Full Judgment Text
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PETITIONER:
PATEL INDIA (PRIVATE) LTD.
Vs.
RESPONDENT:
UNION OF INDIA & OTHERS(with connected petition)
DATE OF JUDGMENT28/03/1973
BENCH:
SHETTY, K.J. (J)
BENCH:
SHETTY, K.J. (J)
CHANDRACHUD, Y.V.
CITATION:
1973 AIR 1300 1973 SCR (3) 811
1973 SCC (1) 745
ACT:
Sea Customs Act, 1878-S. 40--Whether refund of excess import
duty comes under the Section.
HEADNOTE:
The appellant Company was the sole distributing agent in
India for the imported products of an American :firm. The
Customs authorities used to levy import duty on the basis of
the invoice price under s. 29 read with s.. 30 of the Sea
Customs Act, 1878, as being the real value of the goods so
imported.
During 1954-55, the appellant Company imported several
items set out in Annexure ’D’ of the Special Leave Petition.
When items 1 and 2 arrived in Bombay Port, the Custom
authorities, ignoring their hitherto followed practice,
refused to accept the invoice price as the real value and
levied excess duty. An appeal to the Customs Collector
failed, whereupon the appellant Company lodged a revision
application before the Government of India.
Pending the disposal of the said revision, several other
items set out in Annexure ’D’ arrived in Bombay Port and the
Customs authorities charged the Appellant-Company with
excess amounts as import duty. For fear of demurrage
charges, the appellant-Company paid the excess duty under
protest.
In March, 1957, the Government of India disposed of the said
revision, accepting the appellants’ contention, and directed
re-assessment of import duty on the said two items 1 and 2
on the basis of their invoice price and also ordered refund
of the excess duty charged on them.
The appellant-Company, however, did not file appeals in
respect of the other items which had arrived during the
pendency of the said revision, although the Customs had,
levied excess duty thereon.
The Customs authorities refunded the excess duty levied
on those items, for which application for refund was made
within the time prescribed under s. 40, but refused refund
in respect of the rest of the items.,
An appeal to the Collector and a revision before the
Government of India were both rejected. The appellant
company, thereafter, filed a writ petition before the Delhi
High Court for appropriate relief, but was without success.
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The respondent contended before the Court that whatever
claims were found not in time as required by s. 40 of the
Sea Customs Act have been correctly rejected by the
Appraiser of Customs, Bombay, and therefore, the appellant-
Company had no claim. Allowing the appeal,
HELD : (1) After the disposal of the revision by the
Government of India, there was no doubt that the invoice
prices were the real value of the consignments and the
Custom authorities had no right in law to charge extra duty
on the rest of the consignments. Indeed, the excess duty
was charged in violation of Sections 29 and 30 and in excess
of
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jurisdiction. This position was also accepted by the
Custom authorities when they ordered refund of excess duty
charged by them in relation to items 22 to 29 and 33 to 35.
[815H]
(ii) Section 40 had no application in the present case.
Section 40 clearly applies only to cases where duties have
been paid through inadvertence, error or misconstruction,
and where refund application has to be made within 3
months.. The present case is not one where the excess duty
was paid through any of the 3 reasons set out in Section 40.
The excess duty was demanded on the ground that the invoice
price was not the real value of the imported goods. Since
s. 40 did not apply to the facts of the case, the
respondents could not retain the excess duty illegally.
[816D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1799 of
1969.
Appeal by special leave from the judgment and order dated
April 5, 1967 of the Delhi High Court at New Delhi in
letters Patent Appeal No. 44 of 1967 and Writ Petition No.
181 of 1967.
Petition under Article 32 of the Constitution of India for
the enforcement of fundamental rights.
N. S. Bindra, S. K. Dholakia and Vineet Kumar, for
The appellant and petitioner.
S. N. Prasad and S. P. Nayar, for the respondents.
The Judgment of the Court was delivered by
SHELAT, ACTING C.J.--At all material times, the appellant-
company acted as the sole distributing agent in India for
the products of M/s. Sawyer’s Inc., Portland, U.S.A., and
as such used to import View master stereoscopes, reels etc.
The custom authorities used to levy import duty on the basis
of the invoice price under s. 29 read with s. 30 of the Sea
Customs Act, 1878 as being the real value of the goods so
imported.
During the year 1954-55, the appellant-company imported
several items set out in Annexure ’D’ to the appellant’s
special leave petition, the details of which it is not
necessary to set out here. When items 1 and 2 arrived in
Bombay port, the customs authorities, ignoring their
hitherto followed practice,’ refused to accept the invoice
price as the real value and levied excess duty in the
aggregate sum of Rs. 1356. An appeal to the Customs
Collector failed whereupon the appellant-company lodged a
revision application before the Government of India.
Pending the disposal of the said revision, several other
items set out in the said annexure ’D’ arrived in Bombay
port, in respect of which the Customs, refusing to accept
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their invoice price.
813
charged the appellant-company with excess amounts as import
duty. For fear that demurrage charges would have to be
incurred, the appellant-company paid the excess duty charged
as aforesaid, but under protest.
