1988 (8) TMI 105 - HC - Customs

Court Orders Refund of Excess Duty, Rejects Time Bar Claim

ASHOKA INDUSTRIES Versus UNION OF INDIA

ASHOKA INDUSTRIES Versus UNION OF INDIA - 1988 (38) E.L.T. . 3 (Cal.) Issues Involved:1. Classification of imported goods under the correct tariff item.2. Wrongful or illegal levy of excess duty.3. Bar of limitation for claiming refund.4. Alternative remedy and jurisdiction of the court.5. Unjust enrichment and passing on the burden of duty to customers.Detailed Analysis:1. Classification of Imported Goods:The petitioner, Ashoka Industries, imported stainless steel strips and sheet cuttings, which were assessed under Tariff Item No. 73.15(2) instead of 73.15(1). The petitioner argued that the goods should be classified under 73.15(1), which had a lower duty rate. The court examined the definitions of 'hoop and strip', 'sheets and plates', and 'angles, shapes and sections' under the Customs Tariff Act. It was determined that the imported goods, described as stainless steel strip and sheet cuttings, did not fit the definition of 'strips, sheets, and plates' but rather as 'arisings and off-cuts', which are not end products. The court concluded that the goods should be classified under 73.15(1), not 73.15(2).2. Wrongful or Illegal Levy of Excess Duty:The court found that the customs authorities had incorrectly classified the goods under 73.15(2), resulting in an excess duty payment of Rs. 3,08,679.81 p. The court held that the excess duty was wrongfully levied as the goods did not fit the description under 73.15(2).3. Bar of Limitation for Claiming Refund:The petitioner applied for a refund on 11th October 1982, which was rejected. The court considered whether the claim was barred by limitation. It was noted that the petitioner discovered the mistake from the Customs Tariff Amendment Bill, 1982, and filed for a refund within six months of this discovery. The court ruled that the claim was not barred by limitation, as the period of limitation starts from the date the mistake is discovered.4. Alternative Remedy and Jurisdiction of the Court:The respondents argued that the petitioner should have followed the procedure prescribed by the Customs Act for refund claims. However, the court held that the extraordinary remedy under Article 226 of the Constitution was available as the duty was collected unlawfully. The court cited precedents where it was held that if the tax is collected without jurisdiction, the court can direct a refund under Article 226.5. Unjust Enrichment and Passing on the Burden of Duty to Customers:The respondents contended that the petitioner had passed on the burden of duty to its customers, leading to unjust enrichment if a refund was granted. The court found no factual basis for this claim in the affidavit in opposition. It was held that unless it is proven that the petitioner realized customs duty from its customers, the argument of unjust enrichment cannot be sustained. The court ruled that the petitioner was entitled to the refund as the duty was collected without authority of law.Conclusion:The court directed the respondents to refund the excess duty amount of Rs. 3,08,679.81 p. to the petitioner. Since the amount had already been refunded pursuant to an interim order, the petitioner was allowed to appropriate the same towards the satisfaction of the claim. The order for the petitioner to furnish a bank guarantee was vacated. There was no order as to costs.