Legal principle

Paying under protest, when one is not liable to pay, is paying under coercion, and money so wrongfully collected must be refunded under Section 72 of the Contract Act with interest.

Court decision

The First Appeal was allowed and the trial court's dismissal of the suit was set aside: the suit was decreed and the plaintiff was held entitled to recover Rs.29,23,320/- (the excess duty) with 9% interest from the institution of the suit until realization, the judgment to remain in abeyance for four weeks to enable the respondent to approach a higher forum.

Facts

Deep Exports, a registered partnership firm importing gold and silver for customers, entered a Memorandum of Understanding dated 24.3.1998 with MMTC Ltd., a Government of India enterprise, and on 4.1.1999 placed an indent for 1700 gold TT bars, depositing Rs.85,00,000/- as 10% earnest money. Customs import duty on gold was raised from Rs.250 to Rs.400 per 10 grams effective 5.1.1999, and MMTC insisted on charging the duty prevailing on the date of delivery. The plaintiff paid an additional Rs.29,74,320/- towards the enhanced duty under protest and demanded its refund, invoking (inter alia) Section 28B of the Customs Act. Its summary suit for recovery of Rs.32,49,820/- was dismissed by the City Civil Court, Ahmedabad, leading to this First Appeal under Section 96 CPC.

Key provisions

• Section 27, Customs Act, 1962 — Claim of refund duty
• Section 28B, Customs Act, 1962 — Duties collected from the buyer to be deposited with the Central Government