Customs duty refund on unlawful levy: Section 40 did not bar restitution where duty was collected under a mistaken legal premise.

Excess customs duty collected on an erroneous legal basis was held refundable, because the duty had been levied without authority of law after the Government accepted the invoice price and directed reassessment on that basis. Section 40 of the Sea Customs Act, 1878 was confined to payments made through inadvertence, error or misconstruction within its prescribed time and did not bar restitution where duty was exacted under protest on a mistaken legal premise. The prior grant of refund for some consignments confirmed the absence of lawful recovery, and no other statutory bar to refund was shown. The refusal to refund was therefore unsustainable, and the appellant was entitled to restitution of the excess duty.

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Issues: Whether the refusal to refund excess customs duty on the ground that the refund claim was not filed within the time prescribed by Section 40 of the Sea Customs Act, 1878 was sustainable when the duty had been levied without authority of law.

Analysis: The imported goods had been assessed by rejecting the invoice price, but the Government of India had already accepted the invoice price as the real value and directed reassessment on that basis. Once that position was settled, the excess duty charged on the remaining consignments was also without authority of law and had been recovered in excess of jurisdiction. Section 40 applied only to payments made through inadvertence, error or misconstruction and within the prescribed time; it did not govern a case where duty was exacted on an erroneous legal premise and paid under protest. The fact that refund had been granted for some consignments confirmed that the duty was not lawfully recoverable, and no other statutory bar to restitution was shown.

Conclusion: The refusal to refund was unsustainable. Section 40 did not apply, and the appellant was entitled to refund of the excess duty.

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