Full Judgment Text
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1666 OF 2006
Union of India & Ors. … Appellants
VERSUS
M/s. Hamdard (Waqf) Laboratories … Respondent
J U D G M E N T
Dipak Misra, J.
The respondent, M/s. Hamdard (Waqf) Laboratories, is
engaged in the business of manufacture and sale of various
items including Rooh Afza which is a sweetened non-alcoholic
beverage, and the respondent treated it to have been classified
under the sub-heading 2201.90 of the Schedule to the Central
Excise Tariff Act, 1986 (for short, 'the Tariff Act'), but the
Revenue did not accept the classification claimed by the
assessee-respondent on the foundation that it was classifiable
Signature Not Verified
under the sub-heading 2107.91 of the Tariff Act.
Digitally signed by
GULSHAN KUMAR
ARORA
Date: 2016.02.27
13:28:04 IST
Reason:
2. Because of the cavil relating to classification, steps were
2
taken for recovery of the differential duty and keeping in view
the demands made, the respondent-manufacturer started
paying the duty as demanded by the concerned authority. Be
it stated, the initial adjudicator, that is, the Assistant
Commissioner of Central Excise, did not accept the stand of the
assessee. The said grievance compelled the respondent to
prefer an appeal before the Commissioner (Appeals) who
negatived the stand of the assessee. Being grieved the assessee
preferred an appeal before the Central, Excise and Service Tax
Appellate Tribunal (for short, 'the tribunal'), which, agreed with
the view expressed by the fora below and consequently
dismissed the appeal.
3. The decision rendered by the tribunal, was called in
question by the assessee in Civil Appeal No. 7766 of 1995. The
two-Judge Bench in Hamdard (Wakf) Laboratories vs.
1
Collector of Central Excise, Meerut adverted to the issue of
classification pertaining to the product, namely, Sharbat Rooh
Afza and posed the question whether the said “Sharbat” was
within the tariff heading 2201.90 as contended by the assessee
or under heading 2107.91 as the excise authorities would
1
(1999) 6 SCC 617
3
maintain and after adverting to various aspects, accepted the
stand of the assessee that it is a non-alcoholic beverage and
repelled the stand of the Revenue and resultantly allowed the
appeal.
4. Be it mentioned here that this Court in its judgment
th
dated 4 August, 1999 had stated that it falls within the term
of heading 2201.90 and accordingly, set aside the order passed
by the tribunal and further directed for consequential relief to
follow. For the sake of completeness, paragraphs 7 and 8 of
the said decision are extracted below:-
“7. The Tribunal would also appear to
have concluded that the said sharbat was
not a beverage but a preparation for the
same. The fact that these tablespoonfuls of
the said sharbat have to be added to a glass
of water to make it drinkable does not, in
our view, make the said sharbat not a
beverage but a preparation for a beverage.
Were that so, many beverages which are
squash would not be beverages [See for
example para 5 of this Court's judgment in
the case of Parle Exports (P) Ltd. (Northern
Industries vs. CCE (1988) 37 ELT 229
(Tribunal) and para 12 et seq. Of the
Tribunal's judgment in the case of
Northland Industries (From the judgment and
order dated 4.5.1995 of the National
Consumer Disputes Redressal Commission,
New Delhi in F.A. No.65 of 1994 ]. It seems
to us that the phrase “preparations for
lemonades or other beverages” in clause (j)
4
of Note 5 of Chapter 21 was intended to
refer to the industrial concentrates from
which aerated water and similar drinks are
mass produced and not to preparations for
domestic use like the said sharbat.
8. It was necessary for the respondents to
have shown, having regard to the
terminology of Heading 21.07, that the said
sharbat was “not elsewhere specified or
included”. That, in our view, was not done.
In fact, as we see it, it falls within the terms
of Heading 2202.90.”
