Case: Union Of India Vs. A.V. Narasimhalu

1. A.V.Narasimhalu - hereinafter called "the plaintiff" imported 43 reels of newsprint 13 1/2" width under a Bill of Entry dated July 15, 1954. The width of the newsprint being less than 15" no import duty was payable under the Open General Licence. The Assistant Collector of Customs held that the commodity imported fell within item 44 of the Customs Tariff and levied a duty of 33.3/8% ad valorem. The plaintiff paid the duty under protest, and applied for refund of the duty relying upon a decision of the High Court of Madras in writ petition No. 402 of 1954 in which it was decided that newsprint of width less than 15" was exempt from duty. This application was rejected. An appeal to the Collector of Customs and a revision application to the Central Board of Revenue were unsuccessful. The customs authorities rejected the claim on the ground that the claim not having been made within three months of the date of demand was barred under s. 40 of the Sea Customs Act, 18782. The plaintiff then instituted an action in City Civil Court for a decree for Rs. 2, 669-62 against the Union of India. The Trial Court decreed the claim holding that the claim was not barred. In appeal the principal Judge, City Civil Court held that the City Civil Court had no jurisdiction to entertain the suit. In so holding he relied upon the judgment of the Judicial Committee in Secretary of State for India v. Mask & Co. (L.R. 67 I.A. 222). In second appeal, the High Court of Madras reversed the judgment of the Principal Judge, City Civil Court, and restored the decree passed by the Trial Court. The Union of India has appealed to this Court with special leave.

Reasoning:
It is true that the decision or order passed under s. 188 of the Sea Customs Act in appeal to the appellate authority is expressly declared final. But on that account it cannot be held that by refusing to appeal against the decision or by refusing to claim relief in the manner provided by s. 188 and s. 191 of Sea Customs Act, a party aggrieved by the order of a Customs Officer may invest the Civil Court with jurisdiction to entertain a suitThe jurisdiction of the Civil Court to entertain a suit on the ground that the duty was improperly or illegally levied is excludedThe Judicial Committee did not express any opinion on the questionwhether prior to taking an appeal under s. 188 the importers would have been entitled to resort to the Civil Courts.But in our judgment it would not be open in all situations where a party who had right to appeal to refuse to resort to the procedure prescribed by the statute and to file a suit. The express declaration in s. 188 of the Sea Customs Act that the order of the Collector in appeal shall be final does not imply that a suit will lie against the decision or order of the original authority7. But an erroneous decision of the Customs Authority cannot be said to be reached without jurisdiction merely because it may be shown in some collateral proceeding to be wrong. Normally an action of an administrative authority interfering with the right to property may be challenged by resort to a civil court. Yet in the case of a right which depends upon a statute, the jurisdiction of the civil court to grant relief may by express provision or by clear implication of the statute be excludedWhere, however, a statute creates a new right or liability and it provides a complete machinery for obtaining redress against erroneous exercise of authority, jurisdiction of the civil court to grant relief is barred. Liability to pay a duty of customs is not a common law liability : it arises by virtue of the Sea Customs Act : in respect of any grievance arising in consequence of enforcement of that liability machinery has been provided by the Act. Having regard to the complicated nature of the questions which arise in the determination of liability to pay duty of customs the Legislature has invested the power of determining liability and the manner of enforcement thereof upon a specially authorised hierarchy of tribunals. An appeal lies against the order of the Assistant Collector of Customs against an order imposing duty as well as an order refusing to refund duty, and the grievance may be carried to the Central Board of Revenue. In our judgment, the jurisdiction of the civil court is by clear implication of the statute excluded8. We, however, deem it necessary to observe that the civil courts have jurisdiction to examine cases in which the Customs Authority has not complied with the provisions of the statute or the officer of customs has not acted in conformity with the fundamental principles of judicial procedure or the Authority has acted in violation of the fundamental principles of judicial procedure or he has made an order which is not within his competence or the statute which imposes liability is unconstitutional, or where the order is alleged to be mala fide. A civil suit will lie for obtaining appropriate relief in these cases9. The jurisdiction of the civil court to entertain a suit challenging the validity of the imposition of the duty of customs being excluded, the plaintiffs suit must fail. But it must be observed that the present is a fair illustration of the administration not making a serious attempt to avoid futile litigation for small claimsIf the plaintiff had moved the High Court in exercise of its jurisdiction under Article 226 the Union had practically no defence. The Union could without loss of face accede to the request of the plaintiff to refund the amount collectedBut the High Court recorded the judgment under appeal after the claim was resisted by the Union. We are glad to record the assurance given by the Attorney General that whatever may be the decision in the appeal, the Union of India will refund the amount of tax unauthorisedly recovered by the Assistant Collector of Customs. This was essentially a case in which when notice was served the Central Government should instead of relying upon technicalities have refunded the amount collected. We trust that the Administrative authorities will act in a manner consistent not with technicalities, but with a broader concept of justice if a feeling is to be nurtured in the minds of the citizens that the Government is by and for the people.