' The petitioner imports edible oil, which after processing's, manufacturing and packing in suitable containers, is sold to consumers at large. The edible oil is imported in bulk quantity and therefore, the goods remain in bonded terminals from where suitable quantities are drawn. The petitioner is also liable to pay customs duty on the edible oil.
2. On 20-6-1990 the petitioner received a letter, dated 14-6-1990 from the Assistant Collector of Customs, Oil Section, Kemari, Karachi, asking the petitioner to make a payment of Rs,4,47,336 being customs duty which was excessively refunded to the petitioner-Company. The petitioner raised objections with respect to the demand and stated that the calculations made by the department on the basis of an audit objection, were incorrect. It is said that the matter was referred to two Inspectors of the Department who did not justify the demand and stated that the certificate issued to the petitioner bearing Nos.98/88, 99/88 and 100/88 of 1988, were correctly issued and the audit objection was not correct. That despite this, a detention order for recovery of Rs,4,47,336 was issued on 2-2-1991 which said:-- "Further goods imported on their/his behalf and passing through the Customs House should be detained under the provision of section 202 of the Customs Act, 1969, until the dues are paid."
' This was challenged by the petitioner under the provisions of section 32 of the Customs Act of 1969. That the petitioner even invited a show-cause notice against the detention order but this was refused. That the petitioner later took up the matter with the Collector, Customs and Central Excise, Rawalpindi. That instead of being reasonable, the respondent asked the petitioner to deposit a sum of Rs,3,53,037 while submitting proof against rest of the amount.
3. The main case of the petitioner was that the demand so made offended the provision of section 32 of the Customs Act, 1969 which prescribes a period of 6 months for issuance of notice for recovery of duties which may have been erroneously refunded/short levied.
4. The notice asking the petitioner to refund the amount of Rs,4,47,336, is (Annexure 'A'), dated 14-6- 1990. Alongwith this notice, the petitioner also received the audit objection (Annexure 'B') vide No,C.No,IV.EC(8) Audit/PDP/9/90, dated 15-4-1990 which reads as follows:-- "To, ' The Collector (Preventive), Customs House, Karachi.
' Subject: P.D.P. No, 1653-CE/ST IRREGULAR REFUND AGAINST CONSUMPTION CERTIFICATE.
' Kindly find herewith subject audit observation which is self-explanatory.
' Steps for recovery of .Short realization of Government due as shown below may kindly be taken and this office informed accordingly so that the matter may be taken up for finalization with the audit authorities.
1. Silver Oil Mills Ltd., Islamabad Rs,1,09,413
2. Fazal vegetable Rs,7,908
3. Punjab Oil Rs,4,47,336 (Sd.)
(AKHTAR HUSSAIN JAFRI), Assistant Collector, CE-DIV.I."
5. There is another Annexure (Annexure 'C') which forms part of the earlier two letters and gives the basis for making of this demand. It reads as follows:-- PROPOSAL DRAFT PARA. NO.1653-CE.
' Subject: IRREGULAR REFUND OF REGULATORY DUTY OF Rs,5 64 657.
' Customs General Order No,18 of 1986 prescribes the procedure for the repayment of Customs duty on Palm Oil actually used in the manufacture of vegetable Ghee to the extent that it does not exceed 65% of the quantity of Vegetable Ghee produced. In contravention an Authority issued consumption certificates of Palm Oil in excess of prescribed limit to certain Ghee Mills during September, 19r to July, 1989 resulting in excess refund of Regulatory duty of Rs,5,64,657.
' When pointed out by Audit in August, 1989, no reply was furnished by the Circle/Divisional Officer.
In December, 1989, it was stated that the audit observation was under study and Audit would be informed accordingly.
' Immediate action is required to be taken to recover the Government dues.
(Sd.)
(CH. ABDUL AZIZ), Deputy Director."
6. Annexures D, E, F reflect calculation by the Audit Officer in support of the demand. The letter which was sent by the petitioner/General Manager claiming that the demand was not justified and they deserved a show-cause notice for proper defence, is Annexure 'I' with the writ petition. Another letter (Annexure 'K') issued by the Superintendent, Office of the Central Excise, Islamabad, dated 9- 12-1991, bearing NO.C.NO.IV.CE/Audit/PDP/5/90/2309, which said:-- "The requisite information's are still awaited. You are directed to deposit the amount of Rs,4,47,336 in the Government Treasury against the PDP No,1653 for the year 1989-90 and send the copy of Treasury Challan to this office for settlement of the said para."
7. In another letter of 6-5-1992 the petitioner asked the Collector, Customs and Central Excise, Rawalpindi, to issue them a show-cause notice against the recovery before taking any unauthorized action in the matter and it appears that thereafter the petitioner filed the writ petition in question. It also appears that the error on the basis of which it was said that the Excise Refund Regulatory Duty was made pertained to the period of September, 1987 to July, 1989 (Annexure 'C') and the demand is made for the first time by Letter No,S-5/MISC/220/90/Oil, dated 24-6-1990 (Annexure 'A'). The question for determination is whether such a demand could be made? The matter relates to the provisions of section 32(3) of the Customs Act (IV of 1969) which reads as follows:-- "Untrue statement, error, etc.---If any person, in connection with any matter of customs,--
(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or (b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer, knowing or having reason to believe that such document or statement is false in any material particular, he shall be guilty of an offence under this section.
(2) Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on the that account shall be served with a notice within three years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice.
(3) Where, by reason of any inadvertence, error or misconstruction, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within six months of the relevant date requiring him to show cause why he should not pay the amount specified on the notice.
(4) The appropriate officer, after considering the representative, if any, of such person as is referred to in subsection (2) or subsection (3) shall determine the amount of duty payable by him which shall in no case exceed the amount specified in the notice, and such person shall pay the amount so determined.
(5) For the purposes of this section, the expression "relevant date" means--
(a) in any case where duty is not levied, the date on which an order for the clearance of goods is made;
(b) in case where duty is provisionally assessed under section 81, the date of adjustment of duty after its final assessm ent;
(c) in a case where duty has been erroneously refunded, the date of its refund;
(d) in any other case, the date of payment of duty or charge."
8. The State, therefore, has itself prescribed a time frame for issuance of the show-cause notice for the refund of a duty erroneously refunded. In this particular case, despite the requests made by the petitioner that a show-cause notice be issued to him so that he may explain his position, a show- cause notice was not issued which is strange. The recovery in question also related to a period which was beyond 6 months from the relevant date. The law did not permit a recovery beyond the period prescribed by section 32 of the Customs Act, 1969. The action, therefore, on the part of the respondent for detaining any goods of the petitioner against the demand in question until the arrears or dues so discovered on the basis of an audit inspection were paid, was not legal and the action is, therefore, declared to be one unauthorised and unlawful. Resultantly, the writ petition succeeds. However, there is no order as to costs.