At this juncture, it is necessary to state that initially when
the judgment was pronounced on 04.08.1999, paragraph 8
mentioned “within the terms of heading 2201.90” and the same
has been corrected by a corrigendum. We shall advert to the
factum of rectification and its impact at a later stage.
5. After the judgment was pronounced, the respondent filed
th
an application on 25 August, 1999 for grant of refund. The
Revenue, in response, vide letter No.C.No.V(18)
Ref/311/99/7041 dated 27.09.1999 communicated to the
respondent-assessee as follows:-
“You are requested to furnish the evidences
showing that the incidence of duty
debited/deposited by you for Rs.3.74 crores
has not been passed on to your customers.
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It has also been observed that you have not
submitted copy of protest letter under Rules
233B of the C.E. Rules in respect of
Rs.54,00,000/- debited by you in PLA vide
entry No.956 dated 26.5.95.
You are directed to submit the above
documents within three days of receipt of
this letter so that your claim may be
processed.”
6. The said letter was replied to on 30.09.1999. The relevant
part of the reply reads as follows:-
“The deposit of amount of
Rs.3,20,00,000.00 was made directly in the
Bank against TR 6 for which no credit was
taken in the PLA and the balance amount of
Rs.54,00,000.00 was debited from the PLA
under protest in presence of
Superintendent, Central Excise, Range-IV,
Div. I Ghaziabad. In this way when the
amount was not utilised by us in any way
other than making deposits against the
Adjudications Order of the Assistant
Commissioner, then the question or scope
of passing it on to the consumer does not
arise. However, we certify that we had not
passed on this amount of Rs.3,74,00,000.00
to our customers.
In the debit entry No.956 dated 26.5.95 in
the PLA after debiting the amount of
Rs.54,00,000.00 against the Adjudication
Order of Asstt. Commissioner it was clearly
mentioned that the debit was made under
Protest which was also
witnessed/authentication by the
Superintendent, Central Excise, Range-IV,
Div.I, Ghaziabad at that time.”
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7. After receipt of the said reply, the matter was taken up by
the competent authority, that is, the Assistant Commissioner
(Div. I), Ghaziabad. The said authority recorded the history of
the litigation and order passed by this Court and opined as
follows:-
“I have carefully examined the claim papers
and submission made by the party in their
reply and at the time of personal hearing.
Regarding deposit of Rs.5,40,000.00 in PLA
vide Entry No.956 dated 26.6.95 under
protest, I observed that the contention of
the party is tenable as the letter of protest
dated 8.9.94 protest all payments made
under protest on 8.9.94 and their view finds
support in the case of CCE, Meerut vs.
Citurgia Biochemical Ltd. 1998 (101) 568
(SC). Even otherwise, I find that the
payment of Rs.54 lacs which was endorsed
“under protest” had been verified and
authenticated on the same date i.e. on
26.5.95 by the Range Superintendent and
the same is sufficient compliance of Rule
2338.
Regarding passing on the duty element
to the Customers, I carefully examined the
O-I-A 600-CE/MRT/94 dated 10.01.95
passed by the Commissioner (appeal),
Ghaziabad, who had decided in the above
O-I-A that the assessable value in relation
to any excisable goods, does not include the
amount of duty of excise, sales tax and
other taxes, if any, payable on such goods.
Therefore, in the case for cum duty price,
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the abatement of excise duty and other
taxes is to be allowed for determining the
assessable value of the goods for the
purpose of levy of excise duty thereon and
accordingly passed order that differential
duty payable by the appellants should be
recalculate by the Assistant Collector after
allowing the abatement of excise duty and
other admissible deduction, if any, from the
wholesale price.”
Being of this view, the said authority allowed the
application for refund.
8. Be it mentioned here that after the application for refund
was filed and the Revenue was in correspondence with the
assessee, it required the assessee to get a rectification order
from this Court with regard to a typographical error pertaining
to the classification. As stated earlier, in the original order of
this Court, the classification was mentioned as 2201.90 which
was corrected by a corrigendum making it “2202.90”. Be that
as it may, we clearly state that it has neither any bearing nor
impact on the present lis.
