1998 (7) TMI 101 - HC - Customs

Summary

Issues:
1. Whether a claim for refund of duty paid under the Customs Act can be maintained beyond the prescribed period?
2. Whether the recovery of countervailing duty from the petitioner was legal considering the exemption notifications?
3. Whether the High Court can direct a refund in exceptional circumstances?

Analysis:

Issue 1: The petitioner, a public sector undertaking, imported materials and paid countervailing duty. The petitioner later claimed a refund, contending the duty was not lawfully recoverable due to exemption notifications. The Assistant Commissioner and the Collector of Customs dismissed the claim as it was filed beyond the period prescribed by Section 27 of the Customs Act. The petitioner argued that the recovery was illegal and the refund claim should not be governed by Section 27. The court referred to the Mafatlal Industries case, stating that refund claims must be made within the specified period under the Act. The court emphasized that the Act provides a mechanism for correcting errors, and refunds must be adjudicated under the Act's provisions. The court held that Section 27 constitutes 'law' under Article 265 of the Constitution, and failure to claim refund within the stipulated period legitimizes the collection.

Issue 2: The petitioner argued that the recovery of duty was illegal due to exemption notifications. The court held that refunds must be claimed under the Act's provisions and within the prescribed time limit. The court stated that recovery and retention of money, even if not recoverable, would be considered lawful if not claimed within the specified period. The court highlighted that exceptions to this rule exist only when the recovery is made under a provision declared constitutionally invalid.

Issue 3: The petitioner sought a refund beyond the prescribed period, urging the court to direct the refund under extraordinary writ jurisdiction. The court referred to previous judgments, emphasizing that the High Court's jurisdiction under Article 226 cannot circumvent valid provisions of the law. The court held that Article 226 should be used to ensure authorities act in accordance with the law, not against it. The court dismissed the writ petition, stating that the High Court cannot direct refund contrary to the provisions of Section 27 of the Customs Act.

In conclusion, the court dismissed the writ petition, emphasizing that refunds must be claimed within the prescribed period under the Customs Act, and the High Court cannot direct refunds in defiance of valid legal provisions.