2004 (1) TMI 90 - HC - Customs

Demand - refund of the excess amount - Limitation - expiry of the time limit of six months prescribed in Section 27(4) - money deposited on anticipation of payment of duty - anticipating delivery of 69 bales of paper - Cause of action - HELD THAT - In the instant case, only 51 bales were delivered to the petitioner and, therefore, it was open for the Revenue to deduct the amount of duty on the goods, namely, 51 bales entered for home consumption from the amount deposited by the petitioner to that extent only. It was the duty of the respondent to return the balance amount to the petitioner. The cause of action for demanding customs duty would arise only after 51 bales were imported into India and not before that. Thus with a view to see that the claim is not summarily rejected, the petitioner was required to furnish short landing certificate , which is dated 11-6-1974. Obviously, before that date, the petitioner could not have submitted his application. Therefore, considering this date, it cannot be said that the application of the petitioner was barred by limitation in view of Section 27(4) of the Act. It is an admitted position that the petitioner was likely to receive 69 bales but in fact only 51 bales were delivered to the petitioner. Therefore, the goods for which the petitioner had placed an order did not arrive in toto and only 51 bales crossed the customs barriers. Therefore, no question of any custom levy arises insofar as 18 bales are concerned. For these 18 bales, the petitioner's case does not come within the four corners of the Customs Act at all, as no import has taken place for 18 bales for which amount was paid in advance on the assumption that goods will be received. As no import actually took place, the Customs Authorities cannot refuse refund of the money paid by the petitioner insofar as the excess amount is concerned on the ground of limitation, as envisaged u/s 27 of the Act. Following the decision the of Supreme Court in the case of Salonah Tea Company Ltd. etc. v. Superintendent of Taxes 1987 (12) TMI 3 - SUPREME COURT , the Court is required to decide that when the petitioner deposited the amount with the respondent in anticipation of arrival of goods and the goods did not arrive in the quantity expected, can the Union of India state that he ought to have made an application within a period, as prescribed in Section 27 of the Act? In the instant case, application was made and it cannot be said that in view of what we have said hereinabove, the claim was barred by limitation prescribed in Section 24 of the Act. He was prosecuting his remedy under the belief that his application for refund would be considered and ultimately when the same was rejected, he has approached this Court. Therefore, there is no question of delay in this case. Money received by the respondent on 19-1-1974 is not the amount realized on the day of arrival of goods for home consumption in India. Therefore, there was no realization of payment of duty under the Act. The act of payment of money for goods not received was ultra vires as that amount had not been paid under the Act. Hence, the Act will not apply for retention of that part of money. In the opinion of the Court, Section 27 of the Act will not apply in this case as the amount retained by the Union of India was not an amount by way of customs duty assessed in accordance with law. Moreover, presuming that it is duty even then the refund application is within the period stipulated, which we have discussed above. It is in these circumstances, that we direct the Union of India to make the payment to the petitioner with interest at the rate of 12% p.a. till the amount is paid. The petition stands allowed with aforesaid direction with no order as to cost.

Summary

Issues Involved:
1. Whether the amount deposited by the petitioner in anticipation of customs duty constitutes "duty" under the Customs Act, 1962.
2. Whether the refund claim was barred by limitation u/s 27(4) of the Customs Act, 1962.
3. Whether the Union of India is liable to refund the excess amount deposited by the petitioner.

Summary:

1. Nature of the Amount Deposited:
The petitioner deposited an amount on 19-1-1974 in anticipation of customs duty for goods expected from the UK. Only 51 out of 69 bales were delivered. The petitioner sought a refund for the undelivered 18 bales. The court clarified that the initial deposit was not "duty" as defined u/s 2(15) of the Customs Act, 1962. Duty is levied on goods imported into India, and the amount paid in anticipation does not constitute duty until the goods are actually imported.

2. Limitation Period for Refund Claim:
The refund application was rejected as time-barred u/s 27(4) of the Customs Act, 1962, which prescribes a six-month limit. The court noted that the petitioner could not have applied for a refund before obtaining the "short landing certificate" on 11-6-1974. Therefore, the application submitted on 9-9-1974 was within the permissible period, and the claim was not barred by limitation.

3. Liability for Refund:
The court held that since only 51 bales were imported, the petitioner was entitled to a refund for the undelivered 18 bales. The amount deposited in anticipation of duty for these 18 bales was not "duty" as no importation occurred. The Customs Authorities cannot retain this amount under the pretext of limitation u/s 27 of the Act. The court cited precedents, including the Supreme Court's decision in Salonah Tea Company Ltd., emphasizing that taxes collected without authority must be refunded.

Conclusion:
The court directed the Union of India to refund the excess amount with interest at 12% p.a. from the date of deposit until payment. If not paid within eight weeks, the interest rate would increase to 15%. The petition was allowed with no order as to costs.