1985 (5) TMI 170 - AT - Central Excise

High Court Upholds Customs Act Refund Denial, Emphasizes Timely Reporting

The High Court upheld the decisions of the Appellate Collector and Tribunal, denying the applicants' refund claims under Sections 13 and 23(1) of the ... Refund - Excess duty paid on shortage of goods due to pilferage Issues:1. Validity of cancellation of the 'out of charge' order under Section 47 of the Customs Act, 1962.2. Admissibility of refund claim under Section 13 of the Customs Act, 1962.3. Applicability of Section 23(1) of the Customs Act for granting refund.4. Binding nature of judgments from other High Courts on the Tribunal.Detailed Analysis:1. The case involved a dispute regarding the import of 1000 M.T. of nickel under the Open General Licence. The applicants paid a fine and duty levied on the consignment, obtained an 'out of charge' order, but later discovered damaged packages and suspected shortages. They sought a survey, which confirmed shortages. The Customs Department initially rejected their refund claim, stating shortages were not reported before clearance. The Appellate Collector and Tribunal upheld this decision, leading to the applicants seeking a reference to the High Court on the validity of canceling the 'out of charge' order.2. The applicants claimed a refund under Section 13 of the Customs Act, which exempts payment of duty on pilfered goods if reported before clearance. The Asstt. Collector rejected the claim due to delayed reporting of shortages. The Appellate Collector and Tribunal concurred, emphasizing the need for timely reporting to claim under Section 13. The applicants' argument of entitlement to refund under Section 13 or Section 23 was dismissed at all levels, leading to the application for reference to the High Court.3. The applicants also sought a refund under Section 23(1) of the Customs Act for excess duty paid on shortages. However, the Tribunal clarified that Section 23(1) applies to cases of absolute loss, not pilferage. Since the applicants had indicated suspected pilferage to the Assistant Collector, they could not later claim shortages were not due to pilferage. The Tribunal concluded that Section 23(1) did not cover the circumstances of the case, further strengthening the need for a High Court reference on the cancellation of the 'out of charge' order.4. The Tribunal addressed the issue of the binding nature of judgments from other High Courts, specifically referencing the Sialkot Industrial Corporation case. The Tribunal detailed its disagreement with the Delhi High Court judgment and clarified that while such judgments raise legal questions, the binding nature of decisions is well-established. The Tribunal's decision not to consider the Delhi High Court judgment binding on them was explained, emphasizing the settled limitations on the binding nature of decisions from other High Courts.