On March 20, 1957, the Government of India disposed of the
said revision, accepting the appellant’s contention, and
directed reassessment of import duty on the said two items 1
and 2 on the basis of their invoice price and also ordered
refund to the appellant-company of the excess duty charged
on them.
It would seem that since the said revision was pending
before the Government of India, the appellant-company
thought that the Customs would follow the principle which
would be laid down in the decision in the said revision.
The appellant-company therefore, abstained from filing
appeals in respect of the other items, which had arrived
pending the decision of the said revision although the
Customs had levied excess duty thereon. On the said
revision being disposed of and the Government having therein
ordered refund, the appellant-company applied for refund of
the excess duty charged in respect of some of the items,
items 22 to 29 and 33-35. This was done under s. 40 of the
Act and within the period appointed therein. The Customs
granted refund on the aforesaid items 22 to 29 and 33-35,
although invoice value thereof had not been accepted, and
excess duty had been charged. The customs authorities,
however, declined to refund the excess duty in respect of
the rest of the items. The reason given for such refusal
was that the application for refund in respect of those
items had not been made within the time prescribed by s. 40.
An appeal to the Collector and a revision before the
Government of India against the said refusal to grant refund
were both rejected, the refusal by the Customs appraiser
being confirmed on the ground that refund was not applied
for in time under sec. 40.
The appellant-company thereupon filed a writ petition in the
High Court of Punjab (at Delhi) under Art. 226 of the
Constitution pleading inter alia that :
(a) Sec. 40 of the Act had no application,
(b) the Union of India was not entitled to
appropriate or retain the said excess duty,
(c) the appellant-company had ’a legal right
to the return of the said excess duty, and
(d) that there was an error apparent on the
record in the orders refusing return of the
excess duty.
The appellant-company on these ^Pleas prayed that the said
orders of refusal should be quashed and an order should be
passed directing return of the excess duty.
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In para 16, sub-paras (i) and (j) of its return the Union of
India averred as follows :
"(i) with reference to clause (1) of para No.
16 of the petition, it is correct that the
Government of India cannot appropriately
retain to whatever they are not legally
entitled. But I submit that the importers are
also required to put in the claims in time as
required by law. I deny that the petitioner
has a legal right to the return of the excess
customs duty levied on all the consignments.
I deny and controvert the allegations made in
clause (J) of para No. 16 of the petition. I
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say that the Bombay Customs House allowed some
claims of the petitioner which were in time
under section 40 of the Sea Customs Act, out
of the list forwarded with their letter dated
3-4-1957."
Para 17 of the return was as follows :
"I deny para No. 17 of the petition. I submit
that whatever claims were found not in time.
as required by section 40 of the Sea Customs
Act have been correctly rejected by the
Appraiser of Customs, Bombay."
It is clear from the return by the Union of
India that
(a) refund was granted to the appellant-
company in respect of the items referred to
above without any appeal having been filed by
the company relating to those items,
(b) refund was granted in respect of those
items simply on the ground that an application
therefor had been made within the time
prescribed by sec. 40, and it was refused in
respect of the rest of the items only because
such an application therefor was not made
within the time prescribed by sec. 40, and
(c) there was no plea that the excess duty
was rightly charged on those items.
The learned Single Judge of the High Court who heard the
writ petition held that sec. 40 of the Act did not apply;
that it applied to erroneous payments and not to erroneous
assessments. He, however, held that the proper. remedy for
the appellant-company was to have filed appeals against such
erroneous assessments under s. 188 of the Act, and that that
having not been done, no relief could be granted to the
appellant-company. He, however, observed that the
Government was morally bound to grant the
815
refund and made a recommendation that the refund should be
made to the appellant-company. A Letters Patent appeal
against the said judgment was rejected. Hence this appeal
by special leave.
The only question which arises in this appeal is whether the
High Court ought to have granted in the circumstances of the
case the relief asked for by the appellant-company in its
writ petition.
Sec. 29 of the Act casts a duty on the owner of imported
goods, whether liable to duty or not, to state the real
value, quantity and description of such goods in the bill of
entry or the shipping bill and to subscribe a declaration of
the truth of such statement at the foot of such bill. In
case of doubt, the Customs Collector has the power to
require such owner or any one else in possession of any
invoice, broker’s note, policy of insurance or other
document, whereby the real value, quantity and description
of any such goods can be ascertained. An invoice thus is
one of the documents from which the real value of imported
goods has to be ascertained where the Customs Collector has
any doubt as regards their declared value. Sec. 30 then
defines ’real value’ to be the wholesale cash price, less
trade discount, for which goods of the like kind and
quality. are sold or are capable of being sold at the time
and place of importation. Sec. 31 provides that goods
chargeable with duty upon the value thereof but for which. a
specific value is not fixed by law for the purpose of
levying duties thereon, shall, without unnecessary delay, be
examined by the officer of customs. If it appears that the
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real value of such goods is correctly stated in the bill of
entry or shipping bill, the goods shall be assessed in
accordance therewith.
