2015 (2) TMI 826 - HC - Customs

Refund of Excess Custom duty - Period of limitation - Application of Article 113 or Limitation Act 1963 read with Section 72 of the Contract Act, 1872 - Late filing of refund application - Project Imports Regulations 1986 - Held that - The Project Imports Regulations 1986 specifically stated that goods under heading No. 98.01 were to be assessed under those regulations and that any contract in relation to importation of those goods had to be registered with the authorities. Now, if the goods imported by the petitioners falls under Chapter 84 specifically and not under 98.01, the regulations did not apply to such import and it was not at all obligatory on the part of the petitioners to register the contract with the authorities. Section 27 only applies when there is over payment of duty or interest under the Customs Act 1962. Therefore, the duty or interest must be leviable under the Customs Act and paid under it. Any excess sum allegedly paid has to be claimed within one year. When the petitioners case is that the tunnel boring machines were not exigible to any duty, any sum paid into the exchequer by the petitioners was not duty or excess duty but simply money paid into the government account. The government could not have claimed or appropriated any part of this as duty or interest. Therefore, there was no question of refund of any duty by the government. The money received by the government, could more appropriately called money paid by mistake by one person to another which the other person as an obligation to repay, under Section 72 of the Contract Act, 1962. A person to whom money has been paid by mistake by another person, becomes at common law a trustee for that other person with an obligation to repay the sum received. This is the equitable principle on which Section 72 of the Contract Act, 1872 has been enacted. Therefore, the person who is entitled to the money is the beneficiary or cesti qui trust. When the said sum of ₹ 360.46 lakhs was paid by mistake by the petitioner to the government of India, the latter instantly became a trustee to repay that amount to the petitioner. The obligation was a continuing obligation. When a wrong is continuing there is no limitation for instituting a suit complaining about it. On or about September 2012 the said joint venture as a bidder of similar kind of works Project with the Kolkata Municipal Corporation for drinking water for human and animal consumption while processing the said Tender discovered that a sum of ₹ 360.46 lakhs was paid under bona fide mistake as Customs duty on account of import of the said Boring Tunnel machines when the same are wholly exempted. Your petitioners state that the said joint venture has already been paid customs duty upon import of any other machines and have not ever raised any dispute. However, upon detection of the factum was being paid by way of customs duty under bona fide mistake the said joint venture immediately their Advocate by a letter dated June 4, 2013 submitted representation before the Respondent No.1 and 2 apprising them of such bona fide mistake committed by the said joint venture and prayed inter alia, for return of the said sum of ₹ 360.46 lakhs which is being unlawfully retained as customs duty on account of the import of the said machines which is otherwise exempted. I accept this explanation and hold that the period of limitation began to run against the petitioners from September 2012. If you take September 2012 to be the beginning of the period of limitation, the petitioner had, under Article 113 of the Limitation Act 1963, a period of three years to institute a suit from that time. Therefore, in my opinion, the claim in the writ application cannot be said to be barred by the laws of limitation. Decision in the case of Dunlop India Ltd. Vs. Collector of Customs, Calcutta 1997 (9) TMI 108 - SUPREME COURT OF INDIA distinguished - Writ applicaiton is allowed. - Decided in favour of assessee

Issues:
1. Customs duty refund claim for tunnel boring machines import.
2. Applicability of Customs Act 1962 and Project Import Regulations 1986.
3. Time limitation for claiming refund under Section 27 of Customs Act 1962.
4. Equitable principle of refund for money paid by mistake.
5. Interpretation of limitation period under the Limitation Act 1963.

1. Customs Duty Refund Claim:
The case involved a dispute over the payment of Customs duty on the importation of tunnel boring machines by the petitioners. The petitioners sought a refund of the duty amounting to Rs. 3,60,45,561, contending that the duty was paid by mistake as the imported goods were exempted from duty under specific classifications. The main contention was whether the petitioners were entitled to a refund of the entire sum paid.

2. Applicability of Customs Act 1962 and Project Import Regulations 1986:
The judgment discussed the applicability of the Customs Act 1962 and the Project Import Regulations of 1986 in relation to the classification and clearance of goods. The argument centered around whether the contract between the petitioners and the Kolkata Municipal Corporation was registered as required under the regulations, impacting the petitioners' eligibility for duty exemption.

3. Time Limitation for Claiming Refund:
The judgment analyzed the provisions of Section 27 of the Customs Act 1962, which stipulates a one-year period for claiming a refund of duty or interest. The respondents argued that the petitioners' application for refund made in June 2013 was out of time, thus barring them from seeking a refund. The court deliberated on the timeliness of the refund claim under the statutory provisions.

4. Equitable Principle of Refund for Money Paid by Mistake:
The court examined the equitable principle of refund for money paid by mistake, citing Section 72 of the Contract Act 1962. It emphasized that if money was paid to the government by mistake, the government had an obligation to repay it to the petitioner, irrespective of the statutory limitations for duty refunds under the Customs Act.

5. Interpretation of Limitation Period under the Limitation Act 1963:
The judgment interpreted the limitation period under the Limitation Act 1963 concerning the recovery of money paid by mistake. It considered the petitioner's explanation of discovering the mistake in September 2012 and the subsequent representation for refund made in June 2013. The court concluded that the claim was not time-barred under the Limitation Act.

In conclusion, the court allowed the writ application, directing the respondents to refund the Customs duty amount to the petitioners within a specified timeframe, emphasizing the equitable obligation for repayment of money paid by mistake.

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