9. Presently to the flash back. In pursuance of the order
passed by the competent authority, an amount of
Rs.3,74,00,000/- was refunded by cheque no.639266 dated
15.11.2000 payable at PNB Navyug Market, Ghaziabad. As no
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interest was paid by the appellant, the respondent filed a Civil
Miscellaneous Writ Petition No. 249 of 2001 before the High
Court of Judicature at Allahabad. The Division Bench,
considered the judgment rendered by this Court in Civil Appeal
No.7766 of 1995, took note of the time prescribed for disposal
of the application for refund, the language employed in Section
11-BB of the Central Excise Act, 1944 (for short, 'the Act') and
further appreciating the conduct of the parties, opined that the
liability for payment of interest is statutory and it is the
bounden duty of the Assistant Commissioner to pay interest
th th
from 26 November, 1999 till 15 November, 2000 at the rate
specified under Section 11-BB of the Act. The aforesaid
conclusion impelled the Division Bench to allow the writ
petition with costs which was assessed at Rs.10,000/-. The
said order is the subject matter of appeal by special leave.
10. We have heard Mr. Yashank Adhyaru, learned senior
counsel along with Mr. Sanjai Kumar Pathak, learned counsel
for the appellants and Mr. S.B. Upadhyay, learned senior
counsel and Ms. Sharmila Upadhyay, learned counsel for the
respondent.
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11. The facts which we have adumbrated herein-above are not
in dispute. It is contended by Mr. Adhyaru, learned senior
counsel appearing for the Revenue that Section 11-B which
deals with grant of refund of duty has to be strictly construed
and, if there is no compliance with the conditions enumerated
therein, the application has to be rejected. Elucidating the
said argument, learned senior counsel would submit that if
there is a defective application or an application not meeting
the requisite criteria stipulated under the statutory provision,
it is to be held that there is no application in the eye of law and
hence, the period has to commence from the date when the
defects are rectified. In essence, the submission is that the
prescription of three months in the said provision has to
commence when the application is appositely rectified to bring
it in order, and there has to be adjudication to arrive at the
necessitous conclusions as enshrined in the said provision,
otherwise, the persons who are not entitled to get refund would
be in a position to avail the benefit of refund and the interest
on technical score. To buttress the said submission, he has
paid immense stress on the factual matrix. It is urged by him
that there was no proper application and, in fact, when the
10
defects were communicated, they were not appositely corrected
and things only came to light at the time of adjudication and
thereafter in quite promptitude, the amount was paid by way of
a cheque and hence, the claim of interest is absolutely
unjustified and resultantly, the grant of interest by the High
Court is wholly unsustainable.
12. Mr. Upadhyay, learned senior counsel appearing for the
respondent would contend that in the absence of a particular
form in praesenti the application was in order from the
inception and, in any case, the period commences from the
date of submission of the application which is required to be
filed within one year. It is put forth by him that the time runs
from that day and it is open to the Revenue to ask the assessee
to remove the defects and if the defects are not removed it can
reject the application but it has to be done within the statutory
period, but under no circumstances, there can be an assumed
extension of time by the Revenue. To bolster the said
submission, reliance has been placed on Ranbaxy
2
Laboratories Limited vs. Union of India & Ors.
