RATANLAL SINGHANIA Vs. M M SETHI

JUDGEMENT

(1.) The facts in this case are briefly as follows : The petitioners carry on business in Calcutta under the name and style of "Mahadayal Premchandra". The said firm was granted a licence by the Government of India in 1958 for the importation of cotton fabrics etc., from the soft currency areas including Japan. Under the said licence, the petitioners imported from Japan about 6800 yards Black Cotton Umbrella cloth 888 (Synthetic waterproof fabric) to Calcutta. The goods arrived per s. s. "Eastern Muse" on or about 26th June, 1959. They had the manufacturer's certificate stating that the goods were synthetic waterproof fabrics. On or about the 26th June, 1959 the petitioners made over the shipping documents to their clearing agents M/s. Mitra Shipping Agency, for clearing the goods. On the same day, the clearing agents filed the bill of entry for consumption, together with the bill of lading, bill of exchange, invoice and other necessary shipping documents, for clearance of the said goods on behalf of the petitioners. Even before the petitioners placed their order for the importation of the said goods, they had taken the precaution of writing through their clearing agents to the Public Relation Officer of the respondents, enquiring if the total duty leviable on synthetic waterproof fabrics was only 65 per cent and no excise duty was leviable. On 15th September, 1958 the Public Relation Officer informed them that if it could be established at the time of passing the bill of entry or at the time of import that the umbrella cloth was actually synthetic waterproof fabric, then the goods were exempt from levy of excise duty. When the clearing agents filed the said bill of entry, the Appraiser in the Appraisement Department of the Customs House, Calcutta, stated that he could not pass the goods on payment of 65 per cent duty, unless they were tested and found to be synthetic waterproof cotton fabrics. Thereupon, as the goods were required for the manufacture of umbrellas during the monsoon seasons and delay would have been fatal, the petitioners paid 100 per cent duty, pending the testing of the samples, and cleared the goods. Thus, a sum of Rs. 9,743.65 nP. was paid in place of Rs. 6,333.37 nP. payable at the rate of 65 per cent ad valorem. On the 12th September, 1959 the positioners through their clearing agents demanded a refund of ihe balance sum of Rs. 3410.28 nP. In spite of repeated demands and after great delay, the Assistant Collector of Customs issued a refund order dated 26th May, 1960 in favour of the petitioners for Rs. 3410.28 nP. By notification dated 30th July, 1960 the Government of India, Ministry of Finance (Department of Revenue), in exercise of powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules of 1944, introduced an amendment in the earlier notification dated 5th January 1957 whereby rubberised or synthetic water-proof cotton fabrics had been exempted from excise duty. In other words, the exemption was withdrawn. On the 26th August, 1960 the Assistant Collector of Customs for appraisement, purporting to act under Section 39 of the Sea Customs Act 1878 demanded from the petitioners, payment back of the said refunded sum of Rs. 3410.28 nP. The letter of demand a copy whereof is Ex. C to the petition is in the following terms :--

(2.) On the 10th September, 1960 the petitioners in their said firm wrote to the Assistant Collector of Customs denying that the refund was erroneously made. They asked for the grounds for holding that it had been so made On the 4th November, 1960 the petitioners were informed by the Public Relation Officer that according to the Finance Bill 1960, Government of India, consignment of cotton umbrella cloth and synthetic waterproof fabrics under Items 48(3) and 48(9) of I. C. T. are assessable to duty at the rate of 65 per cent + 37nP. per sq. yd. + 13 nP. per sq. yd. + 3 pies per sq. yd. It has been admitted before me that the reference was to the Finance Act 1960 and that it has no application to the facts of this case, not being retrospective in operation. The same statement was repeated on the 11th November 1960 by the Assistant Collector of Customs, although no reference was made to the Finance Act 1960. On the 23rd December, 1960 the petitioners asked for a copy of the test results. On the 19th April. 1961 the Assistant Collector of Customs sent the petitioners the following letter of demand :--

(3.) On the 3rd July, 1961 the petitioners preferred an appeal to the Collector of Customs. On the 7th September 1961 the petitioners were informed by the Assistant Collector of Customs that unless extra duty of Rs. 3410.28 nP. was paid, the appeal could not be entertained. On the 27th December 1961 steps were taken against the petitioners under Section 39; notifying that all goods belonging to them and passing through the Calcutta Customs House should be detained, until the sum demanded had been paid. Thereafter, the petitioners applied to this court and this rule was issued on the 23rd March, 1962. Since, then, the appeal preferred to the Collector of Customs had been withdrawn.