1998 (10) TMI 74 - SC - Customs

Court Orders Refund of Excess Customs Duty, No Interest Allowed

The court upheld the challenge to the constitutional validity of Notification No. 49/89-Customs, directing the respondents to refund excess customs duty ... Constitutional validity of Notification No. 49/89-Customs, dated 1-3-1989 - Held that:- The writ petitions are disposed of by holding that the respondents are entitled to levy and recover only to the extent of 15% ad valorem on the glazed newsprint imported/cleared by the petitioners during the period 1-3-1989 to 24-1-1990 and in cases where the respondents have recovered over and above 15% ad valorem, that part of the excess customs duty should be refunded to the petitioners in each case within a period of three months from today without insisting any affidavit from the petitioners on the basis of `unjust enrichment principle'. The bank guarantee, if any, furnished in W.P. 272/90 shall stand discharged. Issues:Challenge to constitutional validity of Notification No. 49/89-Customs dated 1-3-1989 under Article 32 of the Constitution of India.Settlement terms proposed by respondents regarding customs duty on glazed newsprint.Entitlement to interest on refund.Applicability of Mafatlal Industries case on refund.Refund of excess customs duty paid.Discharge of bank guarantee.Applicability of Interest Act, 1978 and Section 27A of the Customs Act, 1962.Analysis:The judgment pertains to writ petitions challenging the constitutional validity of Notification No. 49/89-Customs dated 1-3-1989, which imposed a 30% ad valorem customs duty on imported glazed newsprint used for news magazines. The court noted subsequent events where the Union Government proposed a settlement to charge duty at 15% ad valorem for imports between 1-3-1989 to 24-1-1990. The petitioners accepted the offer seeking refund of excess duty paid. The court emphasized the economic burden on the newspaper industry and directed the respondents to refund excess customs duty without insisting on an affidavit based on the 'unjust enrichment principle'.Regarding the entitlement to interest on the refund, the court rejected the claim, stating that the matter arose from a settlement between parties, making provisions of the Interest Act, 1978, and Section 27A of the Customs Act, 1962 inapplicable. The court also discharged any bank guarantee furnished for customs duty exceeding 15% ad valorem. The judgment concluded by directing the respondents to refund excess customs duty collected above 15% ad valorem within three months, without requiring additional affidavits, and without costs to either party.