UNION OF INDIA & ORS.versusM/S. HAMDARD (WAQF) LABORATORIES

                             [2016] 3 S.C.R. 744



A                       UNION OF INDIA & ORS.
                                      v.
               M/S. HAMDARD (WAQF) LABORATORIES
                       (Civil Appeal No. 1666 of2006)

B                           FEBRUARY 25, 2016
           [DIPAK MISRA AND SHIVA KIRTI SINGH, JJ.)
         Central Excise Act. 1944 - s.11-BB - Interest on delayed refimds
    - Adjudication on classification of a sweetened non-alcoholic
    beverage - Thereafter, application by assessee for rejimd of duty -
c   Rejimd of duty by the competent authority- As no interest was paid
    on refund amount. writ petition by the assessee - High Court directed
    the Revenue to pay interest - On appeal, held: The adjudicatory
    process for refund of duty is required to be concluded within three
    111onths - The liability of the Revenue to pay interest uls. 11 BB
D   co111111ences fiwn the date of expiry of three months from the date of
    receipt of application for refimd uls.JJB(l) - In the present case.
    there is delay in grant of rejimd - Assessee is, therefore. entitled to
    interest.
          Ranbaxy laboratories limited v. Union of India & Ors. (2011)
          10 SCC 292: 2011 (13) SCR 1 - relied on.
E
          Mafatlal Industries Ltd. & Ors. vs. Union of India & Ors.
          (1997) 5 SCC 536: 1996 (10) Suppl. SCR 585 - distinguished.
          Hamdard (Wakj) Laboratories 1( Collector of Central Excise,
          Meerut (1999) 6 SCC 617 - referred to.
F                           Case Law Reference
        (1999) 6 sec 617              referred to           Para 3
        2011 (13) SCR l                relied on            P:ira 12
        1996 (10) Suppl. SCR 585       distinguished        Para 19
G
         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1666 of
    2006.
         Yashank P. Adhyaru, Sr. Adv., Sanjai Kumar Pathak, Ritesh Kumar,
    B. Krishna Prasad, Advs. for the Appellants.

H
                                      744
              UNION OF INDIA v. M/S. HAMDARD (WAQF)                           745
                          LABORATORIES

    S. B. Upadhyay, Sr. Adv., Ms. Pawan Upadhyay, Ms. Anisha                   A
Upadhyay, Ms. Param Mishra, Kaustuv P. Pathak, Sarvjeet P. Singh,
Ms. Sharmila Upadhyay, Ms. Neeru Vaid, Advs. for the Respondent.
       The Judgment of the Court was delivered by
       DIPAK MISRA, J. The respondent, M/s. Hamdard (Waqf)
Laboratories, is engaged in the business of manufacture and sale of            B
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 220 l .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        c
that it was classifiable under the sub-heading 2107 .91 of the Tariff Act.
      2. Because of the cavil relating to classification, steps were 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,    D
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        E
consequently dismissed the appeal.
      3. The decision rendered by the tribunal, was called in question by
the asses see in Civil Appeal No. 7766of1995. The two-Judge Bench in
Hamdard (Wakj) Laboratories vs. Collector of Central Excise,
Meerut adverted to the issue of classification pertaining to the product,
          1                                                                    F
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
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
                                                                               G
the Revenue and resultantly allowed the appeal.
    4. Be it mentioned here that this Cou11 in its judgment dated 41h
August, 1999 had stated that it falls within the term of heading 2201.90

1
    (1999)6 sec 617
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746            SUPREME COURT REPORTS                          [2016) 3 S.C.R..



A     and accordingly, set aside the order passed by the tribunal and further
      directed for consequential relief to follow. For the sake ofcompleteness,
      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.
B            The fact that these tablespoonfuls nfthe 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
c            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
D           "preparations for lemonades or other beverages" in clause U) 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.

E           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."

 F           At this juncture, it is necessary to state that initially when the
      judgment was pronounced on 04.08. I 999, 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 ofrectification and its impact
      at. a l11ter stage.

