RBF Rig Corpn. vs Commr. of Customs (Imports)

RBF Rig Corporation, Mumbai .............. Appellant

versus

The Commissioner of Customs (Imports),

Mumbai ..............Respondent

J U D G M E N T

H.L. Dattu, J.

1) This 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 12.05.2006.

2) The 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

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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.'

3) The 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

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Essentiality Certificates only on the strength of

recommendatory letters issued by ONGC.

4) The 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.

5) In 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.

3 6) In 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.

7) Subsequently, 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:

4 "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)

8) Accordingly, 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

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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.

9) Shri 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 before us.

6 10) This 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.

11) The 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

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finality. 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

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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.

12) Shri K. Swamy, learned counsel for the Revenue, justifies the

reasoning and the conclusions reached by the Tribunal.

13) In 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.

14) The 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

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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.

15) Article 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

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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."

16) In Dwarkanath v. ITO, AIR 1966 SC 81, this Court pointed out

that Article 226 is designedly couched in a wide language in

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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."

17) In 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."

18) The 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."

19) We 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

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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.

20) Therefore, 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.

14 21) In 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.

..............................J.

[ D.K. JAIN ]

..............................J.

[ H. L. DATTU ]

New Delhi,

February 08, 2011.

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