1. Import of goods — Classification dispute — Refund application filed beyond the six-month limitation period prescribed under Section 27 of the Customs Act, 1962. (Para 2 , 3 )
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1994 Supreme(SC) 248
SUPREME COURT OF INDIA
B.L.Hansaria : B.P.Jeevan Reddy
Escorts Limited
Versus
Union Of India
Case No. : 2421-22 of 1981
Date of Decision : 2/17/94
Important Points
Refund applications under Section 27 of the Customs Act, 1962, must be filed within the prescribed six-month limitation period. This statutory limit is binding on departmental authorities and cannot be overridden by invoking Section 72 of the Indian Contract Act.
Subject
Tax Law - Customs Duty Refund
Act Referred
Headnote
Customs Act, 1962 - Section 27 - Contract Act - Section 72 – Tenant – Jurisdiction - Appellant imported certain industrial fittings Transmission Lines in - He presented the Bill of Entry - He classified the said imported goods under the then obtaining tariff item and paid appropriate duty thereon. The duty payable under the said tariff item at that time was additional duty. Having paid the duty, he cleared the goods - Subsequently the appellant says, he entered into correspondence with Customs Authorities regarding the appropriate tariff item under which the said goods ought to have been classified. He says that he received letter from authorities which according to the appellant, supports his contention that said goods must be subjected to duty not under tariff but under tariff item which attracts a far lower rate of duty – Held, It appears that where duty has been levied without the authority of law or without reference to any statutory authority or the specific provisions of Act and Rules framed there under have no application, the decision will be guided by the general law and the date of limitation would be the starting point when mistake or the error comes to light. But in making claims for refund before the departmental authority is bound within four corners of the statute and the period of limitation prescribed in the central Excise Act and the Rules framed must be adhered to - Authorities functioning under the Act are bound by the provisions of the Act - If proceedings are taken under Act by department, the provisions of limitation prescribed in the Act will prevail - It may however be open to department to initiate proceedings in civil court for recovery of the amount due to the department in case when such a remedy is open on ground that money received by was not in the nature of refund - This was the view taken by the tribunal in a previous decision in the case of Miles India Ltd. v. Assistant Collector of Customs, but it was assailed before this court - Appeal was withdrawn. This court observed that Customs authorities, acting under Act, were justified in disallowing claim for refund as they were bound by the period of limitation provided in the relevant provisions of Customs Act, 1962 - If really payment of duty was made under a mistake of law party might seek recourse to such alternative remedy as it might be advised - See observations of this court in Miles India Ltd. v. Assistant Collector of Customs – Appeal dismissed
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Table of Contents
2. Whether limitation under Section 27 applies without a formal assessment order and whether Section 72 of the Contract Act overrides statutory limitation. (Para 4 )
3. A signed bill of entry constitutes an order of assessment; statutory limitation for refunds under Section 27 is mandatory for authorities acting under the Act. (Para 9 , 10 , 11 )
4. Statutory limitation periods for refunds under the Customs Act are mandatory for departmental authorities and cannot be bypassed by invoking the Indian Contract Act. (Para 10 , 11 )
5. Appeals dismissed. (Para 12 )
6. Does a formal written order of assessment need to exist for the limitation period under Section 27 of the Customs Act to begin?
No. In cases where there is no dispute over classification or duty, a formal order is not expected. A bill of entry signed by the assessing officer signifies approval and constitutes an order of assessment. (Para 10 )
7. Can the limitation period for a refund under Section 27 of the Customs Act be bypassed by invoking Section 72 of the Indian Contract Act?
No. Authorities operating under the Act must adhere to the statutory limitation period. While a party might seek alternative remedies in civil court for payments made under a mistake of law, departmental authorities cannot ignore the Act's limitation. (Para 11 )
8. When does the six-month limitation period for a refund application under Section 27 of the Customs Act begin to run?
The limitation period begins from the date on which the duty was paid. (Para 10 )
(1) THESE appeals are preferred against the order of the government of India in a revision petition filed under Section 36 of the central Excise Act, as it obtained at the relevant time.
(2) THE appellant imported certain industrial fittings for 400 KV Transmission Lines in the year 1977. He presented the Bill of Entry on 26/2/1977. He classified the said imported goods under the then obtaining tariff item 73.33/40 and paid the appropriate duty thereon. The duty payable under the said tariff item at that time was 100% duty and 20% additional duty. Having paid the duty, he cleared the goods. Subsequently, the appellant says, he entered into correspondence with the Customs Authorities regarding the appropriate tariff item under which the said goods ought to have been classified. He says that he received the letter dated 26/10/1978 from the authorities, which according to the appellant, supports his contention that the said goods must be subjected to duty not under tariff item 73.33/40 but under tariff item 85.18/27 which attracts a far lower rate of duty.
(3) BE that as it may, the appellant filed an application for refund on 9/10/1978, even before receiving the letter dated 26/10/1978, which, of course, has not been produced before us. The application was filed admittedly beyond the period of six months prescribed by Section 27 of the Customs Act, 1962. The Assistant Collector rejected the same on the ground that the application was barred under Section 27. The appeal before the Collector met the same fate as also the revision before the government.
(4) IN these appeals it is submitted by Shri A.K. Ganguli, learned counsel for the appellant that the period of six months prescribed under Section 27(1 applies only where the duty is paid in pursuance of an order of assessment. Learned counsel submitted that in this case, there was no order of assessment as such, and therefore, the period of limitation did never begin to run. The second submission urged by Mr Ganguli is that by virtue of Section 72 of the Contract the bar of limitation contained in Section 27 cannot be invoked by the authorities to reject the appellants application. We are unable to see substance in either of these contentions.
(5) SECTION 45(1 of the Customs Act provides that "save as otherwise provided in any law for the time being in force, all imported goods unloaded in a customs area shall remain in the custody of such person as may be approved by the Collector of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII".
(6) SECTION 46 provides for filing of the bill of entry. It says that the importer of any goods other than goods intended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form.
(7) SECTION 17(1 says that if an importer has filed a bill of entry under Section 46, the goods shall be examined and tested by the proper officer. Sub- section (2 of Section 17 says that after such examination and testing, the duty, if any, leviable on such goods shall save as otherwise provided in Section 85 be assessed.
(8) SS. (1 of Section 47 says that where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the duty and any charges payable under this Act in respect of the same, the proper officer may permit clearance of goods only after the duty assessed is paid along with other charges, if any, payable according to law.
(9) READING S. 47 and 17 together, it is clear beyond any doubt, that as soon as the bill of entry is filed, the proper officer examines the goods, tests them, assesses the proper duty and permits clearance of goods only after the duty and other charges, if any, are paid. In the scheme of the Act, there is no room for conte
