RBF Rig Corporation,
Mumbai Vs The Commissioner of Customs (Imports), Mumbai
J U D G M E N T
H.L. Dattu, J.
appeal is directed against the Order of the Customs, Excise and Gold (Control) Appellate
Tribunal, West Zonal Bench [hereinafter referred to as `the Tribunal'] dated
issue raised for our consideration and decision in this appeal is: `Whether the
adjudicating authority was justified in rejecting the appellant's claim for
refund of the duty paid under the Customs Act, 1962 (hereinafter referred to as,
"the Act") without considering Essentiality Certificates, produced on
a later date, particularly, in view of the specific and positive directions
issued by the Delhi High Court.'
brief factual matrix involved in this appeal are: The appellant is an importer
of spares and stores for use on rigs for petroleum operations pursuant to
contract with Oil and Natural Gas Corporation Limited [hereinafter referred to
as `ONGC']. The appellant has imported three consignments of spares and duly filed
the Bills of Entry dated 10.06.2002 and 25.06.2002 in respect of these imported
goods. These imported goods are covered by List 12 of Notification No. 21/2002,
Customs, dated 01.03.2002 as goods exempted from customs duty on fulfilling
Condition 29 of the said Notification, which requires the importer to produce
Essentiality Certificates issued by Director General of Hydrocarbons
[hereinafter referred to as `the DGH'] to the effect that these imported goods were
required for the petroleum operations. The DGH issues the 2 Essentiality Certificates
only on the strength of recommendatory letters issued by ONGC.
appellant had requested ONGC to issue recommendatory letters in order to enable
the DGH to issue the Essentiality Certificates, which were not granted. The
DGH, in the absence of such recommendatory letters, refused to entertain the appellant's
request for the Essentiality Certificates.
this backdrop, the appellant requested the Customs authority, vide endorsement
on Bill of Entry presented on 10.06.2002 for one consignment and vide letter
dated 28.06.2002 for other two consignments, to make provisional assessment of the
said imported goods in view of the pending proceedings for procurement of the Essentiality
Certificates. However, these requests were not acceded to, and the appellant,
on account of commercial exigencies, had cleared the said three consignments of
the imported goods on full payment of the customs duty pursuant to the Order of
the Customs Authority dated 15.06.2002, 03.07.2002 and 09.07.2002.
the month of July 2002, the appellant filed a Writ Petition before the Delhi
High Court inter-alia challenging the refusal of ONGC to issue the requisite
recommendatory letters and also the refusal of the DGH to issue the Essentiality
Certificates. The High Court, by its ad-interim order dated 30.07.2002, directed
ONGC to take a final decision in the matter within a fixed time frame and granted
liberty to the appellant to clear consignments on payment of duty under protest
and subject to further orders of the High Court.
ONGC, whilst complying with the abovementioned directions of the High Court, issued
recommendatory letters and on the strength of these recommendatory letters, the
DGH issued Essentiality Certificates to the appellant. In view of this, the said
Writ Petition was finally disposed of by the High Court by its order dated
11.03.2003, wherein the High Court directed the customs authorities to dispose
of the appellant's refund claim of customs duty paid by taking into consideration
the Essentiality Certificates issued by the DGH in the following terms: "Mr.
Setalvad, learned senior counsel for the petitioners, on the other hand,
submits that in view of the fact that almost all essentiality certificates have
been issued by Respondent No. 2 on the recommendation of Respondent No. 3 the only
controversy which survives for consideration is with regard to the disposal of
the refund applications filed by the petitioner with the customs authorities. He,
therefore, prays that instead of adjourning the matter, it may be disposed of with
a direction to the custom authorities to take final decision on the refund applications
filed by the petitioner. We find substance in the suggestion made by learned counsel
for the Petitioner. Accordingly, we dispose of the Writ Petition with a direction
to the customs authorities to consider and dispose of such refund claims as had
been preferred by the petitioner with them by taking into consideration the essentiality
certificates, issued on the petitioners by Respondents No. 2. We further direct
that the said applications shall be disposed of by a speaking and reasoned
order after giving an opportunity of hearing to the petitioners. The applications
shall be disposed of as expeditiously as practicable but in any case not later then
eight weeks from the date of receipt of a copy of this order." (Emphasis supplied)
the appellant filed refund claim dated 06.05.2003 and 04.06.2003 in respect of the
customs duty paid on the import of the said three consignments, which was rejected
by the Deputy Commissioner of Customs vide its order dated 23.12.2004 on the ground
of unjust enrichment and failure to 5 challenge the assessment of the Bills of Entry
by filing an appeal before the Appellate Forum. Reliance was also placed on the
judgment of this court in CCE v. Flock (India) (P) Ltd., (2000) 6 SCC 650 and Priya
Blue Industries Ltd. v. Commissioner of Customs (Preventive), (2005) 10 SCC 433.
