Court quashes respondents' orders, directs refund of excess duty with interest.

The Court ruled in favor of the petitioner, quashing the orders of respondents 2 and 3 and directing respondent 1 to refund the excess duty amount of Rs. 1,60,439.12 with interest at 6% per annum from the date of the petition until payment, without any order for costs.

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Issues:
1. Rejection of petitioner No. 1's claim for refunds of excess paid towards duty of customs.

Detailed Analysis:
The petitioner, engaged in the manufacture of rayon and rayon products, imported articles liable to customs duty before July 1978. The dispute arose due to the amendments in Sections 14 and 15 of the Customs Act, 1962, regarding the determination of the value of goods for duty assessment and the date for duty rate determination, respectively. The controversy centered around the pre and post 1-7-1978 positions concerning the rate of exchange for duty calculation. The imports in question were made before 1-7-1978 but cleared after that date, with duty paid based on the rate of exchange at the time of ex-bonding. The petitioner sought a refund of excess duty paid due to a mistake, initially amounting to Rs. 24,841.20, later revised to Rs. 1,60,439.73. However, the refund applications were rejected by respondent 2 citing the limitation under Section 27 of the Act, leading to the petition under Article 226 of the Constitution.

The petitioner argued that the retention of the excess amount by respondent 1 was unlawful, as they promptly applied for refunds upon discovering the error. The subsequent applications were not fresh but aimed at correcting the initial mistake. Respondent's defense included reliance on Section 27(5) of the Act, application of Section 59 instead of Section 46, and the prospective nature of the amendments. The Court dismissed these defenses, emphasizing the obligation to refund unlawfully collected money and referencing relevant case law to support the petitioner's position.

The Court also addressed the applicability of the rate of exchange based on the date of presentation of the Bill of Entry post the 1-7-1978 amendment, contrary to the pre-amendment practice. It clarified that the date of presentation, not ex-bonding, determines the rate of exchange. The Court upheld the petitioner's argument that the second set of refund applications were not fresh but intended to rectify the initial mistake, and thus, the rejection by respondents 2 and 3 was erroneous. Consequently, the Court ruled in favor of the petitioner, quashing the orders of respondents 2 and 3, and directing respondent 1 to refund the excess duty amount of Rs. 1,60,439.12 with interest at 6% per annum from the date of the petition until payment, without any order for costs.

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