ORDER
1. The Revision Application filed before the Government of India against the Order-in-Appeal No. S/49-307/80M, dated. 21-6-80 passed by the Appellate Collector of Customs, Bombay, statutorily stood transferred to the Tribunal for being heard as an appeal.
2. The undisputed facts are :
The Minerals and Metal Trading Corporation of India Ltd., imported 2 crates of Cold Rolled Stainless Steel Sheets, but sold the materials to the appellants, namely, Star Textile Engineering Works Ltd., on high seas basis. The appellants made entry by presenting the Bill of Entry for home consumption and paid the duty on 3-11-79. The appellants could take delivery of only 1 crate. The Bombay Port Trust who are the custodians of the imported goods unloaded in the Customs area {vide Section 45) issued a short-landing certificate in respect of the other crate. Thereafter, the appellants made an application before the Assistant Collector of Customs for refund of duty paid in respect of the short-landed crate. This application in Form ‘A’ was received in the Refund Section on 20-5-80. The Assistant Collector of Customs rejected their claim for refund as time-barred under Section 27(1) of the Customs Act, 1962 (to be hereinafter referred to as ‘the act’) in as much as the payment of duty was made on 3-11-79 and the claim for refund was received on 20-5-80. The Appellants’ appeal before the Appellate Collector was unsuccessful. The Appellate Collector rejected the appeal holding that the provisions of Section 27(1) of the Act are mandatory, and therefore, the Assistant Collector’s order cannot be interdered with.
3. Shri P.M. Parulekar, Deputy Manager of the appellants submitted that the Assistant Collector as well as the Appellate Collector committed an error in rejecting the appellants’ claim for refund. He contended that there was no dispute that one of the crates in respect of which refund of duty was claimed did not land in India, and as such, no duty was chargeable. If no duty was chargeable, there was no scope to invoke the provisions of Section 27(1). In support of his contention he cited the earlier orders passed by the Tribunal and also relied on the decision of the Bombay High Court reported in 1981 E.L.T, page 921, Indian Dairy Corporation v. Union of India. He, therefore, prayed that the appeal may be allowed and the orders passed by the authorities below may be set aside and there may be direction for refund of duty.
4. Shri CM. Gidwani for the respondent Collector made the following submissions :
(1) The application for refund ‘was made in the prescribed Form, namely Form ‘A’ which was, the form to claim refund under Section 27(1) of the Act.
(2) Excepting Section 27, there is no other Section in the Customs Act which provides for refund of duty paid.
(3) The authorities created or constituted under the Customs Act have to function within the ambit of the provisions contained in that Act, and therefore, the provisions of Section 27 are binding on those authorities and they cannot travel beyond the provisions of Section 27(1).
(4) The party who claims the benefit of Section 27 by making an application under that Section is bound by the restrictions imposed by that Section as to the period within which the claim for refund as to be made.
(5) The appellants made the claim before the Assistant Collector and on rejection they filed an appeal before the Appellate Collector unsuccessfully, and thereafter, filed the revision application before the Government of India and thereby resorted to the machinery provided by the Customs Act. Therefore, the order on the revision application shall have to be under the provisions of the Customs Act. He reiterated that the only provision which permitted refund of duty is Section 27(1), but then to claim the benefit on that Section the application for refund shall have to be made within the period prescribed thereunder, and admittedly, the appellants’ application for refund was beyond the period prescribed in the said Section.
(6) Once a party places reliance upon a statutory right, then it is not open to that party to urge that the restrictions imposed by such a statute on the exercise of that right as to the entertainability of the claim are to be ignored. In this connection Shri Gidwani relied upon the two decisions of the Supreme Court (1) reported in AIR 1962 S.C. 1320, Burmah Construction v. State of Orissa and (2) reported in AIR 1975 S.C. 1039, Commissioner of Sales Tax U.P. v. Parson Tools and Plants, Kanpur.
(7) The Larger Bench of the Tribunal in Miles India Ltd., Baroda (Gujarat) v. the Appellate Collector of Customs, Bombay [1983 E.LT 1026 (CEGAT)], had held that any claim filed before the Custom Authorities for refund of the excess duty has to be treated under Section 27 of the Customs Act, and the parties refund claim are to be regulated by and restricted to the time provided in the said provisions and that the Custom Authorities could be right in rejecting the claim filed after the expiry of the period contemplated in that Section. The said decision of the Tribunal is binding on this Bench.
