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Judgment
The Writ Petition is for the issue of writ of mandamus to direct the first and third respondents to grant refund of countervailing duty of Rs. 1, 76,
798.70 ps. wrongfully collected from the petitioner in respect of import of bicycle components made under bill of Entry No. 912 dated 13.5.1988
together with interest thereon at 18% from the date of collection till the date of repayment.
The writ petition is filed by T.I. Cycles of India represented by its Taxation Manager. The petitioner Company is a manufacturer of bicycles. It
had imported bicycle components from Taiwan vide invoice and bill of lading dated 23.3.1988. The case of the petitioner is that on 7.4.1988 the
goods arrived at Madras and a bill of entry No. 912 dated 13.5.1988 was filed. The goods were valued at Rs. 3, 60. 814 and the total duty paid
thereon was Rs. 4,99,979. On this amount, the countervailing duty was fixed at Rs. 1,76,798.70 ps. On 27.10.1988, the petitioner filed a refund
claim for Rs. 3,697.30 being the excess duty paid on landing charges. Afterwards, the petitioner came to know that bicycle components were
exempted from levy of central excise duty in terms of Notification No. 62 of 86-CE dated 10.2.1986 as amended by Notification No. 137 of 88-
CE dated 4.4.1988. In view of the notifications, the petitioner filed a supplementary refund claim on 30.6.1989 for refund of countervailing duty
paid amounting to Rs. 1. 76,798.70 ps. The third respondent by orders dated 21.8.1989 and 14.3.1990 rejected the refund claim and
supplementary refund claims respectively on the ground that the claims were made beyond the statutory period of limitation of six months.
Aggrieved by the same, the petitioner preferred an appeal to the second respondent who by his order dated 19.10.1990 dismissed the appeal on
the ground of limitation. Hence this writ petition.
Learned counsel for the petitioner submitted that the bicycle components were exempted from excise duty in terms of Notification dated
10.2.1986 amended by another Notification dated 4.4.1988 and therefore the goods would not be liable for countervailing duty and hence the
petitioner is entitled for the refund of the same. Learned counsel has also argued that the petitioner made the claim petitions as the duty was paid
inadvertantly and hence the departmental authorities are bound to refund the amount under the statutory provisions. It is further argued that as the
duty was collected contrary to the exemption Notification, the same is without any jurisdiction and any authority of law and therefore the authorities
are bound to refund the amounts with interest irrespective of the fact that the claim petitions were filed beyond the period of limitation. In support
of his contentions, learned counsel for the petitioner has relied on the following decisions:
(1) Mafatlal Industries Ltd. and Others Vs. Union of India (UOI) and Others, ; (2) Bhadrachalam Paper Boards Ltd. v. Government of Andhra
Pradesh and others, 1998 (3) STC 657; (3) Premraj and Ganpatraj and Company (P) Ltd. v. Assistant Collector of customs and others, 1997
ELT J. 630 .
Learned counsel for the petitioner has also argued that the components which were imported were not liable to be taxed as they were used in the
manufacture of bicycles. Learned course has also submitted that in the instant case, the question of limitation does not arise since the components
were exempted by a Notification and the duty was paid under the mistake of law.
In Bhadrachalam Paper Board''s case, 1998 (3) STC 657 the Supreme Court while reversing the judgment of the High Court has held as
follows:
We have seen that the appellants sought a declaration that the tax demanded and collected on the transactions in question for the period from
1978-79 onwards was illegal, null and void. The High Court in the light of the decision of this court in State of Orissa and Others Vs. Titaghur
Paper Mills Company Limited and Another, held that the transactions in question were not exigible to tax. The refund was, however, denied on the
ground that the appellants must be deemed to have passed on the liability to the consumer.
We find that the High Court was not right in so presuming in the light Pleader as extracted above. The appellants have reimbursed a tax liability
which was on the Forest Department and the appellants have consumed the goods for manufacturing paper boards etc., Therefore, the question of
the appellants passing on the tax liability to the consumer, on the facts of this case, would not arise. Consequently, tax collected from the, not for
the entire period but for the period commencing three years prior to the date of filing of the Writ Petition.
In Premraj and Ganpatraj''s Case, 1997 ELT. J. 166 , this court held that if an assessee was not aware of an existing notification when the duty
was worked out and paid, he is entitled to refund and the time limit of six months as provided in Section 27 of the Customs Act 1962 as the
recovery of excess duty was clearly recovered in contravention of the notification and is also without jurisdiction. In this case also, neither the
petitioner nor the assessing officer was aware of the contents of the Notification and the duty was worked out and the same was paid. This court
has further held that in so far as the orders of the respondents are concerned, no fault can be found therewith, inasmuch as the application for
refund made by the company was actually time-barred, having been presented, as already stated, beyond six months of the payment of duty so
that the customs authorities were bound to reject it in purchase of the provisions of Section 27 of the Act. That, however, does not end the matter
because the recovery of excess duty was clearly and admittedly in contravention of the notification and therefore, without jurisdiction so that the
same is liable to be refunded by directions in the nature of mandamus to be issued by this court. This conclusion finds support from the judgment in
Special Civil Application Nos. 909, 910 and 911 of 1971 decided by a Division Bench of the Gujarat High Court consisting of Mehta and Sheth
JJ, on 17th/18th March 1972 Premraj and Ganpatraj and Company (P) Ltd. v. Assistant Collector of Customs, Madras and others, W.P.Nos.
3236 to 3251 of 1970 decided on 14.9.1972. Finally, this court allowed the petition in part. This court observed that while the orders of the three
respondents holding the application made by the petitioner to the Assistant Collector of Customs, Madras, for a refund of the excess duty to be
time-barred are not interfered with, and the respondents were directed by a writ of mandamus to refund to the Company the sum of Rs.
11,952.84.
In Assistant Collector of Customs v. Premraj and Ganpatraj and Company (P) Ltd., 1978 ELT. J 630 this court held that when the duty was
paid without taking into account the exemption notification, even though the refund application was filed after the expiry of time limit, the duty
amount paid is liable to be refunded. In the above case, it was argued that the collection of duty was without the authority of law and that this court
had not been inhibited by the period provided by Section 27 which would prevent the customs authorities from ordering refund; that this court
should exercise jurisdiction under Article 226 of the Constitution and give effect to what is provided under Article 265 of the Constitution which
says that ""no tax shall be levied or collected except by authority of law.
In the instant case, by notification dated 10.2.1986 as amended by another notification dated 4.4.1988, bicycle components were exempted
from the central excise duty. There is no dispute that the petitioner has paid the duty amount of Rs. 1,76, 798.70 ps. There is also no dispute that
the imported goods were not liable to countervailing duty in view of the exemption notifications and the said amount was wrongly paid and the
same has been wrongly collected without any authority of law by the respondent authorities. In such circumstances, as held by this court and the
Supreme Court in the cases dealt with supra, the question of limitation also does not arise. Hence the Writ Petition is liable to be allowed and the
same is allowed. In view of the above, the authorities are directed to refund the amount within a period of three months from the date of receipt of
a copy of this order. No costs. Consequently W.M.P.No.832 of 1991 is closed.