http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: UNION OF INDIA AND ANR.

       Vs.

RESPONDENT: KIRLOSKAR PNEUMATIC COMPANYLIMITED

DATE OF JUDGMENT:       06/05/1996

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) SEN, S.C. (J)

CITATION:  1996 SCC  (4) 453        JT 1996 (5)    26  1996 SCALE  (4)317

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Leave granted. Heard the counsel for the parties.      This appeal is directed against, what is called, "Minutes of the order" made by the Bombay High Court on 23rd June, 1995. The order reads:      "1 The  Petitioners  will  file  an      application for  refund, in respect      of  the  consignments  imported  as      referred to  in this  Petition,  in      the  prescribed  form  as  per  the      amended section  27 of  the Customs      Acts  1962,  within  2  weeks  from      today.      2. The  Respondents will dispose of      the  aforesaid   Refund  Claim,  on      merits, within  10 weeks  from  the      filing of the same.      3. The Respondents shall not reject      the  refund   application  on   the      ground that it is time barred.      4.  The  Petition  is  disposed  of      accordingly.      5. No order as to costs."      The Revenue is questioning the validity and correctness of clause  (3) of  the said order whereby the High Court has directed the authorities under the Customs Act not to reject the respondent’s  application for  refund on the ground that it is time barred and to dispose it of on merits.      The respondent  imported certain goods between February 1983  and  July  1985.  There  was  a  dispute  between  the respondent and  the Customs  Authorities with respect to the classification  of  goods.  The  duty  as  demanded  by  the authorities  was  paid  by  the  respondent  and  the  goods cleared.  thereafter,   the  respondent   filed  the  refund application.  The   appellant  says   that  the   respondent

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

preferred an  appeal which  was rejected  by  the  appellate authority and that instead of filing the further appeal, the respondent approached  the Bombay High Court. The respondent disputes this  statement. He  says that  he did not file any appeal but  approached the High Court straight away. Be that as it  may. The  prayer in the writ petition was to issue an appropriate  writ,   order  and  direction  to  the  Customs Authorities to  refund the  excess customs  duty levied upon the goods  imported by the respondent and collected from it. The respondent  also claimed interest at the rate cf 18% per annum on  the said order. The writ petition was filed in the year 1987.      The appellants  state  that  they  contested  the  writ petition but  the High Court passed the impugned ’minutes of the order’.  Indeed Mr.Hidayatullah, learned counsel for the respondent states  that the  order impugned  herein  is  the standard order  which is  usually passed  by the Bombay High Court in all such matters.      In this  appeal we  are not  concerned either  with the maintainability of the writ petition or its merits. The only contention raised  and which  we are  considering is whether the direction  given by  the High  Court  that  the  Customs Authorities "shall  not reject the refund application on the ground that  it is  time barred",  is   valid in  law.  With respect we think that it is not.      In Collector  of Central  Excise,  Chandigarh  v.  M/s. Doaba Co-operative Sugar Mills Ltd. Jalandhar [A.I.R. 1988 S.C. 2052 = 1988 (37) E.L.T. 478] this Court had observed:      "6.  It appears that where the duty      has   been   levied   without   the      authority   of   law   or   without      reference    to    any    statutory      authority    or     the    specific      provisions of the Act and the Rules      framed    thereunder     have    no      application, the  decision will  be      guided by  the general  law and the      date of  limitation  would  be  the      starting point  when the mistake or      the error  comes to  light. But  in      making claims for refund before the      departmental authority, an assessee      is bound within four corners of the      Statute   and    the   period    of      limitation   prescribed    in   the      Central Excise  Act and  the  Rules      framed thereunder  must be  adhered      to.  The   authorities  functioning      under the  Act  are  bound  by  the      provisions  of   the  Art.  If  the      proceedings are taken under the Act      by the  department, the  provisions      of limitation prescribed in the Act      will prevail.  It may,  however, be      open to  the department to initiate      proceedings in  the Civil Court for      recovery of  the amount  due to the      department  in  case  when  such  a      remedy is  open on  the ground that      the money  received by the assessee      was not  in the  nature of  refund.      This was  the  view  taken  by  the      Tribunal in  a previous decision in      the case of Miles India Ltd. v. The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