(8) The Civil Appeal No. 1633/84 filed by Miles India Ltd. before the Supreme Court was dismissed as withdrawn, but while granting leave the Supreme Court has observed
‘We accord leave to withdraw the appeal, but make it clear that the order of the Customs, Excise & Gold (Control) Appellate Tribunal suffer from no infirmity. If really, the payment of duty was under mistake of law, the appellants may seek recourse to such alternative remedy as it may be advised.’
This judgment of the Supreme Court according to Shri Gidwani is binding on the Tribunal, and lastly
(9) If the appellants had paid the duty by mistake, they must either approach the High Court under Article” 226 or a Civil Court by way of suit. The authorities created under the Customs Act were not conferred with the power to order refund outside the purview of the Act. The refunds ordered by the High Court in various cases were in exercise of their prerogative writs and the Tribunal had not been conferred with such a prerogative.
5. I have carefully considered the submissions made on both sides and also perused the records of the case. The points that fall for consideration in this appeal are :
(1) Whether the payment made by the appellants is a Customs duty ?
(2) Is the claim of the appellants barred under Section 27(1) of the Act ?
(3) Whether the Customs Act prohibits the Custom Authorities from refunding the amounts other than Customs duty ?
Answer to point No. 7.-Though the Assistant Collector and the Appellate Collector did not consider their claim on merits, it cannot be disputed that one of the crates imported by the appellants did not land in India. The Bombay Port Trust Authorities who are constituted as the statutory custodians of the goods landed in the Customs area had issued a short-landing certificate in respect of the crate which had not in question had been satisfactorily established. It is the contention of the appellants that no duty could be levied in respect of the short-landed goods. If duty could not be levied, there is no scope to assess or collect duty in respect of the short-landed goods. The appellants contended that they made the payment in expectation of the arrival of the goods. When the goods did not arrive, the payment made in respect of that goods should be treated as a deposit. The Act has not prescribed any period of limitation for refunding the amount as deposit.
6. In order to examine the validity of the contentions raised by the appellants, it is necessary to refer to a few provisions of the Customs Act. The expression ‘duty’ is defined in Section 2(15) of the Act. Duty means ‘a duty of Customs leviable under this Act’ Section 1 of the Act provides for levy of Customs duties and Sub-section (1) of that Section reads :
‘Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods imported into, or exported from India.’
7. Valuation of goods for purposes of assessment is provided in Section 14.
8. Date for determinatian of rate of duty and tariff value of imported goods are dealt with in Section 15. The modes of assessment of duty are provided under Section 17. The said Section reads :
(1) After an importer has entered any imported goods under Section 46 or an exporter has entered any export goods under Section 50 of the imported goods or the export goods, as the case may be, or such part thereof as may be necessary may, without undue delay, be examined and tested by the proper officer.
(2) After such examination and testing, the duty, if any, leviable on such goods shall, save as otherwise provided in Section 85, be assessed.
(3) For the purpose of assessing duty under Sub-section (2) the proper officer may require the importer, exporter or any other person to produce any contract, broker’s note, policy of insurance, catalogue or other document whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required for such ascertainment which it is in his power to produce or furnish, and thereupon the importer, exporter or such other person stall produce such document and furnish such information.
(4) Notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry thereto and the documents produced and the information furnished under Sub-section (3) ; but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be re-assessed to duty.
9. The claim for refund of duty is considered under Section 27. Subsection (1) of that Section reads :
“(1) Any persons claiming refund of any duty paid by him in pursuance of an order of assessment made by an officer of customs lower in rank than an Assistant Collector of Customs may make an application for refund of such duty to the Assistant Collector of Customs-
(a) not relevant for our purpose
(b) in any other case, before the expiry of six months, from the date of payment of duty.”
The rest of this Sub-section is also not relevant for the purpose of this appeal.
10. Now from the scheme contemplated in the Act it is seen that the Act provides for levy and collection of Customs duty. From the plain reading of the provisions of Section 12 it would be clear that the Customs duty could be levied on goods imported into India or exported from India. No Customs duty is leviable in respect of the goods which did not land in India. The assessment and collection of the Customs duty could be in respect of the goods landed in India and which are leviable to the Customs duty. If the Customs duty is not leviable or chargeable in respect of any goods then there cannot be any assessment of duty or collection of duty in respect of such goods.