13. To appreciate the controversy in proper perspective, it is
2 (2011) 10 SCC 292
11
seemly to refer to the provisions dealing with refund and
interest. Section 11-B deals with claim for refund of duty and
interest, if any, paid on such duty. The said provision reads
as under:-
“ Section 11B. Claim for refund of duty
and interest, if any, paid on such duty--
(1) Any person claiming refund of any duty
of excise and interest, if any, paid on such
duty may make an application for refund of
such duty and interest, if any, paid on such
duty to the Assistant Commissioner of
Central Excise or Deputy Commissioner of
Central Excise before the expiry of one year
from the relevant date in such form and
manner as may be prescribed and the
application shall be accompanied by such
documentary or other evidence (including
the documents referred to in section 12A) as
the applicant may furnish to establish that
the amount of duty of excise and interest, if
any, paid on such duty in relation to which
such refund is claimed was collected from,
or paid by, him and the incidence of such
duty and interest, if any, paid on such duty
had not been passed on by him to any other
person :
Provided that where an application for
refund has been made before the
commencement of the Central Excises and
Customs Laws (Amendment) Act, 1991,
such application shall be deemed to have
been made under this sub-section as
amended by the said Act and the same shall
be dealt with in accordance with the
provisions of sub-section (2) substituted by
that Act :
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Provided further that the limitation of
one year shall not apply where any duty and
interest, if any, paid on such duty has been
paid under protest.
(2) If, on receipt of any such application,
the Assistant Commissioner of Central
Excise or Deputy Commissioner of Central
Excise is satisfied that the whole or any
part of the duty of excise and interest, if
any, paid on such duty paid by the
applicant is refundable, he may make an
order accordingly and the amount so
determined shall be credited to the Fund :
Provided that the amount of duty of
excise and interest, if any, paid on such
duty as determined by the Assistant
Commissioner of Central Excise or Deputy
Commissioner of Central Excise]under the
foregoing provisions of this sub-section
shall, instead of being credited to the Fund,
be paid to the applicant, if such amount is
relatable to -
(a) rebate of duty of excise on excisable
goods exported out of India or on
excisable materials used in the
manufacture of goods which are
exported out of India;
(b) unspent advance deposits lying in
balance in the applicant's account
current maintained with the
Commissioner of Central Excise;
(c) refund of credit of duty paid on
excisable goods used as inputs in
accordance with the rules made, or
13
any notification issued, under this
Act;
(d) the duty of excise and interest, if
any, paid on such duty paid by the
manufacturer, if he had not passed
on the incidence of such duty and
interest, if any, paid on such duty
to any other person;
(e) the duty of excise and interest, if
any, paid on such duty borne by
the buyer, if he had not passed on
the incidence of such duty and
interest, if any, paid on such duty
to any other person;
(f) the duty of excise and interest, if
any, paid on such duty borne by
any other such class of applicants
as the Central Government may, by
notification in the Official Gazette,
specify :
Provided further that no notification
under clause (f) of the first proviso
shall be issued unless in the
opinion of the Central Government
the incidence of duty and interest,
if any, paid on such duty has not
been passed on by the persons
concerned to any other person.
(3) Notwithstanding anything to the
contrary contained in any judgment, decree,
order or direction of the Appellate
Tribunal or any Court or in any other
provision of this Act or the rules made
thereunder or any other law for the time
14
being in force, no refund shall be made
except as provided in sub-section (2).
[Emphasis added]
14. Section 11-BB deals with interest of delayed refunds. The
said provision is extracted below:-
Section 11-BB. Interest on delayed
refunds.-- If any duty ordered to be refunded
under sub-section (2) of section 11B to any
applicant is not refunded within three
months from the date of receipt of
application under sub-section (1) of that
section, there shall be paid to that applicant
interest at such rate, not below five per cent
and not exceeding thirty per cent per
annum as is for the time being fixed by the
Central Government, by Notification in the
Official Gazette, on such duty from the date
immediately after the expiry of three months
from the date of receipt of such application
till the date of refund of such duty :
Provided that where any duty ordered to be
refunded under sub-section (2) of section
11B in respect of an application under
sub-section (1) of that section made before
the date on which the Finance Bill, 1995
receives the assent of the President, is not
refunded within three months from such
date, there shall be paid to the applicant
interest under this section from the date
immediately after three months from such
date, till the date of refund of such duty.
