Territorial jurisdiction and unlawful customs exaction: communication of orders and refund of duty collected without authority of law.

Article 226 jurisdiction was attracted because a part of the cause of action arose in Rajasthan when the assessment, appellate and revisional orders were communicated to the petitioner there. The levy of countervailing duty was treated as unlawful because the imported goods did not attract excise duty under the relevant tariff entry during the material period, so no duty was leviable under Section 2A of the Indian Tariff Act, 1936. The refund claim was not defeated by Section 27(1) of the Customs Act, 1962, since that provision applies to valid assessments and could not justify retention of money collected without authority of law. Delay and laches also did not bar relief.

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Issues: (i) whether the High Court had territorial jurisdiction because part of the cause of action arose within Rajasthan when the impugned orders were communicated there; (ii) whether the amount recovered as countervailing duty was legally leviable and whether the refund claim was barred by Section 27(1) of the Customs Act, 1962 or by delay and laches.

Issue (i): Whether the High Court had territorial jurisdiction because part of the cause of action arose within Rajasthan when the impugned orders were communicated there.

Analysis: Under Article 226 of the Constitution of India, as amended, jurisdiction is attracted where the cause of action wholly or in part arises. The material facts forming the cause of action included not only the levy and rejection of refund at Bombay but also the communication and receipt of the assessment, appellate, and revisional orders at the petitioner's place in Rajasthan. Communication of the orders to the registered office supplied a part of the bundle of facts necessary for the relief claimed.

Conclusion: The High Court had territorial jurisdiction.

Issue (ii): Whether the amount recovered as countervailing duty was legally leviable and whether the refund claim was barred by Section 27(1) of the Customs Act, 1962 or by delay and laches.

Analysis: The goods imported by the petitioner did not attract excise duty under the relevant tariff entry during the material period, and therefore no countervailing duty under Section 2A of the Indian Tariff Act, 1936 was leviable. The amount recovered as Rs. 396 per metric tonne was thus an illegal exaction. Section 27(1) of the Customs Act, 1962 applies to refund claims arising from a valid order of assessment, and it could not be used to sustain retention of money levied without authority of law. The Court also held that the writ petition was not defeated by delay, because the petitioner acted after discovering the mistake and pursued the statutory remedies before approaching the Court.

Conclusion: The levy was unlawful and the refund claim was not barred.

Final Conclusion: The Court upheld the petitioners' entitlement to relief, quashed the impugned orders, and directed refund of the amounts illegally collected as a consequential consequence of the unlawful levy.

Ratio Decidendi: Where an unlawful customs exaction is not supported by the charging provisions, a refund claim is not defeated by the limitation applicable to valid assessments, and communication of the impugned orders at the petitioner's place may supply part of the cause of action for Article 226 jurisdiction.

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