    Asstt. Collector  of Customs but it      was assailed before this Court. The      appeal was  withdrawn.  This  Court      observed    that     the    Customs      Authorities, acting  under the Act,      were justified  in disallowing  the      claim for refund as they were bound      by   the   period   of   limitation      provided therefor  in the  relevant      provisions  of   the  Customs  Act,      1962. If  really the payment of the      duty was  under a  mistake of  law,      the party  might seek  recourse  to      such alternative remedy as it might      be advised. See the observations of      this Court  in Miles  India Ltd. v.      The    Assistant    Collector    of      Customs,[1987   (30)   E.L.T.   641      (S.C)= 289]."      Inasmuch as  the earlier  decision of  this Court    in Miles India  Ltd. v.  Assistant Collector  of Customs  [1987 (30) E.L.T.  641 (S.C.)]  has practically been reproduced in the above  extract, we do not think it necessary to refer to that decision.      Section 27  of the  Customs Act provides for claims for refund of  duty. The  section has  been substituted by a new section  by  Central  Act  40  of  1991  (with  effect  from September  20,   1991).  The  amended  Section  27  severely curtails the  right to  refund but  for the  purpose of this appeal, it is not necessary to refer to that aspect. Suffice it to  say that sub-sections (1) and (2) of Section 27 (both before  and   after  amendment)   provide  for   filing   an application for  amendment within  a period of six months of the payment  of duty except in a case where it has been paid under protest. What is relevant herein is sub-section (4) of unamended Section  27 and sub-section (3) of amended Section 27. It  would be  sufficient if  we set  out the  said  sub- sections. Sub-section  (4) of  unamended Section  27 read as follows:      "27(4) Save  as provided in section      26, no claim for refund of any duty      shall  be   entertained  except  in      accordance with  the provisions  of      this section."      Sub-section (3) of amended Section 27 reads thus:      "27(3) Notwithstanding  anything to      the  contrary   contained  in   any      judgment,    decree,    order    or      direction of the Appellate Tribunal      or  any   Court  or  in  any  other      provision  of   this  Act   or  the      regulation made  thereunder or  any      other law  for the  time  being  in      force,  no  refund  shall  be  made      except as  provided in  sub-section      (2)".      According to  these sub-sections, a claim for refund or an order  of refund  can be made only in accordance with the provisions of  Section 27  which  inter  alia  includes  the period  of  limitation  mentioned  therein.  Mr.Hidayatullah submitted  that  the  period  of  limitation  prescribed  by Section 27  does not  apply either  to a  suit filed  by the importer or to a writ petition filed by him and that in such cases the period of limitation would be three years. Learned counsel refers  to certain  decisions of  this Court to that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

effect. We shall assume for the purposes of this appeal that it is so, notwithstanding the fact that the said question is now pending  before a  larger Constitution  on Bench of nine Judges along  with the  issue relating to unjust enrichment. Yet the  question is  whether it is permissible for the High Court to  direct  the  Authorities  under  the  Act  to  act contrary to  the aforesaid  statutory provision.  We do  not think it  is, even  while acting  under Article  226 of  the Constitution. The  power conferred  by  Article  226/227  is designed to  effectuate the  law, to enforce the Rule of law and to ensure that the several authorities and organs of the State act  in accordance  with law. It cannot be invoked for directing  the  authorities  to  act  contrary  to  law.  In particular, the Customs authorities who are the creatures of the Customs  Act,  cannot  be  directed  to  ignore  or  act contrary to  Section 27,  whether before or after amendment. May be  the High  Court or a Civil Court is not bound by the said provisions  but the  authorities under the Act are. Nor can there  be any  question of  the High  Court clothing the authorities with its power under Article 226 or the power of a civil  court. No such delegation or conferment can ever be conceived. We  are,  therefore,  of  the  opinion  that  the direction contained  in clause  (3) of the impugned order is unsustainable in law. When we expressed this view during the hearing Mr.Hidayatullah  requested that  in such  a case the matter be  remitted to  the High Court and the High Court be left free  to dispose of the writ petition according to law. The appeal is accordingly allowed, the order under appeal is set aside  in its entirety and the matter is remitted to the High Court for disposal in accordance with law. We reiterate that we  express no  opinion upon the maintainability or the merits of  the writ  petition. That is for the High Court to consider.      There shall be no order as to costs.