Case: Patel India Private Limited Vs. Union of India &amp; Others

that the appellant company had declared the real value of the articles imported by it and in support thereof had produced the manufacturers invoices. The customs authorities had refused to accept the invoice price as real value and charged excess duty. But any doubt with regard to the real value of the several consignments imported by the company was totally eradicated when the Government of India decided the Companys revision and directed that the invoice price should be accepted and duty should be assessed accordingly. In respect of the two items to which the revision related, the Government had also directed refund of the excess duty charged and paid under protest. There was thus no doubt or dispute left thereafter as regards the invoice prices being the real value of the consignments. The direction given in its decision in the said revision that the invoice price should be accepted as real value within the meaning of Section 30 of the Act applied to the rest of the consignments. The customs authorities, therefore, were not right in law in charging excess duty on the rest of the consignments. Indeed, the excess duty was charged in violation of Ss. 29 and 30 and in excess of jurisdiction, since, as held by the Government of India, the real value of the goods was their invoice price.13. This position, indeed, was accepted by the customs authorities when they ordered refund of excess duty charged by them in relation to items 22 to 29 and 33-35.Such refund could only have been ordered on the footing that the excess duty on those consignments had been charged without the authority of law and therefore without jurisdiction. The fact that no application had been made therefor under Sec. 40 was irrelevant to the point that the excess duty was assessed and recovered without the authority of law.14. Section 40 on which the Union of India relied in its return, provides that no customs duties or charges which have been paid, and of which repayment wholly or in part, is claimed in consequence of the same having been paid through inadvertence error or misconstruction, shall be returned, unless such claim is made within three months from the date of such payment. The section clearly applies only to cases where duties have been paid through inadvertence, error or misconstruction, and where refund application has to be made within three months from the date of such payment.15. As rightly observed by the High Court, the present case was not one where the excess duty was paid through any of the three reasons set out in S. 40.The excess duty was demanded on the ground that the invoice price was not the real value of the imported goods and payment under protest was also made on that footing. The ultimate result in the appellant companys revision was that charging of excess duty was not warranted under the Act, and that the value on which duty should have been assessed was the invoice price and nothing else. That being the position, Section 40 did not apply and could not have been relied upon by the customs authorities for refusing to refund the excess duty unlawfully levied on the appellant-company.16. From the fact that the customs authorities refunded the excess duty on items 22 to 29 and 33-35, it follows that the customs authorities had fully realised that the excess duty had been levied without the authority of law, for otherwise they would not have agreed to refund it, and further that they could not lawfully retain it. If the customs authorities were not entitled to levy the excess duty and retain it, they were bound to return it to the appellant company who had paid it under protest and only with a view not to incur demurrage charges, unless there was some provision of the Act which debarred the appellant-company from recovering it17. The only provision relied on by the customs-authorities was Section 40 of the Act. Indeed, their refusal to refund the excess-duty both in their return and in the High Court was on the ground of the omission of the appellant company to apply for the refund within the time provided by that section. It is necessary to emphasise that it was not their case that the invoice price of the items in question was not the real value or that the excess duty was lawfully levied or that the appellant - company was not entitled to the refund thereof for any reason except the omission to apply for it within the time prescribed by S. 40. But since Sec. 40 did not apply to the facts of the case, the respondents could not retain the excess duty except upon the authority of some other provision of law. No other provision was pointed out by them which would disentitle the appellant-company to the refund on the ground of its right being time-barred or otherwise. No such provision other than Section 40 which disentitled the appellant-company to the refund having been put forward and the customs authorities not being entitled to retain the excess duty, there was a legal obligation on the part of the respondents to return the excess duty and a corresponding legal right in the appellant-company to recover it. Besides except S. 40 the Act contains no other provision laying down any limitation within which an importer has to apply for refund. The refusal to return the excess duty on the ground that the appellant-company had not applied within time provided by the Act was clearly unsustainable. Since there was not and could not be any dispute with regard to the invoice price being the real value there was no point in filing any appeal; nor could the omission to file any such appeal be a proper or valid ground for refusing relief to the appellant-company, when there remained no longer any dispute between the parties as to the invoice price being the real value of the imported items.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]From the fact that the customs authorities refunded the excess duty on items 22 to 29 andit follows that the customs authorities had fully realised that the excess duty had been levied without the authority of law, for otherwise they would not have agreed to refund it, and further that they could not lawfully retain it. If the customs authorities were not entitled to levy the excess duty and retain it, they were bound to return it to the appellant company who had paid it under protest and only with a view not to incur demurrage charges, unless there was some provision of the Act which debarred thefrom recovering it17. The only provision relied on by thewas Section 40 of the Act. Indeed, their refusal to refund theboth in their return and in the High Court was on the ground of the omission of the appellant company to apply for the refund within the time provided by that section. It is necessary to emphasise that it was not their case that the invoice price of the items in question was not the real value or that the excess duty was lawfully levied or that the appellantcompany was not entitled to the refund thereof for any reason except the omission to apply for it within the time prescribed by S. 40. But since Sec. 40 did not apply to the facts of the case, the respondents could not retain the excess duty except upon the authority of some other provision of law. No other provision was pointed out by them which would disentitle theto the refund on the ground of its right beingor otherwise. No such provision other than Section 40 which disentitled theto the refund having been put forward and the customs authorities not being entitled to retain the excess duty, there was a legal obligation on the part of the respondents to return the excess duty and a corresponding legal right in theto recover it. Besides except S. 40 the Act contains no other provision laying down any limitation within which an importer has to apply for refund. The refusal to return the excess duty on the ground that thehad not applied within time provided by the Act was clearly unsustainable. Since there was not and could not be any dispute with regard to the invoice price being the real value there was no point in filing any appeal; nor could the omission to file any such appeal be a proper or valid ground for refusing relief to thewhen there remained no longer any dispute between the parties as to the invoice price being the real value of the imported items.