Explanation. - Where any order of refund is
made by the Commissioner (Appeals),
Appellate Tribunal, National Tax Tribunal or
15
any court against an order of the Assistant
Commissioner of Central Excise or Deputy
Commissioner of Central Excise, under
sub-section (2) of section 11B, the order
passed by the Commissioner (Appeals),
Appellate Tribunal, National Tax Tribunal
or, as the case may be, by the court shall be
deemed to be an order passed under the
said sub-section (2) for the purposes of this
section.”
15. Sub-section (2) of Section 11-B stipulates filing of an
application by the assessee before the competent authority. It
also postulates that the said authority is required to be
satisfied that the whole or any part of the duty of excise and
interest, if any, paid on such duty is refundable. The
application, as submitted by Mr. Adhyaru, has to be an
application in law. Section 11-BB which deals with interest on
delayed refund clearly and categorically predicates that if any
duty ordered to be refunded under sub-section (2) of Section
11-B is not refunded within three months from the date of
receipt of the application under Section (1) of Section 11-B,
there shall be paid to the applicant interest at the notified rate
from the date immediately after the expiry of three months
from the date of receipt of such application till the date of
refund of such duty. The significant words are “expiry of three
months from the date of receipt of such application”. In the
16
th
instant case, the application was filed on 25 August, 1999.
The said application, needless to emphasise, was preferred
under sub-section (2) of Section 11-B. We have been apprised
th
of the circular dated 30 May, 1995. It deals with interest of
delayed refund under Section 11-BB. Paragraph 2 of the said
circular being relevant is reproduced below:-
“2. Keeping the above in view, the
following instructions are being issued
regarding refunds claimed under section 11
BB of CE & SA, 1944:-
(a) Refund application must invariably be
filed in the office of the Assistant
Collector and not with the Range
Superintendent.
(b) Immediately on receipt of an
application, the same must be
scrutinized by an officer, not below the
rank of an Inspector for its
completeness.
(c) Preliminary scrutiny should be carried
out with regard to completeness of the
information in the proforma already
prescribed, verification of supporting
documents to substantiate the refund
claims and to evidence payment of
duty.
(d) An acknowledgment should be issued
immediately after the above mentioned
verification which will be an evidence
of the receipt of refund application in
terms of Section 11-BB. The period of
17
3 months in terms of Section 11-BB
shall be counted from the date
following the date of receipt of refund
application up to the date of dispatch
of cheque for refund.
(e) The Collector should direct the
Divisional Assistant Collector to
designate an officer by name who will
carry out the initial verification and
issue the acknowledgment thereof.
(f) Such acknowledgment must be issued
within 48 hours of the receipt of the
refund application, excluding
holidays.
(g) Where the refund application is found
to be incomplete a letter shall be
issued stating the deficiencies therein
the additional information/document
required within 48 hours of the
receipt. In such cases the letter shall
be issued only with the approval of a
Superintendent and the period of 3
months, for purpose of Section 11-BB
shall count from the date of receipt of
all the requisite information or
documents.
(h) The Collector may use a cyclostyled
Performa for the purpose of intimating
the deficiencies or for acknowledgment
of the receipt of the refund
application.
(I) Check-lists of various documents
which should be filed with the refund
claims of different types are annexed
herewith to be used as guidelines.
However, the list may not be treated
as exhaustive and any other
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documents, if required, may be
included therein and called from the
assessee.”
16. Mr. Upadhyay, learned senior counsel has rested his
stand on paragraph (g) which provides that where the refund
application, is found to be incomplete, a letter shall be issued
stating the deficiencies therein within 48 hours. The said
circular is issued by the Government of India, Ministry of
Finance (Department of Revenue), New Delhi it is binding on
the Revenue but the Revenue had not pointed out any
deficiency in the application within 48 hours. On the contrary,
th
it had issued a letter on 27 September, 1999. We have
already reproduced the said communication. On a studied
scrutiny of the said letter, it is quite vivid that the two aspects
were mentioned by the Revenue. They relate to the arena
whether the assessee has passed on the duty to others; and
whether the amount that was deposited was done under
protest. The assessee was granted three days time and within
th
a span of three days, i.e., 30 September, 1999, the same was
complied with by stating that the duty had not been passed on
by the assessee to any consumer and the amount was
deposited under protest. With the said communication, the
19
proceedings commenced so that the competent authority could
be satisfied as provided under sub-section (2) of Section 11-B.
