1994 (8) TMI 37 - HC - Customs

Summary

Issues Involved:
1. Refund of excess customs duty paid.
2. Applicability of the amended provisions of Section 27 of the Customs Act, 1968.
3. Doctrine of unjust enrichment.
4. Jurisdiction of the High Court to order a refund.

Detailed Analysis:

1. Refund of Excess Customs Duty Paid:
The writ petitioners, a partnership firm engaged in manufacturing, imported 62 crates of wood attracting a basic customs duty of 10% ad valorem based on Notification Nos. 62/85 and 311/86. However, upon filing the Bill of Entry on 8th October 1986, the customs duty was assessed at higher rates due to Notification Nos. 439/87-Cus. and 440/86-Cus. issued on 6th October 1986, which increased the duty to 60% and 40% ad valorem, respectively. The petitioners sought a refund of Rs. 3,62,398.39 for the excess duty paid under protest. The Assistant Collector of Customs initially rejected the refund application, but the Collector of Customs (Appeals) remanded the case for re-hearing. Upon re-evaluation, the Assistant Collector again rejected the claim, leading to an appeal before the Customs, Excise and Gold (Control) Appellate Tribunal, which directed the refund. Despite this, the customs authorities did not comply, prompting the petitioners to seek relief from the High Court.

2. Applicability of the Amended Provisions of Section 27 of the Customs Act, 1968:
The customs authorities argued that the petitioners must approach the Assistant Collector of Customs under the amended Section 27 of the Customs Act for a refund, citing a Supreme Court decision (Union of India v. Jain Spinners Ltd.). The High Court analyzed the facts and found that the petitioners had applied for a refund before the amendment of Section 27. The proviso to the amended Section 27 states that applications made before the amendment should be dealt with under the new provisions. Accordingly, the High Court concluded that the petitioners' application should be processed under the amended Section 27(2).

3. Doctrine of Unjust Enrichment:
The customs authorities contended that the doctrine of unjust enrichment applied, arguing that the petitioners passed on the duty to buyers through the sale of manufactured products. The High Court referred to a Bombay High Court decision (Solar Pesticide Pvt. Ltd. v. Union of India), which clarified that unjust enrichment applies when the importer sells the imported goods directly, passing on the duty to the buyer. In this case, the petitioners used the imported goods in manufacturing plywood products and did not sell the raw imported goods directly. Therefore, the High Court found no merit in the argument of unjust enrichment, as the petitioners did not pass on the duty directly to any buyer.

4. Jurisdiction of the High Court to Order a Refund:
The customs authorities argued that the High Court lacked jurisdiction to order a refund without the petitioners first approaching the Assistant Collector of Customs. The High Court disagreed, noting that the petitioners had already applied for a refund before the amendment and the Appellate Tribunal had directed the refund. The High Court held that it had jurisdiction to enforce the Tribunal's order and directed the customs authorities to process the refund application in accordance with the Tribunal's decision and the amended Section 27(2).

Conclusion:
The High Court allowed the writ petition, directing the customs authorities to refund the excess duty paid by the petitioners within three months, as per the Appellate Tribunal's order and the amended Section 27(2) of the Customs Act. The claim for interest on the refund was not pressed by the petitioners and thus was not granted. The writ petition was allowed without any order as to costs.