REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3478 OF 2006

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.

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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:

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“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.

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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-à-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:

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“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.

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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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