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1985 Supreme(Mad) 521
High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. M. N. CHANDURKAR & THE HONOURABLE MR. JUSTICE K VENKATASWAMI
Government of India - Appellant
Versus
Prema Metal Works, Madras and Others - Respondent
Case No : Writ Appeal Nos. 208 of 1977
Decided On : 19 December 1985
The classification of goods under the Indian Tariff Act is to be determined based on the commercial understanding of the goods in the trade, rather than on the basis of technical definitions or specifications.
Headnote:
CUSTOMS ACT - CLASSIFICATION OF GOODS - STAINLESS STEEL SHEETS AND STRIPS - INTERPRETATION OF TARIFF ITEMS - APPLICATION OF INDIAN STANDARD INSTITUTION SPECIFICATIONS - RELEVANCE OF TRADE MEANING - REFUND OF EXCESS DUTY - LIMITATION - JURISDICTION OF HIGH COURT UNDER ARTICLE 226 OF THE CONSTITUTION.
Fact of the Case:
The issue in this case was whether the goods imported by the respondents fell under Item 63(20-A) of the First Schedule to the Indian Tariff Act, which described "Stainless Steel Plates and Sheets," or under Item 63(14), which described "Cold rolled hoops and strips of stainless steel of 250 mm. width or more." The duty payable under Item 63(20-A) was 100% ad valorem, while the duty payable under Item 63(14) was 40% ad valorem. The respondents, who had actual users' licenses to import stainless steel sheets, imported the goods and declared them as stainless steel sheets in coils. The Customs Authorities accepted the declaration and levied duty at the rate of 100% ad valorem. The respondents paid the duties and cleared the goods, but later filed applications for refund of the excess duty paid, claiming that the goods imported fell under Item 63(14). The Assistant Collector rejected the applications as time-barred under section 27(1) of the Customs Act, and his orders were upheld by the appellate and revisional authorities. The respondents then filed writ petitions in the High Court, challenging the rejection of their refund claims.
Finding of the Court:
The High Court held that the goods imported by the respondents were stainless steel sheets falling under Item 63(20-A) of the Indian Tariff Act. The Court found that the goods were commercially understood as stainless steel sheets both in the country of shipment and in the country of importation. The Court also found that the respondents had actual users' licenses for the import of stainless steel sheets and that the contract with the foreign seller was also for the import of stainless steel sheets. The Court further found that the respondents had declared to the Customs Authorities that the goods imported were stainless steel sheets. The Court held that, on the basis of these facts, the Revisional Authority had rightly concluded that the goods imported were stainless steel sheets and that the duty levied at the rate of 100% ad valorem was in accordance with Item 63(20-A). The Court also held that the respondents were not entitled to a refund of the excess duty paid as their applications for refund were time-barred under section 27(1) of the Customs Act.
Issues: 1. Whether the goods imported by the respondents fell under Item 63(20-A) or Item 63(14) of the First Schedule to the Indian Tariff Act? 2. Whether the respondents were entitled to a refund of the excess duty paid?
Ratio Decidendi: 1. The Court held that the goods imported by the respondents were stainless steel sheets falling under Item 63(20-A) of the Indian Tariff Act. The Court found that the goods were commercially understood as stainless steel sheets both in the country of shipment and in the country of importation. The Court also found that the respondents had actual users' licenses for the import of stainless steel sheets and that the contract with the foreign seller was also for the import of stainless steel sheets. The Court further found that the respondents had declared to the Customs Authorities that the goods imported were stainless steel sheets. The Court held that, on the basis of these facts, the Revisional Authority had rightly concluded that the goods imported were stainless steel sheets and that the duty levied at the rate of 100% ad valorem was in accordance with Item 63(20-A). 2. The Court held that the respondents were not entitled to a refund of the excess duty paid as their applications for refund were time-barred under section 27(1) of the Customs Act.
Final Decision: The High Court allowed all the writ appeals, set aside the judgment in the writ petitions, and discharged the rules nisi. No costs were awarded. Leave to appeal was refused.
VENKATASWAMI, J
This batch of 54 writ appeals can be disposed of by this common judgment as the only substantial issue raised in all these cases is common. The issue is, whether the goods imported by the respondents answered the description of 'Stainless Steel Plates and Sheets' as contained in Item 63 (20-A) appearing in the First Schedule to the Indian Tariff Act as contended by the appellants/Revenue or fell under Item 63(14) which is to the effect 'Cold rolled hoops and strips of stainless steel of 250 mm. width or more' as contended by the various respondents/importers. If the goods imported are found to fall under Item 63(20-A), then the duty payable by the respondents will be at the rate of 100%ad valorem. If, on the other hand, the goods imported are found to fall under item 63(14), the duty payable will be 40%ad valorem. A subsidiary question that might arise if the goods are found to fall under Item 63(14) is, whether the duty at the rate of 40%ad valoremis further reducible by applying the Notification No. 118, Customs, dated 20.8.1965 (hereinafter referred to as the notification).
2.Before entering into the controversy as such, let us give the admitted facts. All the respondents/importers had actual users licences to import stainless steel sheets. On the basis of such import licences, they imported the goods and declared before the Customs Authorities that the goods imported were stainless steel sheets in coils. Accepting the declaration of the importers, the Authority levied duty at the rate of 100%ad valoremin accordance with Item 63(20-A). The respondents importers, after paying the duties so levied, cleared the goods, and thereafter preferred applications for refund of the excess duty paid by them on the ground that the goods imported were exigible to duty only under Item 63 (14) read with the notification. The Assistant Collector found in 48 out of 54 cases the applications were time barred under section 27(1) of the Customs Act and therefore rejected the same on that ground. Such orders of the Assistant Collector had been subsequently confirmed by the appellate Authority and by the Government of India, Revisional Authority. In six cases where the applications for refund of excess duty were filed in time, the Assistant Collector considered them on merits and found that the goods imported were stainless steel sheets and, therefore, the duty already levied was in accordance with Item 63 (20-A) and such orders of the Assistant Collector on merits as well were confirmed by the Appellate Authority and by the Revisional Authority.
3.Aggrieved by the rejection of the claim for refund of excess duty as mentioned above, the respondents/exporters had moved this Court for the issue of writs of certiorari to quash the orders of the appellants and for consequential relief.
4.The first writ petition that came up for final disposal was W.P. No. 3993 of 1974. In that case, the application for refund of excess duty was turned down by the authorities as time barred by invoking section 27(1) of the Customs Act. Therefore, there was no occasion for the authorities to consider the case on merits. The Counter affidavit filed in W.P. 2993 of 1974 also supported the order of rejection of claim for refund of excess duty only on the basis that the application was time barred. Koshal, J. (as he then was), before whom W.P. 3993 of 1974 came up for final disposal, was of the view that notwithstanding the rejection of the application for refund of the excess duty as time barred under section 27(1) of the Customs Act, relief could be granted to the aggrieved party under Article 226 of the Constitution if the excess levy was found to be illegal. Before the learned Judge, reliance was placed heavily on the contents of the compilation published by the Indian Standard Institution entitled "Glossary of Terms relating to Iron and Steel" by the counsel for the importers/petitioners. The fact that the terms "plates", " sheets"and" strips" a