Being aggrieved, the appellant preferred an appeal against the Order of Deputy Commissioner
of Customs before the Commissioner (Appeals). This appeal of the appellant was rejected
by the Commissioner (Appeals) vide Order dated 18.04.2005. The appellant, aggrieved
by the Order of Commissioner (Appeals), further preferred an appeal before the Tribunal.
The Tribunal, by its impugned Order dated 12.05.2006, dismissed the appeal. Aggrieved
by these orders, the appellant is before us in this appeal filed under Section 130-E
of the Act.
Harish N. Salve, learned senior counsel and Shri Amar Dave, learned counsel, appear
for the appellant and the Revenue is represented by Shri K. Swamy, learned counsel.
We will refer to their submissions while dealing with the issue canvassed
Court in Flock (supra) has held that a refund claim under the Central Excise Act,
1944 is not maintainable, if an assessment order, which is appealable, has not
been challenged. In other words, it was held that such assessment order is not liable
to be questioned and reopened in a proceeding for refund, which is in the
nature of execution of a decree or order. Further, this Court in Priya Blue
(supra), adopting the ratio of the Flock (supra), has held that a refund claim under
the Act is not an appeal proceeding and the officer considering a refund claim cannot
sit in appeal or review an assessment order made by a competent authority. Such
assessment order is final unless it is reviewed and/or modified in an appeal.
learned senior counsel Shri. Harish N. Salve submits that the decisions of this
court in Flock (supra) and Priya Blue (supra) are incorrectly decided and
require reconsideration. He submits that the present appeal should be referred to
a larger bench to finally and correctly decide the questions of law arising in this
appeal. He further submits that the appellant is entitled to claim refund by
virtue of Section 27 of the Act, even after the assessment order of imported goods
has attained the 7finality. He contends that the claim of refund under Section
27 after final assessment order is different from the refund claim under
Section 18, which is after provisional assessment of the imported goods. He submits
that Section 27 of the Act provides that the claim for refund shall be made within
a period of one year or six months. This short period of limitation indicates that
a claim for refund is maintainable even without preferring an appeal against the
assessment order. In other words, if the claim for refund is permissible only
after filing of an appeal by the party, then Section 27 of the Act will become
redundant as the appeal proceedings would never be over within abovementioned period.
In this regard, learned senior counsel further argues at great length by
analyzing Section 27 of the Act in view of its legislative history and the
philosophy and the broad scheme of the Act vis-`-vis Central Excise Act, 1944 and
Income Tax Act, 1961. He further contends that decisions of this Court in Flock
(supra) and Priya Blue (supra) have ignored or not considered the decision of nine
Judge-Bench of this court in Mafatlal Industries Ltd. v. Union of India, (1997)
5 SCC 536, which suggests that if the duty has 8 been collected contrary to law,
i.e., on account of a misinterpretation or misconstruction of a provision of
law, rule, notification or regulation and the assessment order has attained finality,
then the assessee is entitled to claim refund in accordance with section 11B of
Central Excise Act, 1944 read with Rule 11 of the Central Excise Rules, 1944 on
account of subsequent discovery of such mistake of law by any judgment of High
Court or of this Court.
K. Swamy, learned counsel for the Revenue, justifies the reasoning and the
conclusions reached by the Tribunal.
our considered view, the elaborate submissions made by the learned senior counsel
for the appellant challenging the correctness of Flock (supra) and Priya Blue
(supra) may not be necessary to be considered in the light of the peculiar facts
involved in the present appeal. Ergo, we are not inclined to go into the merits
of Shri Salve's arguments.
facts in the present case are that, since the request of the appellant for
issuance of Essentiality Certificates was delayed, the appellant was
constrained to approach the Delhi High Court 9 by filing a petition under Article
226 of the Constitution of India, inter-alia requesting the Court to direct ONGC
to consider the request of the appellant for issuance of Essentiality Certificates
vide its letter dated 21st May, 2002. On a concession made by learned counsel for
ONGC, the Court, while permitting the parties to file their pleadings, further observed
that the appellants, if they are willing to get their consignment of spare
parts released, may do so by paying the customs duty as demanded under protest
subject to final orders in the petition. The writ petition was finally disposed
of by the Court by its order dated 11th March, 2003, in the presence of learned
counsel for respondents, wherein the Court specifically directed the
respondents to consider the refund claims preferred by the petitioners taking into
consideration the Essentiality Certificates issued by ONGC.
226 of the Constitution confers powers on the High Court to issue certain writs
for the enforcement of fundamental rights conferred by Part-III of the
Constitution or for any other purpose. The question, whether any particular
relief should be granted under Article 226 of the Constitution, depends on the 10
facts of each case. The guiding principle in all cases is promotion of justice and
prevention of injustice. In Comptroller and Auditor-General of India v. K.S.
