KUMAR PRABHULAL SHAH Vs. UNION OF INDIA

JUDGEMENT

(1.) These petitions under Article 226 of the Constitution are aimed against the rejection of applications moved by petitioners for refund of Additional Duty levied and paid under Section 3 of the Customs Tariff Act, 1975.

(2.) The eight petitions afore-mentioned arise out of imports of Sorbitol Solution, Phenol USP, Phenol and Diethylene Glycol between 1980 and 1985. Upon the arrival of the consignments the importer-petitioners tendered Bills of Entry. In these Bills, the product imported was stated to be one of the afore-mentioned four, the column meant for Customs Tariff heading showing "29.01/45" and that for column C.E.T. Item mentioning the numeral "68". Additional Duty was recovered on the consignment along with the Customs Duty payable. A series of petitions came to be filed in this Court questioning the recovery of Additional Duty upon products imported, it being contended that they were exempted from such duty under Notification issued vide Rule 8(1) of the Central Excise Rules, 1944 as amended from time to time. Pendse J. in Rakesh Enterprises and another Vs. Union of India and another [1986 (26) E.L.T. 906 (Bombay)] held that Additional Duty could not be levied upon Phenol USP inasmuch as the same was drug or drug intermediate falling within the Notification dated March 1, 1975, at Item No. 19 of the schedule annexed to the Notification. This decision was followed by the learned Judge in Writ Petitions Nos. 1681 of 1982 and 2190 of 1982 - the latter pertaining to "Sorbitol". The judgment in Rakesh Enterprises (supra) was pronounced on 12.8.1986. Taking support from the above judgment and others pronounced at about the same time, the different petitioners now before are moved applications for refund of the Additional Duty paid. It was their contention that the duty had been paid under a mistake of law, the mistake being mutual, and, that the recipient, the Union of India, could not retain the same. These applications were rejected by the second respondent in all the cases, on the short ground of the refund being claimed more than six months after the payment of the Additional Duty. It was held that Section 27(1) of the Customs Act, 1962, prescribed for recovery of duties wrongly paid, a period of six months to be computed from the date of payment of duty. For that reason, the applications were time barred, and thus, liable to be rejected. The rejection of the applications has given rise to the above eight petitions.

(3.) Petitioners' case is that Additional Duty was levied and collected under a mistake of law, the mistake being entertained by the petitioners as also the Customs Authorities. As a matter of fact, no Additional Duty was leviable under Section 3 of the Customs Tariff Act. This was because a 'drug' and 'drug intermediates' fell within the exemption Notification. Having regard to Pendse J.'s decision in Rakesh Enterprises (supra), the recovery was illegal. The amount could not be retained and Section 27(1) of the Customs Act, 1962 did not apply. Petitioners on becoming aware of the judgment in Rakesh Enterprises (supra), moved applications for refund and the rejection thereof had compelled them to move this Court under Article 226. They prayed for a writ of certiorari to quash the orders rejecting their applications for refund and a mandamus to direct the respondents to forthwith refund the Additional Duty collected along with interest at rate 21% per annum from the date of collection till payment.