11. Since the appellants had established by satisfactory evidence that a crate did not land in India, no Customs duty could be levied in respect of that crate, and there cannot be any assessment or collection of duty in respect of that crate. But then the Act provides for assessment and collection of duty even before the landing of the imported goods. Section 46(1) of the Act requires the importer of any goods, other than goods intended for transit or transhipment shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form. The Bill of Entry should normally include all the goods mentioned in the Bill of Lading or other receipts given by the carrier to the consignor. Sub-section (3) of Section 46 permits’ presentation of Bill of Entry at any time after the delivery of import manifest or import report. The first proviso to Sub-section (3) confers discretion on the Collector of Customs to permit presentation of the Bill of Entry before the delivery of the import manifest or import report. The second proviso to Sub-section (3) allows presentation of the Bill of Entry even before the delivery of import manifest if the vessel by which the goods have been shipped for importation into India is expected to arrive within a week from the date of such presentation.
12. Sub-section (4) of Section 17 authorises a proper officer to assess the goods to duty prior to the examination or testing there on the basis of the statements made in the entry thereto and the documents produced and the information furnished by the importer.
13. Having regard to the certificate issued by the Bombay Port Trust Authorities that one of the crates did ‘not land, the assessment of duty in respect of that crate would have been made under Sub-section (4) of Section 17. As has been observed earlier the Customs) duty is leviable or chargeable only in respect of the goods imported into’ India. The assessment to duty and collection of duty also could be in respect of the goods imported into India. Though factually there was an assessment and collection of duty by reason of the provisions of Section 17(4) of the Act, the said assessment and collection cannot be considered legal and they are a nullity. Any payment made in pursuance of such an assessment cannot be treated as the payment towards customs duty, because no Customs duty is leviable in respect of the short-landed goods because they are not imported into India.
14. The next question that arise for consideration is whether the provisions of Section 27 would apply to the payment though ostensibly paid as duty, but was not the Customs duty in the eye of law.
15. To claim the benefit of Section 27(1), the following factors shall have to be established :
(1) The refund of claim should be of refund of duty,
(2) The payment of duty should be in pursuance of an order of assessment made by the officer of Customs lower in rank than an Assistant Collector of Customs and
(3) The claim for refund of duty should be made within the period prescribed in that Sub-section.
16. If what had been paid was not the Customs duty or cannot be considered as the Customs duty, then there is no scope to claim refund of that payment under Section 27(1) of the Act. Similarly, even if the payment was Customs duty, but if that payment was not made in pursuance of an order of assessment made by an officer of Customs lower in rank than an Assistant Collector of Customs then also the refund of duty cannot be made under Section 27(1).
17. Having regard to my finding that what had been paid by the appellants was not the Customs duty, because no Customs duty could be levied in respect of the goods not landed in India there is no scope to apply the provisions of Section 27 of the Act to such a payment. The applicability of Section 27(1) to the short-landed goods came up for consideration before the Bombay High Court in Indian Dairy Corporation v. Union of India, 1981 E.L.T, page 927. The facts of that case are : The appellants imported 40,000 cartons of butter-oil. After assessment they paid the duty on April 2nd, 1975. While clearing the goods they noticed that 161 cartons were missing. They obtained a short-landing certificate from the Bombay Port Trust. Thereafter they filed a refund application for refund of Rs. 18,030/- being the Customs duty paid on the missing 161 cartons which were short-landed. Their claims were rejected by the Assistant Collector, Appellate Collector as well as the Government of India. In the Writ Petition filed before the Bombay High Court, the Hon’ble High Court after referring to the provisions of Section 27(1) observed :
‘It is obvious from the mere reading of the Section that the applications for refund contemplated by this Section are those where the recovery of duty is not without jurisdiction. It has been repeatedly held by the Court while considering the ambit of Rule 11 of the Central Excise Rules that the period of Rule 11 has no application where recovery of duty is illegal and without jurisdiction. The same principle must apply while considering the application of Section 27(1) of the Act to the claim for refund made where duty is recovered by the Department without jurisdiction of authority of law.’
It was further observed in that case that
‘Turning to the facts of the present case, it is crystal clear that the recovery of duty by the Department in respect of 161 cartons which were found missing and in respect of which the Bombay Port Trust issued a short-landing certificate was totally without authority. No duty could have been levied in respect of goods which were not in existence and as such the recovery was without jurisdiction. As the recovery was without jurisdiction it was not open for the Department to fall back upon the period of limitation prescribed by Section 27 of the Act and refuse to entertain the refund claim on that count. In my judgment, the orders passed by the authorities below cannot be sustained.’
