty collection lacks legal authority, as in this case, Section 27 does not come into play, allowing the court to overturn the appellate order and order the refund of the Customs duty. The judgment concluded by granting the petition for refund with modifications, including provisions for interest payment from a specified date.
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