1. The petitioners manufacture, inter alia, diverse qualities of cotton fibres and yarn. In February 1979 the petitioners imported six consignments of Viscose Staple Fibre from U.S.A. weighing 3,97, 498 Kilo grams for the purpose of manufacturing fibres and yarn. Under an exemption notification No. 6-Cus,, a copy of which is annexed as Exhibit 'A' to the petition and which is dated 5th January 1979, Viscose Staple Fibre imported into India is exempt from the duty of customs. The said goods were however, liable to payment of countervailing duty. The equivalent excise duty was as follows : As per Ordinance No. 4/78 dated 4th October 1978 Viscose Staple Fibre was subject to a duty of Rs. 2.55 per kg. plus a special excise duty of 5% and additional excise duty of a further 10%. The total excise duty which is equivalent to the countervailing duty leviable works out to Rs. 3.0475 paise per K.G. Under a notification No. 8-Cus. dated 5th January 1979 Viscose Staple Fibre was exempted from countervailing duty in excess of Rs. 1.32 per kg. Hence Viscose Staple Fibre imported by the petitioners in February 1979 was subject to countervailing duty at the rate of Rs, 1.32 per kg. The respondents however, levied countervailing duty at the full rate of Rs. 3.045 per Kg.
2. When the petitioners discovered the mistake in levying this extra countervailing duty they made a refund application dated 8th October 1979 for the refund of the extra duty so collected. The respondent No.1, Assistant Collector of Customs by his order dated 18th October 1979 and 24th October 1979 rejected these applications for refund on the ground that the applications were not preferred within six months from the date of payment. The applications were, therefore, time barred under the provisions of Section 27 of the Customs Act, 1962.
3. On 20th November 1979 the petitioners preferred six appeals before the Collector of Customs. By his common order dated 27th November 1979 the second respondent rejected the appeals on the ground that he had no power to condone the delay in preferring applications for refund and that the applications were time barred under the provisions of Section 27 of the Customs Act, 1962. On 20th May 1980 the petitioners preferred a revision application before the Government of India. By its order dated 29th November 1980 passed by the Additional Secretary, Department of Revenue. Ministry of Finance, Government of India, the Revision Application of the petitioners has been rejected also on the ground that the applications are time barred at the threshold by virtue of Section 27 of the Customs Act, 1962. These orders are challenged in the present petition. It is an accepted position that on merits the petitioners would be entitled to the refund claim. In fact in respect of six other applications of the petitioners pertaining to other imports of Viscose Staple Fibre their applications for refund have been allowed because they were filed within the period of six months.
4. The short question that requires consideration is whether the petitioners are entitled to recover from the respondents the excess duty so collected. It has been held in several authorities of this Court as well as the Supreme Court that when the duty has been collected without the authority of law or where such recovery is without jurisdiction, the person aggrieved would be entitled to recover excess duty so collected on the basis that the amount is collected under a mistake of law. Ordinarily bearing in mind the period of 3 years provided under the Limitation Act for filing suits for recovery of such amounts, the courts have held that by and large if such an application is filed for recovery of the excess duty, collected without the authority of law, within a period of 3 years the petitioners would be entitled to recover the duties so collected from them. My attention was drawn to a decision in the case of Indian Dairy Corporation v.Union of India reported in 1981 E.L.T. 926(Bom.) where a learned Judge of this High Court held that Section 27 of the Customs Act was in-applicable where the claim was for recovery of duty illegally collected, in that case the claim was for recovery of duty levied on short landed cargo. This and several other cases were considered by me in a recent decision given by me on 11th April 1985 in Writ Petition No. 325 of 1981 in the case of Atul Products Limited v. The Union of India and Ors. For reasons which are set out by me therein the petitioners would be entitled to [recover excess duty collected from them without the authority of law.
5. In the present case the respondents had no power to collect more than the prescribed duty from the petitioner. They have, therefore, collected excess duty from the petitioners without the authority of law and their action is clearly without jurisdiction. In such circumstances the provisions of Section 27 of the Customs Act cannot apply since the duty has been collected without jurisdiction. The petitioners preferred applications for refund within a period of 8 months. They have come to court within 4 or 5 months of the rejection of their revision application. They are, therefore, entitled to get back the excess duty recovered from them by the respondents.
6. It was submitted on behalf of the respondents that permitting such amounts to be re-paid to the petitioners would amount to unjust enrichment of the petitioners because the petitioners must have passed on the burden of duty so paid by them to the customers. This doctrine of unjust enrichment is usually invoked in the case of recovery of excise duty where the manufacturer has passed on the burden of the excise duty paid by him to the customer in the form of increase in price.
7. In the present case the petitioners had imported Viscose Staple Fibres for their own use in the manufacture of various types of yarn.
There was, therefore, no question of their selling these Viscose Staple Fibre to any third party and passing on the burden of countervailing duty to their customers, It is however, submitted by the respondents that the higher costs of Viscose Staple Fibre by reason of the levy of countervailing duty will be reflected in the ultimate price for their product charged by the petitioners to the customers of their final product. There is however, no material before me to show to what extent this additional duty levied is reflected in the price of the ultimate product sold by the petitioners. There is no direct nexus between the recovery and refund of this duty and the benefit to the ultimate customer of the product manufactured by the petitioner. In my view in such circumstances the doctrine of unjust enrichment cannot be invoked, In the premises the respondents arc directed to refund to the petitioners countervailing duty collected on the said consignments in excess of Rs. 1.32 ps. per kg. According to the petitioners the total amount comes to Rs. 80,684.7.1. The respondents to verify the correctness of this amount and to refund the amount so ascertained, within a period of 3 months from today.