 G         5. After the judgment was pronounced, the respondent filed an
      application on 25'h August, I 999 for grant of refund. The Revenue, in
      response, vi de letter No.C.No.V(l 8) 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
 H
        UNION OF INDIA v. M/S. HAMDARD (W AQF)                             747
            LABORATORIES [DIPAK MISRA, J.]

      not been passed on to your customers.                                A
      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 djrected to submit the above documents within three days      B
      of receipt of this letter so that your claim may be processed."
     6. The said letter was replied to on 39.09.1999. The relevant part
of the reply reads as follows:-
      "The deposit of amount of Rs.3,20,00,000.00 was made directly         c
      in the Bank against TR 6 for which no credit was taken in the
      PLA and the balance amount ofRs.54,00,000.00 was debited from
      the PLA under protest in presence of Superinten.dent, 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,        D
      then the question or scope of passi1ig it on to the consumer does
      not arise. However, we certify that we had not passed on this
      amount ofRs.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      E
       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."
     7. After receipt of the said reply, the matter was taken up by the     F
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:-
      "! have carefully examined the claim papers and submission made
      by the party in their reply and at the time of personal hearing.      G
      Regarding deposit ofRs.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 ofCCE, Meerut vs. Citurgia Biochemical Ltd.
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748             SUPREME COURT REPORTS                            [2016) 3 S.C.R ..


A           1998 (I 01) 568 (SC). Even otherwise, 1find 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
B           carefully examined the 0-1-A 600-CE/MRT/94 dated 10.01.95
            passed by the Commissioner (appeal), Ghaziabad, who had decided
            in the above 0-1-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, the abatement of excise duty and
c           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
D           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
E 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 Comt, 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
F 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 interest was paid by the appellant, the respondent
G
      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 lan~uage employed in Section t1-BB of the Central Excise Act,
       1944 (for short, 'the Act') and further appreciating the conduct of the
H     parties, opined that the liability for payment of interest is statutory and it
         UNION OF INDIA v. MIS. HAMDARD (WAQF)                                   749
             LABORATORIES [DIPAK MISRA, J.]

is the bounden duty of the Assistant Commissioner t\) pay interest from          A
26'h November, I 999 till l S'h 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. I 0,000/-. The said order is the subject matter of appeal by special
leave.
                                                                                  B
     10. We have heard Mr. YashankAdhyaru, learned senior counsel
along with Mr. Sanjai Kumar Pathak, learned counsel for the appellant~. ,
and Mr. S.B. Upadhyay, learried senior counsel and Ms. Sharmila
Upadhyay, learned counsel for the respondent.
      11. The facts which we have adumbrated herein-above are not in              c
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 comisel would submit that
ifthere is a defective application or an application not meeting the requisite    D
criteria stipulated under the statutory provision, it is to be held that there
is no application in the eye oflaw 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,       E
and there has to be adjudication to arrive at the necessitous conclusions
as e11shrined in the said provision, otherwise, the persons who are not
entitled to get refund would. be i.n a position to avail the benefit ofrefund
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 defects were               F
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 ofa cheque and hence, the claim of interest
is absolutely unjustified and resultantly, the grant of interest by the High
Court is wholly unsustainable.                                                    G
      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 comn1ences from the date of submission of the application
which is required to be filed within one year. It is put forth by him that        H
750             SUPREME COURT REPORTS                            [2016] 3 S.C.R.



A     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 Rm1baxy Laboratories Limited vs. U1iio11 of /11£/ia & Ors.1
B
            13. To appreciate the controversy in proper perspective, it is 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:-

c            "Section llB. Claim for refund of duty and interest, if any,
             paid on such duty-( I) Any person claiming refund of any duty
             of excise and interest, if any, paid on such duty may inake 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
D            year from the r~levant date in such form and manner as may be
             prescribed and the application shall be accompanied by such docu-
             mentary or other evidence (including the documents referred to
             in section I 2A) as the applicant may furnish to establish that the
             amount of duty of excise and interest, if any, paid on such duty in
 E           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
 F           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 pro-
             visions of sub-section (2) substituted by that Act :
             Provided further that the limitation of one year shall not apply
 G
             where any duty and interest, if any, paid on such duty has been
             paid u.nder protest.
           - (2) If, on receipt of any such application, the Assistant Comm is-

