2004 (1) TMI 85 - HC - Customs

Refund of excess amount - Limitation - Mistake of law - manufacturing business - Whether the claim is just or not - 'unjust enrichment' - HELD THAT - The original claim was rejected being time-barred. Therefore, unless the delay condoned there is no scope of the authority to go into the question of recovery of purported excess Customs duty. The appellate authority did not adjudge the issue even after formulating the point and thereby committed a mistake in realising the point to come to an appropriate conclusion. In other words, he completely by-passed the issue. By now, it is well settled that delay can be condoned by the Court of law unless such power is given to any authority. This proposition is applicable whereunder the applicability of Limitation Act is available. The general proposition is that unless specified no forum other than Court can condone the delay. Duty paid under mistake of law is duty recovered without authority of law and jurisdiction. In salonah Tea Company Ltd. v. Superintendent of Taxes, 1987 (12) TMI 3 - SUPREME COURT the Supreme Court held normally in a case where tax or money has been realised without the authority of law, the same should be refunded and in an application under Article 226 of the Constitution of India, the Court has power to direct the refund unless there has been avoidable laches on the part of the petitioner. I have already indicated that the question of nullity being void in nature, no law prescribed as yet to restrain any void claim unlike the voidable claim. Therefore, the CEGAT is entitled to go into the question of 'unjust enrichment' ignoring the question of the statutory limitation. Incidentally, it is to be remembered that both the claimant and the authority are either instrument of the Government or pure Governmental authority. It is not desirable that this type of dispute should not be persisted amongst themselves. It is further to be remembered that rejection, as made, by the original authority relates to making application beyond the period of six months without ascertainment of the factum that whether the period of six months is appropriate in the case of a Government instrumentality or one year. However, if the application, as made by the petitioner company even beyond the period of one year such principle may not be applicable. The authority concerned did not consider the same apparently as available in the record. Therefore, even the rejection as made by the authority and the appellate authority on that score cannot be said to be free from doubt leaving aside the part of applicability of general principles of Limitation. Here admitted position is that the application for refund was made within the period of three years from the date of knowledge. Therefore, there is a sufficient ground for the petitioner company to raise its grievance before the authority. In doing so if Section 27 of the Act is read with the guideline of the Supreme Court, it will be interpreted that Section 27 may not be rigidly followed in an appropriate case. A case of 'unjust enrichment' i s definitely one of such cases as interpreted above for the purpose of due consideration without being hit by time frame as given u/s 27 of the Customs Act. Therefore, I set aside the order of the Customs authority and the Appellate authority on the ground of limitation. But in doing so, I am not directing the authority to refund the amount. On the other hand, I direct the petitioner company to make an application to the CEGAT for the purpose of coming to an appropriate conclusion in respect of merit of the case. Such application will be made within a period of two weeks from the date of communication of this order. The CEGAT will convert such application into an appeal and give the de novo hearing in respect of the merit of the case and decide the issue once for all within a period of two months from the date of filing of the application by the petitioner. There will be no order as to costs.

Summary

Issues Involved:
Challenge to order of appeal rejecting refund of excess Customs Duty; Determination of mistake of law; Time-barred refund claim.

Summary:

Issue 1: Challenge to Order of Appeal
The petitioner, a Government of India Enterprise, challenged an order of appeal by Commissioner of Customs (Appeals) rejecting the refund of excess Customs Duty, which was confirmed by the Assistant Collector of Customs (Appraising Refund Section).

Issue 2: Determination of Mistake of Law
The petitioner imported Hot Rolled Plates but Customs Authorities mistakenly classified them as alloy steel plates, resulting in higher Customs Duty payment. The Assistant Collector rejected the refund claim as time-barred under Section 27 of the Customs Act, 1962. The Commissioner of Customs (Appeals) held that the question of mistake of law falls under the purview of a Court, not the departmental authorities.

Issue 3: Time-barred Refund Claim
The appellate authority's order was deemed hasty as the original claim was rejected as time-barred. The authority did not adjudicate the issue properly. The Court emphasized the importance of condoning delays as per the law and highlighted the principle of unjust enrichment.

The Court set aside the Customs authority and Appellate authority's orders on the ground of limitation. The petitioner was directed to apply to the CEGAT for a de novo hearing within two weeks. The CEGAT was instructed to decide on the merit of the case within two months. The Court emphasized the need to consider the principle of unjust enrichment and not be rigidly bound by the time frame under Section 27 of the Customs Act.