1994 (1) TMI 101 - HC - Customs

Refund under writ jurisdiction - Limitation - Unjust enrichment - Refund - Interest - Duty collected without authority of law

Summary

Issues Involved:
1. Refund of countervailing or additional duty of customs.
2. Applicability of limitation under Section 27(1) of the Customs Act, 1962.
3. Jurisdiction of the Writ Court under Article 226 of the Constitution.
4. Doctrine of unjust enrichment.
5. Applicability of the Central Excises and Customs Laws (Amendment) Act, 1991.
6. Entitlement to interest on the refunded amount.

Issue-wise Detailed Analysis:

1. Refund of Countervailing or Additional Duty of Customs:
The respondents, a manufacturer of Phthalate Plasticizers, imported certain industrial alcohols and paid countervailing duty under Section 3 of the Customs Tariff Act. They later discovered, via a circular dated 1st October 1984, that no such duty was payable on alcohol. They applied for a refund, but the Assistant Collector of Customs rejected the applications for 131 Bills of Entry as time-barred, although he allowed refunds for 3 Bills of Entry.

2. Applicability of Limitation under Section 27(1) of the Customs Act, 1962:
The Assistant Collector rejected the refund applications for 131 Bills of Entry on the grounds of limitation under Section 27(1) of the Customs Act, which requires applications to be made within six months from the date of payment of duty. The learned trial Judge held that the initial levy was without jurisdiction, making the general law of limitation applicable rather than the special law under the Customs Act.

3. Jurisdiction of the Writ Court under Article 226 of the Constitution:
The learned trial Judge held that under Article 226, the Writ Court has the jurisdiction to grant relief for the refund of duty collected without authority of law, even if the claim is barred by the special law of limitation. This was supported by various Supreme Court decisions, which consistently held that taxes collected without authority of law are refundable and the Writ Court can order such refunds.

4. Doctrine of Unjust Enrichment:
The appellants argued that the respondents would be unjustly enriched if refunded, as the duty might have been passed on to consumers. The court, however, found no evidence of such passing on. It was held that unjust enrichment is not a valid ground to deny refund when the duty was collected without authority of law.

5. Applicability of the Central Excises and Customs Laws (Amendment) Act, 1991:
The appellants contended that the refund should be credited to a Consumer Welfare Fund as per the 1991 Amendment Act. The court ruled this Act inapplicable as the claims pertained to a period before the Act's commencement. Furthermore, there was no evidence of the duty being passed on to consumers.

6. Entitlement to Interest on the Refunded Amount:
The learned trial Judge awarded interest at 10% on the refunded amount from the date of rejection of the refund application. The court upheld this, agreeing that the respondents were entitled to compensation for the use and detention of money collected without authority of law.

Conclusion:
The appeal was dismissed, affirming the trial court's judgment. The Assistant Collector was directed to reprocess the applications for the 131 Bills of Entry and grant refunds with interest as directed by the trial court. All contentions raised by the appellants were rejected, and the court found no merit in the arguments against the trial court's decision.