Legal principle

Customs duty collected without authority of law is refundable in writ jurisdiction under Article 226 where the Section 27 remedy is futile - the Assistant Collector cannot entertain a time-barred claim unless the duty was paid 'under protest' - provided the claimant shows the incidence of duty was not passed on as required by Section 27(2).

Court decision

The Division Bench dismissed the Department's writ appeals and affirmed the single Judge's order allowing the company's writ petitions for refund of the countervailing duty collected on the five bills of entry, while setting aside the single Judge's reasons and substituting its own: the duty was levied and collected without authority of law, the Section 27 remedy was futile (six-month limitation, duty not paid 'under protest', no power to enlarge time), and the incidence was not passed on since the crucibles were consumed as refractories and not sold. The connected Writ Petition No. 15237 of 1994 (the SRF Limited excise matter) was dismissed for failure to rebut the Section 12B CESA presumption that the duty incidence had been passed on.

Facts

The Indo-Swiss Synthetic Gem Manufacturing Co. Ltd., a Mettupalayam-based manufacturer of synthetic gems, imported silica crucibles from France under valid licences, cleared through five bills of entry (1980-1982). The Assistant Collector of Customs classified the crucibles under Customs Tariff Heading 70.21 ('other articles of glass', via Chapter Note 3 treating fused quartz and fused silica as glass) and levied additional/countervailing duty under item 23A(4) of the CET read with Section 3 of the Customs Tariff Act, 1975, and the goods were cleared on payment as demanded. After CEGAT held on 5-1-1983 that, absent a corresponding note in the CET, 'glass' in item 23-A did not include fused quartz or fused silica, the company realised it had paid the duty under a mistaken impression of law and filed writ petitions seeking refund of the amounts collected as countervailing duty on the five bills of entry. The Department resisted, pleading the six-month limitation in Section 27 and, after the 1991 Amendment Act, relying on Sections 27(3), 28C and 28D of the Customs Act.

Key provisions

• Section 11B, Customs Act, 1962 — Power of Central Government to notify goods
• Section 27, Customs Act, 1962 — Claim of refund duty
• Section 28A(2), Customs Act, 1962 —  Power not to recover duties not levied or short-levied as a result of general practice
• Section 3, Customs Tariff Act, 1975 — Levy of additional duty equal to excise duty, sales tax, local taxes and other charges
• Section 28B(2), Customs Act, 1962 — Duties collected from the buyer to be deposited with the Central Government