18. In the above decision the Bombay High Court also referred to its earlier decision in the case of Wipro Product Ltd. and Anr. v. Union of India and Anr. reported in 1981 E.L.T. 531.
19. The ratio of the decision of the Bombay High Court is that if the levy was totally without jurisdiction and outside the provisions of the Customs Act, the bar of limitation prescribed under Section 27(1) is not applicable.
20. The above cited judgment of the Bombay High Court is binding on the Tribunal. As a matter of fact in number of appeals this West Regional Bench relying upon the decision of the Bombay High Court had held that Section 27(1) of the Act has no application to the short-landed goods. The following are some of the decisions rendered by this Bench.
(1) CD. (BOM) Appeal No. 31/79, Arohan Mukhyalaya y. Collector of Customs, Bombay, decided on 29-11-1983.
(2) CD. (T) (BOM) Appeal No. 77/83, New India Export Pvt. Ltd. v. Collector of Customs, Bombay, decided on 20-2-84.
(3) CD. (T) (BOM) Appeal No. 15/79, N.S. Gazdar & Co. Pvt. Ltd. v. Collector of Customs, Bombay, decided on 4-4-84.
Let me now proceed to consider as to whether the decision of the Larger Bench of this Tribunal in Miles India case has any application to the facts of the present case. It is desirable to refer to the facts in Miles India Ltd.- The appellants therein imported goods described as Indian Chemical Reagent Stripe. They contended that their goods should be classified under Tariff Item No. 90.17/18 of India Customs Tariff treating them as diagnostic medical; tools. In the alternative they contended that their goods should be classified under Tariff Item No. 38.10/19 as ‘chemicals not elsewhere specified’. The Custom Authorities however, assessed their goods under Tariff Item No. 48.01/21 under the heading ‘Papers and paper board, all sorts’. They however, went on making the payment. On coming to know of the exemption Notification dated 17-9-77 which exempted the goods imported by them from payment of Customs duty they lodged a refund claim with the Custom Authorities for the period falling between 10-2-1973 to 10-8-1980 totalling Rs. 5,86,465.16 p. on the ground that the additional Customs duty was paid by them under a mistake of law, and accordingly, the law of limitation under the Limitation Act, 1963 ought to apply in their case. Their claim was however, rejected by the Assistant Collector, the Appellate Collector and also by the Tribunal.
21. From the facts narrated above it is clear that the refund claim of Miles India Ltd. did not relate to short-landed goods. The question whether the goods imported by Miles India were chargeable or leviable to Customs duty was not at all the question for consideration before the Larger Bench. As a matter of fact there was no reference to the decision of the Bombay High Court, namely, Indian Dairy Corporation case. The Larger Bench proceeded on the footing and rightly that the goods imported by Miles India were leviable and chargeable to Customs duty. Further, the Larger Bench proceeded on the footing that the appellants’ refund claim fell within the ambit of Section 27(1). On those premises the Larger Bench held that such refund claims are to be regulated by and restricted to the time-limit provided in Section 27 and that Custom Authorities could be right in rejecting the claim filed after, the expiry of the period contemplated in Section 27(1).
22. Since the facts of the present appeal are different from the facts in Miles India Ltd., there is no scope to apply the ratio of the decision of the Larger Bench to the present appeal. As has been held earlier the goods were not chargeable or leviable to Customs duty. Therefore, the payment made in respect of the goods which did not land in India cannot be considered as the payment towards the Customs duty. The bar of limitation prescribed under Section 27(1) is not applicable to the short-landed goods.
