Case Law Details

Case Name : Parimal Ray & Another Vs. Commissioner of Customs (Port), Customs House
Appeal Number : [2015 (2) TMI 826 - CALCUTTA HIGH COURT]
Date of Judgement/Order :
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Parimal Ray & Another Vs. the Commissioner of Customs (Port), Customs House & Others [2015 (2) TMI 826 – CALCUTTA HIGH COURT]

In the present case, a Thailand based Company, Italian Thai Development Public Company Limited and an Indian Public Company, ITD Cementation India Limited having its place of business in Salt Lake City, Kolkata decided to establish a Joint Venture Organisation – ITD-ITD CEM JV. This Joint Venture was unincorporated, represented by Parimal Ray and Another (“collectively along with Joint Venture Company referred to as ‘the Petitioner’).

The Kolkata Municipal Corporation invited tenders, in or about 2008 for its Drinking Water Supply Project. The Petitioner was successful in tendering and the Contract for the same was awarded to them. For the Contract awarded, the Petitioner imported the tunnel boring machines (“impugned goods”) vide Bills of Entry were dated December 15, 2009, December 21, 2009, May 31, 2010 and paid Custom duty of Rs. 3,60,45,561/-. Later on during September, 2012, the Petitioner came to know that they made their classification erroneously and as per the correct classification the impugned goods enjoyed 100% duty exemption as per the Exemption Notification issued under Section 25 of the Customs Act, 1962 (“the Customs Act”).

Accordingly, the Petitioner vide Application dated June 4, 2013 applied for refund of the entire amount of Rs. 3,60,45,561/- mistakenly paid by them. However, the Revenue denied refund to the Petitioner on the ground that refund had to be made within time limit prescribed under Section 27 of the Customs Act. Further, the Application made by the Petitioner cannot be taken as a proper Application for refund under Section 27 of the Customs Act. Being aggrieved, the Petitioner filed Writ Petition before the Hon’ble High Court of Calcutta contending that the time limit prescribed under Section 27 of the Customs Act cannot be made applicable to the amount of duty paid by mistake.

The Hon’ble High Court of Calcutta held as under:

  • Section 27 of the Customs Act only applies when there is over payment of duty or interest under the Customs Act. Therefore, the duty or interest must be leviable under the Customs Act and paid under it. However, in the instant case, the impugned goods were not exigible to any duty, hence any sum paid into the exchequer by the Petitioner was not duty or excess duty but simply money paid into the Government account;
  • The money received by the Government, could more appropriately called money paid by mistake by one person to another which the other person has an obligation to repay under Section 72 of the Contract Act, 1962;
  • A person to whom money has been paid by mistake by another person, becomes at common law a trustee for that other person with an obligation to repay the sum received – Shiv Shankar Dal Mills Vs. State of Haryana [AIR 1980 Supreme Court 1037];
  • As per Section 17 of the Limitation Act, 1963, money paid by mistake can be recovered up to three years from the time the plaintiff discovers the mistake or could have discovered the same with reasonable diligence.

Therefore, the Hon’ble High Court directed the Department to refund the said sum of Rs. 3,60,45,561/- to the Petitioner within 12 weeks of the communication of this Order.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email:

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