st
During that process, a communication was made on 1
December, 1999 to get the order passed by this Court rectified
as there was a mistake with regard to the classification. We
have already stated that the rectification in the order has no
bearing on the determination of interest. No special emphasis
can be laid on the said aspect. As is evident, after production
of documents, ledgers and other documents, the adjudicating
authority passed an order dated 16.11.2000 granting refund.
17. The seminal issue is be whether there has been delay in
grant of refund and consequently, whether the
respondent-assessee is entitled to interest. Keeping in view the
enumerated facts, the submissions canvassed and the
provisions referred to, it is necessary to appreciate the
principle stated in Ranbaxy Laboratories Limited (supra).
In the said case, the question arose whether the liability of the
Revenue to pay interest under Section 11-BB of the Act
commences from the date of expiry of three months from the
date of receipt of application for refund or on the expiry of the
said period from the date on which the order of refund is made.
20
The two-Judge Bench after analyzing the provision has held as
follows:-
“12. It is manifest from the afore-extracted
provisions that Section 11BB of the Act
comes into play only after an order for
refund has been made under Section 11B of
the Act. Section 11BB of the Act lays down
that in case any duty paid is found
refundable and if the duty is not refunded
within a period of three months from the
date of receipt of the application to be
submitted under sub-section (1) of Section
11B of the Act, then the applicant shall be
paid interest at such rate, as may be fixed
by the Central Government, on expiry of a
period of three months from the date of
receipt of the application. The Explanation
appearing below Proviso to Section 11BB
introduces a deeming fiction that where the
order for refund of duty is not made by the
Assistant Commissioner of Central Excise or
Deputy Commissioner of Central Excise but
by an Appellate Authority or the Court, then
for the purpose of this Section the order
made by such higher Appellate Authority or
by the Court shall be deemed to be an order
made under sub-section (2) of Section 11B
of the Act. It is clear that the Explanation
has nothing to do with the postponement of
the date from which interest becomes
payable under Section 11BB of the Act.
13. Manifestly, interest under Section
11BB of the Act becomes payable, if on an
expiry of a period of three months from the
date of receipt of the application for refund,
the amount claimed is still not refunded.
Thus, the only interpretation of Section
21
11BB that can be arrived at is that interest
under the said Section becomes payable on
the expiry of a period of three months from
the date of receipt of the application under
Sub-section (1) of Section 11B of the Act
and that the said Explanation does not
have any bearing or connection with the
date from which interest under Section
11BB of the Act becomes payable.
[Emphasis supplied]
18. While dealing with the said facet, the Court also referred
to circular dated 01.10.2002 issued by the Central Board of
Excise and Customs, New Delhi whereby a direction was
issued to fix responsibility for not disposing of the
refund/rebate claims within three months from the date of
receipt of the application. Appreciating the import of the said
circular, the Court opined as follows:-
“12. Thus, ever since Section 11BB was
inserted in the Act with effect from 26th
May 1995, the department has maintained a
consistent stand about its interpretation.
Explaining the intent, import and the
manner in which it is to be implemented,
the Circulars clearly state that the relevant
date in this regard is the expiry of three
months from the date of receipt of the
application under Section 11B(1) of the Act.”
The ultimate conclusion was recorded thus:-
“19. In view of the above analysis, our
22
answer to the question formulated in para
(1) supra is that the liability of the revenue
to pay interest under Section 11BB of the
Act commences from the date of expiry of
three months from the date of receipt of
application for refund under Section 11B(1)
of the Act and not on the expiry of the said
period from the date on which order of
refund is made.”
