Case Note & Summary
The Supreme Court considered an appeal by the Union of India against an order of the Bombay High Court dated 23 June 1995. The High Court had directed the Customs authorities to dispose of the respondent's refund claim on merits and not to reject it as time barred. The respondent imported goods between February 1983 and July 1985, paid customs duty after a classification dispute, and cleared the goods. Subsequently, the respondent sought refund of excess customs duty and interest at 18% per annum through a writ petition filed in 1987. There was a dispute whether the respondent had earlier filed an appeal which was rejected, but the court did not consider this material. The High Court passed a standard form order requiring the respondent to file a refund application under the amended Section 27 within two weeks and required the authorities to dispose of it within ten weeks, with clause (3) directing that the refund application shall not be rejected on the ground of time bar. The Revenue challenged clause (3) as illegal, arguing that the Customs authorities are bound by the limitation period under Section 27 and cannot be directed to ignore it. The respondent's counsel argued that the limitation period under Section 27 does not apply to a suit or writ petition and that in such cases limitation would be three years, and also requested that if the direction is found unsustainable, the matter be remitted to the High Court. The Supreme Court examined Section 27 of the Customs Act, 1962, both before and after its amendment by Central Act 40 of 1991. It referred to earlier decisions in Collector of Central Excise, Chandigarh v. M/s. Doaba Co-operative Sugar Mills Ltd. and Miles India Ltd. v. Assistant Collector of Customs, which held that departmental authorities are bound by the limitation prescribed under the Act even if general law may allow a longer period. The court held that while the High Court or a civil court may not be bound by Section 27, the Customs authorities, being creatures of the Customs Act, cannot be directed to ignore or act contrary to Section 27. The power under Article 226/227 is designed to effectuate the law, not to direct authorities to act contrary to law. No delegation of the court's power to the authorities can be conceived. Accordingly, the appeal was allowed, the impugned order was set aside in its entirety, and the matter was remitted to the High Court for disposal in accordance with law. The court expressed no opinion on the maintainability or merits of the writ petition. No order as to costs.
Headnote
A) Customs Law - Refund of Duty - Limitation - Section 27 of the Customs Act, 1962 - Claim for refund of duty must be made within six months of payment unless paid under protest - High Court directed Customs authorities not to reject refund application as time barred, but authorities under the Act are bound by the limitation period and cannot be directed to ignore it - Held that direction contained in clause (3) of the impugned order is unsustainable in law as it contravenes Section 27. B) Constitutional Law - Writ Jurisdiction - Article 226/227 of the Constitution of India - High Court cannot direct statutory authorities to act contrary to law - Power under Article 226 is to effectuate law and ensure authorities act in accordance with law, not to delegate court's power to authorities - Held that High Court could not direct Customs authorities to ignore Section 27 and no delegation of court's power can be conceived; matter remitted to High Court for disposal. C) Precedent - Limitation for Refund Claims - Collector of Central Excise v. Doaba Co-operative Sugar Mills Ltd., AIR 1988 SC 2052; Miles India Ltd. v. Assistant Collector of Customs, 1987 (30) ELT 641 (SC) - Departmental authorities are bound by limitation prescribed under the Act even if general law may allow longer period - Court followed earlier decisions to hold that authorities must adhere to statutory limitation.
Issue of Consideration
Whether the Bombay High Court could direct Customs authorities not to reject a refund application as time-barred despite the limitation prescribed under Section 27 of the Customs Act, 1962.
Final Decision
Appeal allowed; order under appeal set aside in entirety; matter remitted to High Court for disposal in accordance with law; no costs; no opinion on maintainability or merits.
Law Points
- Statutory authorities are bound by limitation periods prescribed under the Customs Act
- 1962
- High Court cannot direct authorities to act contrary to law under Article 226/227
- no delegation of court's power to executive authorities
- refund claims under Section 27 must be made within six months unless paid under protest
- Section 27(3) amended prohibits refunds except as provided in sub-section (2)
