1990 (2) TMI 60 - HC - Customs

Summary

Issues:
Challenge to levy of additional duty under Customs Tariff Act based on exemption notification. Refund application rejected as time-barred under Section 27 of Customs Act, 1962.

Analysis:
1. The petitioners, a partnership firm engaged in manufacturing drawing pens, imported goods under Open General Licence and were charged additional duty under Customs Tariff Act. The petitioners claimed the levy of additional duty was contrary to law based on Notification No. 71/86 and 164/86. Refund applications were rejected by the Assistant Collector of Customs as time-barred under Section 27 of the Customs Act, leading to the petition under Article 226 of the Constitution of India.

2. The counsel for the petitioners argued that the refund cannot be declined based on limitation if duty was recovered without authority of law. The key issue was whether the additional duty levied on the imports was in violation of law. The exemption notification dated February 10, 1986, exempted duty on goods falling under Chapter Heading 90.17, including drawing and mathematical instruments. The court agreed that the Department was not entitled to recover additional duty in light of this notification.

3. The Department contended that the exemption should not be interpreted based on Central Excise rules and that only drawing and mathematical instruments were exempted, not spare parts or accessories. However, the court found that the items imported by the petitioners fell under Heading 90.17 and were not treated as spare parts or accessories. The Department's argument was deemed unsustainable, and the levy of additional duty was held to be in violation of law.

4. Consequently, the petition was allowed, and the Department was directed to refund the additional duty paid by the petitioners. The Assistant Collector of Customs was instructed to calculate and make the payment within three months. If the payment was delayed, the petitioners would be entitled to interest at 12% from the expiry of the three-month period. No costs were awarded in the matter.