19. We will be failing in our duty if we do not refer to the
larger Bench decision rendered in Mafatlal Industries Ltd. &
3
Ors. vs. Union of India & Ors. which has been emphatically
relied upon by Mr. Adhyaru, learned senior counsel for the
Revenue. He has drawn our attention to paragraphs 83
and 91. Relying on the said paragraphs, it is contended by
Mr. Adhyaru that the onus is on the assessee to satisfy the
competent authority that he has not passed on the burden of
duty to others, for the claim of refund is founded on the said
bedrock. The Bench dealing with this facet has expressed
thus:-
“… Where the petitioner-plaintiff alleges and
establishes that he has not passed on the
burden of the duty to others, his claim for
refund may not be reused. In other words,
if he is not able to allege and establish that
he has not passed on the burden to others,
his claim for refund will be rejected whether
such a claim is made in a suit or a writ peti-
3 (1997) 5 SCC 536
23
tion. It is a case of balancing public interest
vis-a-vis private interest. Where the peti-
tioner-plaintiff has not himself suffered any
loss or prejudice (having passed on the bur-
den of the duty to others), there is no justice
or equity in refunding the tax (collected)
without the authority of law) to him merely
because he paid it to the State. It would be
a windfall to him. As against it, by refusing
refund, the monies would continue to be
with the State and available for public pur-
poses. The money really belongs to a third
party – neither to the petitioner/plaintiff nor
to the State – and to such third party it
must go. But where it cannot be so done, it
is better that it is retained by the State. By
any standard of reasonableness, it is better
that it is retained by the State. By any
standard of reasonableness, it is difficult to
prefer the petitioner-plaintiff over the State.
…”
20. In paragraph 91, this court was dealing with the
constitutional validity of Section 11-B. It was contended that
there is no reason why the person who becomes entitled to
refund of duty, as a result of appeal or courts order, should
also be made to apply and satisfy all the requirements of
sub-sections (1) and (2) of Section 11-B, when he is entitled to
such refund as a matter of right. The said contention was not
accepted by the Court and while not accepting the larger
Bench stated that:-
“… Such a holding would run against the
very grain of the entire philosophy underly-
24
ing the 1991 Amendment. The idea underly-
ing the said provisions is that no refund
shall be ordered unless the claimant estab-
lishes that he has not passed on the burden
to others. Sub-section (3) of the amended
Section 11-B is emphatic. It leaves no room
for making any exception in the case of re-
fund claims arising as a result of the deci-
sion in appeal/reference/writ petition.
There is no reason why an exception should
be made in favour of such claims which
would nullify the provision to a substantial
degree. So far as “lack of incentive” argu-
ment is concerned, it has no doubt given us
a pause; it is certainly a substantial plea,
but there are adequate answers to it. Firstly,
the rule means that only the person who
has actually suffered loss or prejudice
would fight the levy and apply for refund in
case of success. Secondly, in a competitive
market economy, as the one we have em-
barked upon since 1991-92, the manufac-
turer’s self interest lies in producing more
and selling it at competitive prices — the
urge to grow. A favourable decision does not
merely mean refund; it has a beneficial ef-
fect for the subsequent period as well. It is
incorrect to suggest that the disputes re-
garding classification, valuation and claims
for exemptions are fought only for refund; it
is for more substantial reasons, though the
prospect of refund is certainly an added at-
traction. It may, therefore, be not entirely
right to say that the prospect of not getting
the refund would dissuade the manufactur-
ers from agitating the questions of exigibil-
ity, classification, approval of price lists or
the benefit of exemption notifications. The
disincentive, if any, would not be signifi-
cant. In this context, it would be relevant to
