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 paid by petitioners due to the settlement reducing duty from 30% to 15% ad valorem. The court emphasized the economic impact on the newspaper industry and ordered the refund without requiring an affidavit for 'unjust enrichment'. However, the court denied entitlement to interest on the refund, citing the settlement nature of the matter. Bank guarantees for duty exceeding 15% ad valorem were discharged. The respondents were directed to refund excess customs duty within three months, with no costs to either party.

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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.

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