23. The next question for consideration is whether the Customs Act prohibits refund of payments not made towards the Customs duty or payments which cannot be considered as payments towards the Customs duty. It was the contention of Shri Gidwani that refund of duty is contemplated only under Section 27 and there is no other Section which authorises refund. It was further contended by Shri Gidwani that the party made an application under Section 27, and, therefore the restrictions imposed by that Section is applicable to such a claim. Shri Gidwani further contended that the subsequent conduct of the party in approaching the Appellate Collector and the Government of India precludes them from making a claim for refund outside the purview of Section 27(1). It was also urged by Shri Gidwani that the Authorities created under the Act have no inherent powers or conferred with right to issue prerogative writs, and therefore, cannot order refund if the refund claim was barred by Section 27(1). These contentions of Shri Gidwani to some extent find support in the decision of the Larger Bench in Miles India Ltd. But then there is a fallacy in the argument of Shri Gidwani. I have already considered the scope of Section 27. Section 27 does not debar refund of all payments irrespective of whether the payments were towards Customs duty or otherwise. It also does not debar refund of Customs duty if the payment thereof was not made in pursuance of an assessment made by an officer lower in rank than an Assistant Collector of Customs. Shri Gidwani also did not point out any other Section which either prohibits or precludes the Custom Authorities from refunding the payment made not towards duty or payment made towards duty but the payment was not in pursuance of an order of assessment.
24. The adjudicating authorities under the Customs [excepting the Collector (Appeasl) and the Tribunal] function in dual capacities. They function as Administrative or Executive Officers and also function as adjudicating authorities. The Custom authorities do collect overtime charges. But if such charges are not utilised in the sense if no overtime was done the charges so collected are refunded. Similarly, the amounts in accounts credit are also refunded to the parties. For refund of these paymentsbar of limitation is never pleaded nor provided in the Act. Neither the Larger Bench in Miles India Ltd., nor the Supreme Court in Civil Appeal No. 1633/84 laid down that the Custom Authorities are prohibited or precluded from ordering refund of the amounts though collected as duty but in law cannot be considered as Customs duty or ordering refund of even Customs puty, but payment of which was not made in pursuance of an order of assessment. They only held that the payments to which the provisions of Section 27)1) applies cannot be refunded and the Authorities created under, the Act cannot order refund if the claim is barred under that Section. As a matter of fact a similar question came up for consideration before the Supreme Court in Patel India Ltd. v. Union of India, AIR 1973 S.C. Page 1300. In Patel India case the Customs refused to refund the excess duty on the] ground that the claim had not been made within the time prescribed by Section 46 of the Sea Customs Act. In this they exhausted the remedies prescribed under the Sea Customs Act. They also filed a Writ Petition before the High Court of Punjab and were unsuccessful. Thereafter they approached the Supreme Court. Before the Supreme Court the Union of India urged that Section 40 of the Sea Customs Act was a bar. This contention was considered by the Supreme Court and the Supreme Court observed :
‘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 consequeace 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 applied 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….
The only provision relied on by the Custom 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 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 Section 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 haying been put forward and the Custom authorities not being entitled to retain the excess duty and a corresponding legal right in the appellant-company to recover it. Besides except Section 40 the Act contain no other provisions 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 the 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.
25. The above decision of the Supreme Court is applicable in all fours to the facts of the present case. Excepting Section 27(1) no other provision was relied upon to deny the refund claim of the appellants. 1 have held that Section 27 has no application, because the levy of Customs duty is impermissible in respect of short-landed goods. Since Section 27 did not apply to the facts of the case the respondents could not retain the payment collected as duty, except by the authority of some other provisions of law. No other provision was pointed out by Shri Gidwani which disentitle the appellants to the refund on the ground of their right being time-barred or otherwise. As has been observed by the Supreme Court in the above case there was a legal obligation on the part of the respondents to return the excess duty and a corresponding legal right in the appellants to recover it. .Except Section 27, the Act contains no other provisions laying down any limitation within which an importer has to apply for refund of payment which do not fall within the ambit of Section 27(1). As has been held by the Supreme Court, the refusal to return the excess amount collected as duty on the ground that the appellants had not applied within the time provided by Section 27(1) was clearly unsustainable.
26. As the collection of the amount in the instant case was not towards the duty or cannot be considered as Customs duty, because no duty was chargeable or leviable on the goods not imported into India the payment in question cannot be considered as the payment towards duty or made in pursuance of an assessment contemplated by Section 27(17).
27. The Customs Act nowhere lays down any limitation for refund of the amounts which are not Customs duty. In the matter of refund of the amount which the authorities are not legally entitled to retain, what is to be considered is not whether the Act permits refund, but whether the Act prohibits. Since there is no prohibition in the Act prohibiting the Officers of the Custom from refunding the amount which are not Customs duty, I reject the contention of Shri Gidwani that the authorities created under the Act have no right to order refund except under Section 27 of the Act.
28. In the result this appeal is allowed. The orders passed by the authorities below are set aside. The appellants shall be granted consequential relief.