SUDHIR CHIMANLAL Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition under Article 226 of the Constitution of India takes exception to the rejection of an application made by the petitioner for refund of Additional Duty alleged to have been illegally recovered from him and, so recovered upon an import of a consignment of Sorbitol 70% Liquid USP covered by the Bill of Entry at Ex. 'E' to the petition.

(2.) Petitioner's case is that the consignment imported was a "drug" and exempt from Additional Duty vide Notification No. 104/82-C.E., dated 28th February 1982, as amended from time to time. Because of a mistake law mutually entertained by petitioner and the Assistant Collector of Customs, Additional Duty was illegally recovered. Petitioner realised the error pursuant to the judgment of Pendse, J. in Writ Petition No. 1808 of 1982. This judgment was delivered on 12th August 1986. Petitioner got knowledge of the judgment on or about 25th August 1986. On 6th October 1986, petitioner applied for refund. This application was rejected by responded No. 3 on the ground that the claim was barred by time vis-a-vis Section 27(i) of the Customs Act, 1962. The erroneous order was contrary to the judgment of Pendse, J. aforementioned. Hence the petition for refund of the amount paid together with interest thereon at the rate of 18 per cent per annum from the date of recovery until the refund was made unto the petitioner.

(3.) Respondents oppose the petition through an affidavit-in-reply submitted by Jagdish Chander, who is an Assistant Collector of Customs (Legal) at Bombay. First, it is contended that the imported goods were not a "drug" but some other substance. Had the substance been a "drug", there would have been compliance with the Drugs and Cosmetics Act, 1940 ("Drug Act") and the Rules framed thereunder ("Drug Rules"). Admittedly, there was no compliance with the Drug Act and the Drug Rules. The goods were, in fact, imported under Tariff Heading No. 29.01/45(i) of the Customs Tariff Act, 1975 ("C.T.A."). The reliance placed on the judgment delivered in W.P. No. 1808 of 1982, was without substance. In fact, the claim for refund in that case was made in the very year of import, that is, 1982. In the instant case, imports had been made in May and June 1983 and the petitioner had come up for a refund as late as October 1986. Therefore, the rejection of the refund application on the ground of limitation was correct. The claim for refund was also barred on the principle of unjust enrichment. Without prejudice to the defences aforementioned, the claim was barred on the principle set out in Khandelwal Metal and Engineering Works v. Union of India, 1985 (20) E.L.T. 222 (S.C.). The plea raised on the basis of this decision is that the goods were not exempt from Additional Duty. Lastly, even if petitioner was to get a direction for a refund, it should be subject to verification of the claim on the bias of production of relevant documents, as it was not uncommon for the Customs Authorities to come across spurious claims. In this case itself, petitioner had made some double claims.