Jagannathan, (1986) 2 SCC 679, this Court has held: "20. There is thus no
doubt that the High Courts in India exercising their jurisdiction under Article
226 have the power to issue a writ of mandamus or a writ in the nature of
mandamus or to pass orders and give necessary directions where the government
or a public authority has failed to exercise or has wrongly exercised the
discretion conferred upon it by a statute or a rule or a policy decision of the
government or has exercised such discretion mala fide or on irrelevant considerations
or by ignoring the relevant considerations and materials or in such a manner as
to frustrate the object of conferring such discretion or the policy for
implementing which such discretion has been conferred. In all such cases and in
any other fit and proper case a High Court can, in the exercise of its jurisdiction
under Article 226, issue a writ of mandamus or a writ in the nature of mandamus
or pass orders and give directions to compel the performance in a proper and lawful
manner of the discretion conferred upon the government or a public authority, and
in a proper case, in order to prevent injustice resulting to the concerned
parties, the court may itself pass an order or give directions which the government
or the public authority should have passed or given had it properly and
lawfully exercised its discretion."
Dwarkanath v. ITO, AIR 1966 SC 81, this Court pointed out that Article 226 is designedly
couched in a wide language in 11 order not to confine the power conferred by it
only to the power to issue prerogative writs as understood in England, such
wide language being used to enable the High Courts "to reach injustice
wherever it is found" and "to mould the reliefs to meet the peculiar
and complicated requirements of this country."
Halsbury's Laws of England, 4th Edn., Vol. I, para 89, it is stated that the
purpose of an order of mandamus "is to remedy defects of justice; and accordingly
it will issue, to the end that justice may be done, in all cases where there is
a specific legal right and no specific legal remedy for enforcing that right; and
it may issue in cases where, although there is an alternative legal remedy, yet
that mode of redress is less convenient, beneficial and effectual."
High Court, in the present case, has moulded the relief in such a manner to
meet out justice to an aggrieved person. It is not open to the subordinate Tribunal
to examine whether a direction issued by the High Court under its writ powers was
correct and refuse to carry it out as such amounts to denial of justice and
destroys the principle of hierarchy of courts in the administration of justice.
This court in Bishnu Ram Borah v. Parag Saikia, (1984) 2 SCC 488, has held: 12 "11.
It is regrettable that the Board of Revenue failed to realize that like any other
subordinate tribunal, it was subject to the writ jurisdiction of the High Court
under Article 226 of the Constitution. Just as the judgments and orders of the
Supreme Court have to be faithfully obeyed and carried out throughout the territory
of India under Article 142 of the Constitution, so should be the judgments and
orders of the High Court by all inferior courts and tribunals subject to their supervisory
jurisdiction within the State under Articles 226 and 227 of the Constitution. We
cannot but deprecate the action of the Board of Revenue in refusing to carry
out the directions of the High Court. In Bhopal Sugar Industries Limited v. ITO,
(1961) 1 SCR 474, the Income Tax Officer had virtually refused to carry out the
clear and unambiguous directions which a superior tribunal like the Income tax
Appellate Tribunal had given to him by its final order in exercise of its appellate
powers in respect of an order of assessment made by him. The Court held that
such refusal was in effect a denial of justice and is furthermore destructive of
one of the basic principles in the administration of justice based as it is in
this country on the hierarchy of courts. The facts of the present case are more
or less similar and we would have allowed the matter to rest at that but unfortunately
the judgment of the High Court directing the issue of a writ of mandamus for
the grant of a liquor licence to Respondents 1 and 2 cannot be sustained."
hasten to add, if for any reason, the subordinate authority is of the view that
the directions issued by the Court is contrary to statutory provision or well
established principles of law, it can approach the same Court with necessary
application/petition for 13 clarification or modification or approach the
superior forum for appropriate reliefs. In the present case, as we have already
noticed, the respondents have not questioned the order passed by the High
Court, which order has reached finality. In such circumstances, we cannot permit
the adjudicating authority to circumvent the order passed by the High Court.
in our view, the refund claim of appellant has been erroneously rejected by the
Deputy Commissioner of Customs vide its order dated 23.12.2004 ignoring the
specific directions issued by the Delhi High Court vide its order dated
11.03.2003, to the customs authorities to dispose of the appellant's claim of refund
by taking into consideration the Essentiality Certificates issued by the DGH.
The Deputy Commissioner of Customs has rejected the refund claim of appellant on
the ground of unjust enrichment and failure to challenge the assessment of the
Bills of Entry at the appellate stage, without even considering the Essentiality
Certificates in the light of specific and binding directions of the High Court.
view of the above, we allow this appeal and direct the Customs authorities to
consider the appellant's claim of refund of customs duty paid under protest in accordance
with the directions issued by Delhi High Court vide its order dated 11.03.2003 as
expeditiously as possible. In the facts and circumstances of the case, we direct
the parties to bear their own costs.
D.K. JAIN ]
L. DATTU ]