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1964 Supreme(Cal) 259
HIGH COURT OF CALCUTTA
D. N. Sinha
RATANLAL SINGHANIA - Appellant
Versus
M. M. SETHI - Respondent
Matter 76 Of 1962
Decided On : DECEMBER 09, 1964
The court has the jurisdiction to interfere with the decision of the customs authorities if their interpretation of the Tariff Schedule is perverse.
Headnote:
SEA CUSTOMS ACT - SECTION 39 - LIMITATION - DEMAND FOR REFUND OF CUSTOMS DUTY - INTERPRETATION OF TARIFF SCHEDULE - EXEMPTION FROM EXCISE DUTY - JURISDICTION OF COURT TO INTERFERE WITH CUSTOMS AUTHORITIES' DECISION - ALTERNATIVE LEGAL REMEDY - DELAY AND LACHES.
Fact of the Case:
The petitioners imported cotton fabrics from Japan and paid customs duty at the rate of 100% ad valorem. They later claimed a refund of the excess duty paid, as they were entitled to an exemption from excise duty under the Tariff Schedule. The customs authorities demanded a refund of the refunded amount, claiming that the exemption did not apply. The petitioners challenged the demand, arguing that the interpretation of the Tariff Schedule by the customs authorities was perverse and that they had an alternative legal remedy by way of appeal.
Finding of the Court:
The court held that the demand for refund of the customs duty was barred by limitation, as it was made more than three months from the date of the refund. However, the court also held that the interpretation of the Tariff Schedule by the customs authorities was perverse and that the petitioners were entitled to the exemption from excise duty. The court further held that the alternative legal remedy of appeal was not adequate, as it required the petitioners to deposit the full amount of the claimed duty.
Issues: 1. Whether the demand for refund of customs duty was barred by limitation? 2. Whether the interpretation of the Tariff Schedule by the customs authorities was perverse? 3. Whether the petitioners had an adequate alternative legal remedy?
Ratio Decidendi: 1. The court held that the demand for refund of customs duty was barred by limitation, as it was made more than three months from the date of the refund. However, the court also held that the interpretation of the Tariff Schedule by the customs authorities was perverse and that the petitioners were entitled to the exemption from excise duty. The court further held that the alternative legal remedy of appeal was not adequate, as it required the petitioners to deposit the full amount of the claimed duty.
Final Decision: The court allowed the petition and issued a writ of mandamus restraining the respondents from claiming a refund of the customs duty or from enforcing the demand for refund.
( 1 ) THE facts in this case are briefly as follows : The petitioners carry on business in Calcutta under the name and style of "mahadayal Premchandra". The said firm was granted a licence by the Government of India in 1958 for the importation of cotton fabrics etc. , from the soft currency areas including Japan. Under the said licence, the petitioners imported from Japan about 6800 yards Black Cotton Umbrella cloth 888 (Synthetic waterproof fabric) to Calcutta. The goods arrived per s. s. "eastern Muse" on or about 26th June, 1959. They had the manufacturer's certificate stating that the goods were synthetic waterproof fabrics. On or about the 26th June, 1959 the petitioners made over the shipping documents to their clearing agents M/s. Mitra Shipping Agency, for clearing the goods. On the same day, the clearing agents filed the bill of entry for consumption, together with the bill of lading, bill of exchange, invoice and other necessary shipping documents, for clearance of the said goods on behalf of the petitioners. Even before the petitioners placed their order for the importation of the said goods, they had taken the precaution of writing through their clearing agents to the Public Relation Officer of the respondents, enquiring if the total duty leviable on synthetic waterproof fabrics was only 65 per cent and no excise duty was leviable. On 15th September, 1958 the Public Relation Officer informed them that if it could be established at the time of passing the bill of entry or at the time of import that the umbrella cloth was actually synthetic waterproof fabric, then the goods were exempt from levy of excise duty. When the clearing agents filed the said bill of entry, the Appraiser in the Appraisement Department of the Customs House, Calcutta, stated that he could not pass the goods on payment of 65 per cent duty, unless they were tested and found to be synthetic waterproof cotton fabrics. Thereupon, as the goods were required for the manufacture of umbrellas during the monsoon seasons and delay would have been fatal, the petitioners paid 100 per cent duty, pending the testing of the samples, and cleared the goods. Thus, a sum of Rs. 9,743. 65 np. was paid in place of Rs. 6,333. 37 np. payable at the rate of 65 per cent ad valorem. On the 12th September, 1959 the positioners through their clearing agents demanded a refund of ihe balance sum of Rs. 3410. 28 np. In spite of repeated demands and after great delay, the Assistant Collector of Customs issued a refund order dated 26th May, 1960 in favour of the petitioners for Rs. 3410. 28 np. By notification dated 30th July, 1960 the Government of India, Ministry of Finance (Department of Revenue), in exercise of powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules of 1944, introduced an amendment in the earlier notification dated 5th January 1957 whereby rubberised or synthetic water-proof cotton fabrics had been exempted from excise duty. In other words, the exemption was withdrawn. On the 26th August, 1960 the Assistant Collector of Customs for appraisement, purporting to act under Section 39 of the Sea Customs Act 1878 demanded from the petitioners, payment back of the said refunded sum of Rs. 3410. 28 np. The letter of demand a copy whereof is Ex. C to the petition is in the following terms :--"whereas it appears that Customs duty amount ing to Rs. 3410. 28 (Rupees Three thousand four hundred ten and twenty eight np) which was erroneously refunded in respect of the above consignment is due from you as indicated below:--Demand issued due to wrong assessment. I demand under Section 39 of the Sea Customs Act, 1878 (VIII of 1878) that the said amount be paid within 15 days from the date of this demand. Any representation oral or in writing against the demand with necessary documentary evidence about the correctness of your stand should be made within the period aforesaid otherwise it will be presumed that you have admitted the correctness o