There is no dispute that the appellant-company had declared
the real value of the articles imported by it and in support
thereof had produced the manufacturers’ invoices. The
customs authorities had refused to accept the invoice price
as real value and charged excess duty. But any doubt with
regard to the real value of the several consignments
imported by the company was totally eradicated when the
Government of India decided the company’s revision and
directed that the invoice price should be accepted and duty
should be assessed accordingly. In respect of the two items
to which the revision related, the Government had also
directed refund of the excess duty charged and paid under
protest. There was thus no doubt or dispute left thereafter
as regards the invoice prices ’being the real value of the
consignments. The direction given in its decision in the
said revision that the invoice price should be accepted as
real value within the meaning of sec. 30 of the Act H
applied to the rest of the consignments. The customs
authorities,therefore, were not right in law in charging
excess duty on the rest of the consignments. Indeed, the
excess duty was charged in violation of ss. 29 and 30 and in
excess of Jurisdiction, since, as held
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by the Government of India, the real value of the goods was
their invoice price.
The position, indeed, was accepted by the customs
authorities when they ordered refund of excess duty charged
by them in relation to items 22 to 29 and 33-35. Such re-
fund could only have been ordered on the footing that the
excess duty on those consignments had been charged without
the authority of law and therefore without jurisdiction.
The fact that an application had been made therefor under
sec. 40 was irrelevant to the point that. the excess duty
was assessed and recovered without the authority of law.
Sec. 40, on which the Union of India relied in its return,
provides that no customs duties or charges which have been
paid, and of which repayment wholly or in part, is claimed
in consequence of the same having been paid through
inadvertence, error or misconstruction, shall be returned,
unless such claim is made within three months from the date
of such payment. The section clearly applies only to cases
where duties have been paid through inadvertence, error or
misconstruction, and where refund application has to be made
within three months from the date of such payment.
As rightly observed ’by the High Court, the present case was
not one where the excess duty was paid through any of the
three reasons set out in s. 40. The excess-duty was
demanded on the ground that the invoice price was not the
real value of the imported goods and payment under protest
was also made on that footing The ultimate result in the
appellant-company’s revision was that charging of excess
duty was not warranted under the Act, and that the value on
which duty should have been assessed was the invoice price
and nothing else. That being the position, sec. 40 did not
apply and could not have been relied upon by the customs
authorities for refusing to refund the excess duty
unlawfully levied on the appellant-company.
From the fact that the customs authorities refunded the
excess duty’ on items 22 to 29 and 33-35, it follows that
the customs authorities had fully realised that the excess-
duty had been levied without the authority of law, for
otherwise they would not have agreed to refund it, and
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further that they could not lawfully retain it. If the
customs authorities were not entitled to levy the excess
duty and retain it, they were bound to return it to the
appellant company who had paid it under protest and only
with a view no+, to incur demurrage charges, unless there
was some provision of the Act which debarred the appellant-
company from recovering it.
The only provision relied on by the customs-authorities was
sec. 40 of the Act. Indeed, their refusal to refund the
excess-duty
8 17
both in their return and in the High Court was on the ground
of the omission of the appellant-company to apply for the
refund within the time provided by that section. It is
necessary to emphasise that it was not their case that the
invoice price of the items in question was not the real
value or that the excess dirty was lawfully levied or that
the appellant-company was not entitled to the refund thereof
for any reason except the omission to apply ,for it within
the time prescribed ’by sec. 40. But since sec. 46 did not
apply to the facts of the case, the respondents could not
retain the excess duty except upon the authority of some
other provision of law. No other provision was pointed out
by them which would disentitle the appellant-company to the
refund oh the ground of its rights being time-barred or
otherwise. No such provision other than sec. 40 which
disentitled the appellant-company to the refund having been
put forward and the customs authorities not being entitled
to retain the excess duty, there was a legal obligation on
the part of the respondents to return the excess duty and a
corresponding legal right in the appellant-company to
recover it. Besides, except s. 40 the Act contains no other
provision laying down any limitation within which an im-
porter has to apply for refund. The refusal to return the
excess duty on the round that the appellant-company had not
applied within time provided by the Act was clearly
unsustainable. Since there was not and could not be any
dispute with regard to the invoice price being the real
value there was no point in filing any appeal; nor could the
omission to file any such appeal be a proper or valid ground
for refusing relief to the appellant-company, when there
remained no longer any dispute ’between the parties as to
the invoice price being the real value of th‘e imported
items.
For the reason aforesaid, we are satisfied that the High
Court was not right in refusing the relief, in spite of its
being satisfied that the excess duty, was charged without
any basis in law and also that the respondents could not
lawfully retain the excess duty. In the circumstances we
set aside the judgment of the High Court and allow the
appeal. The respondents will pay to the appellant company
its costs both here and in the High Court. In view of this
conclusion no separate order need be passed in writ petition
181 of 1967. The writ petition accordingly stands disposed
of.
S.C. Appeal allowed.
818