point out that the position was no different
under Rule 11, or for that matter Section
25
11-B, prior to its amendment in 1991. Sub-
rules (3) and (4) of Rule 11 (as it obtained
between 6-8-1977 and 17-11-1980) read to-
gether indicate that even a claim for refund
arising as a result of an appellate or other
order of a superior court/authority was
within the purview of the said rule though
treated differently. The same position con-
tinued under Section 11-B, prior to its
amendment in 1991. Sub-sections (3) and
(4) of this section are in the same terms as
sub-rules (3) and (4) of Rule 11; if anything,
sub-section (5) was more specific and em-
phatic. It made the provisions of Section
11-B exhaustive on the question of refund
and excluded the jurisdiction of the civil
court in respect of all refund claims. Sub-
rule (3) of Rule 11 or sub-section (3) of Sec-
tion 11-B (prior to 1991) did not say that re-
fund claims arising out of or as a result of
the orders of a superior authority or court
are outside the purview of Rule 11/Section
11-B. They only dispensed with the require-
ment of an application by the person con-
cerned which consequentially meant non-
application of the rule of limitation; other-
wise, in all other respects, even such refund
claims had to be dealt with under Rule
11/Section 11-B alone. That is the plain
meaning of sub-rule (3) of Rule 11 and sub-
sections (3) and (4) of Section 11-B (prior to
1991 Amendment). There is no departure
from that position under the amended Sec-
tion 11-B. All claims for refund, arising in
whatever situations (except where the provi-
sion under which the duty is levied is de-
clared as unconstitutional), has necessarily
to be filed, considered and disposed of only
under and in accordance with the relevant
provisions relating to refund, as they ob-
tained from time to time. We see no unrea-
sonableness in saying so.”
26
21. As far the said principles are concerned, they are binding
on us. But the facts in the case at hand are quite different. It
is not a case where the assessee is claiming automatic refund.
It is a case that pertains to grant of interest where the refund
has been granted. The grievance pertains to delineation by the
competent authority in a procrastinated manner. In our
considered opinion, the principle laid down in Ranbaxy
Laboratories Limited (supra) would apply on all fours to the
case at hand. It is obligatory on the part of the Revenue to
intimate the assessee to remove the deficiencies in the
application within two days and, in any event, if there are still
deficiencies, it can proceed with adjudication and reject the
application for refund. The adjudicatory process by no stretch
of imagination can be carried on beyond three months. It is
required to be concluded within three months. The decision in
Ranbaxy Laboratories Limited (supra) commends us and we
respectfully concur with the same.
22. Tested on the aforesaid premises, we do not perceive any
infirmity in the order passed by the High Court and,
27
accordingly, the appeal, being sans substratum, stands
dismissed. There shall be no order as to costs.
............................J.
(Dipak Misra)
............................J.
(Shiva Kirti Singh)
New Delhi;
February 25, 2016
28
ITEM NO.101 COURT NO.4 SECTION III
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 1666/2006
UNION OF INDIA & ORS. Appellant(s)
VERSUS
M/S. HAMDARD (WAQF) LABORATORIES Respondent(s)
Date : 25/02/2016 This appeal was called on for hearing today.
CORAM : HON'BLE MR. JUSTICE DIPAK MISRA
HON'BLE MR. JUSTICE SHIVA KIRTI SINGH
For Appellant(s) Mr. Yashank P. Adhyaru, Sr. Adv.
Mr. Sanjai Kumar Pathak, Adv.
Mr. Ritesh Kumar, Adv.
Mr. B. Krishna Prasad, AOR.
For Respondent(s) Mr. S.B. Upadhyay, Sr. Adv.
Ms. Pawan Upadhyay, Adv.
Ms. Anisha Upadhyay, Adv.
Ms. Param Mishra, Adv.
Mr. Kaustuv P. Pathak, Adv.
Mr. Sarvjeet P. Singh, Adv.
Ms. Sharmila Upadhyay, AOR
Ms. Neeru Vaid,Adv.
UPON hearing the counsel the Court made the following
O R D E R
The appeal, being sans substratum, stands dismissed in terms
of the signed reportable judgment. There shall be no order as to
costs.
(Gulshan Kumar Arora) (H.S. Parasher)
Court Master Court Master
(Signed reportable judgment is placed on the file)