1987 (1) TMI 87 - HC - Customs

Court quashes refund rejection, orders repayment with interest. Petitioner entitled to costs. Imported film duty exempt.

The court quashed the Assistant Collector of Customs' order rejecting the refund claim and the subsequent appeal confirmation. Respondents were directed ... Plastics - Additional duty - Burden of proof - Refund - Duty paid under mistake of law Issues Involved:1. Whether the article imported was within the exemption or fell within the tabular exclusion 'foil' vide Ex. 'A'Rs.2. Whether the petition occasions consideration of factual aspects and is recourse to Article 226 of the Constitution of India, therefore, not properRs.3. Whether the rejection of the claim for refund by relying upon Section 27 of the Act was wrongRs.4. Is petitioner entitled to interest, and, if so, terms thereofRs.5. What orderRs.Detailed Analysis:1. Whether the article imported was within the exemption or fell within the tabular exclusion 'foil' vide Ex. 'A'Rs.The petitioner argued that the imported metallised polyester film was entitled to exemption from Additional Duty under Notification No. 228-Cus., dated August 2, 1976, as amended by Notification No. 443-Cus., dated November 29, 1976. The notification exempted 'articles made of plastics, all sorts,' but excluded 'foils' from this exemption. The petitioner contended that the film did not fall under the excluded category of 'foils.' The court examined the definitions and trade usage of 'film' and 'foil' and concluded that the metallised polyester film imported by the petitioner was indeed within the exemption and did not fall under the exclusionary term 'foil.'2. Whether the petition occasions consideration of factual aspects and is recourse to Article 226 of the Constitution of India, therefore, not properRs.The respondents argued that the petition involved serious questions of fact which should be determined by statutory authorities, not under Article 226 of the Constitution. However, the court found that the classification dispute was susceptible to an easy resolution and was covered by direct authority, specifically the decision in Precise Impex (P) Ltd. v. The Collector of Customs, Madras. The court held that recourse to Article 226 was proper in this case.3. Whether the rejection of the claim for refund by relying upon Section 27 of the Act was wrongRs.The court found that the rejection of the refund claim based on Section 27 of the Customs Act, 1962, was incorrect. The petitioner had discovered the mistake of law within a month or two preceding August 1986, and the claim for refund was made within three years of this discovery, as required by the ordinary law of limitation. The court cited previous decisions, including Shalimar Textile Mfg. Pvt. Ltd. v. Union of India and Others and Rapidur (India) Ltd. v. Union of India and Others, which held that claims for refund of duty recovered in violation of law are not governed by Section 27 of the Act.4. Is petitioner entitled to interest, and, if so, terms thereofRs.The court held that the petitioner was entitled to interest at the rate of 12 percent per annum from the expiry of eight weeks from the date of the order until the date of payment. The petitioner had initially claimed interest at the rate of 18 percent per annum from the date of collection, but the court found this excessive and instead set a deadline for the refund, with interest payable if the deadline was not observed.5. What orderRs.The court quashed the order of the Assistant Collector of Customs rejecting the claim for refund and the order confirming this rejection in appeal. The respondents were directed to refund the sum recovered as Additional Duty within eight weeks from the date of the order. If the refund was not made within this period, the amount would carry interest at the rate of 12 percent per annum from the expiry of the eight weeks until the date of payment. The petitioner was also awarded costs, with the respondents bearing their own costs.Order:The order of the Assistant Collector of Customs rejecting the claim for refund and the order confirming this rejection in appeal are hereby quashed. Respondents are directed to refund the sum recovered as Additional Duty within eight weeks from today. If the refund is not made within this period, the amount shall carry interest at the rate of 12 percent per annum from the expiry of eight weeks until the date of payment. The petitioner shall get its costs from respondents, who shall, in addition, bear their own. Rule, in the above terms, is hereby made absolute.