 H    '(2011) 10 sec 292
      UNION OF INDIA v. MIS. HAMDARD (WAQF)                                  751
          LABORATORIES [DIPAK MISRA, J.]

 sioner of Central Excise or Deputv Commissioner of Central Ex-               A
 cise 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,             B
 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 -
                                                                              c
(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 e){ported out of India;
(b)      unspent advance deposits lying in balance in the applicant's
        account current maintained with the Commissioner of Cen-              D
        tral Excise;
(c)      refund of credit of duty paid on excisable gooc!s used as in-
        ptits in accordanc.e with the rules made, or any notification
        issued, under this Act;
(d)      the duty of excise and interest, if any, paid on such duty paid      E
        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· inGidence of such          F
      • dut)' and interest, if any, paid on such duty to any other per-
        son;
(t)     the duty of excise and interest, if any, paid on such duty borne
        by any other such class of applicants as the Central Govern-
        ment may, by notification in the Oftic.ial Gazette, specify: A ---·- G
        Provided further that no notification under clause (t) of the
        first proviso shall be issued unless in the opinion of the Central
        Gqvernment 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.                                                  H
752            SUPREME COURT REPORTS                           [2016] 3 S.C.R.



A           (3) Notwithstanding anything to the contrary contained in any judg-
            ment, decree, order or direction of the Appellate Tribunal or any
            Court or in any other provision of this Act or the rules made there-
            under or any other law for the time being in force, no refund shall
            be made except as provided in sub-section (2).
B                                                            rEmphasis addedl
           14. Section 11-BB deals with interest of delayed refunds. The said
      provision is extracted below:-
              Section 11-BB. Interest on delayed refunds.-lf any duty
            ordered to be refunded under sub-section (2) of section 11 B to
c           any applicant is not refunded within three months from the date
            ofreceipt of application under sub-section (I) 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
D           the Official Gazette, on such duty from the date immediately af-
            ter the expiry of three months from the date of receipt of such
            application till the date ofrefund of such duty:
            Provided that where any duty ordered to be refunded under sub-
            section (2) of section 11 Bin respect of an application under sub-
 E          section (I) 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 immedi-
            ately after three months from such date, ti 11 the date of refund of
            such duty.
 F
            Explanation.- Where any order of refund is made by the Com-
            missioner (Appeals), Appellate Tribunal, National Tax Tribunal or
            any court against an order of the Assistant Commissioner of Cen-
            tral Excise or Deputy Commissioner of Central Excise, under sub-
            section (2) of section 11 B, the order passed by the Commissioner
 G          (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 ofan application
      by the assessee before the competent authority. It also postulates that
 H    the said authority is required to be satisfied that the whole or any part of
          UNION OF INDIA v. M/S. HAMDARD (WAQF)                                 753
              LABORATORIES [DIPAK MISRA, J.]

the duty of excise and interest, if any, paid on such duty is refundable.       A
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
                                                                                 B
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 instant case, the application was filed on 25 1h
August, 1999. The said application, needless to emphasise, was preferred         c
under sub-section (2) of Section 11-B. We have been apprised of the
circular dated 301h 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          D
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.                                                    E
       (b)    Immediately on receipt ofan 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            F
              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         G
              of the receipt of refund application in terms of Section 11-
              BB. The period of 3 months in terms of Section 11-BB
              shall be counted from the date following the date ofreceipt
              of refund application up to the date of dispatch of cheque
              for refund.
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754                SUPREME COURT REPORTS                         [2016] 3 S.C.R.



 A           (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
 B                   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
 c                   with the approval of a Superintendent and the period of 3
                     months, for purpose of Section 11-88 shall count from the
                     date of re~eipt of all the requisite information or documents.
             (h)     The Collector may use a cyclostyled Performa for the
                     purpose of intimating the deficiencies or for
 D                   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 documents, ifrequired,
 E                   may be included therein and called from the assessee."
            16. Mr. Upadhyay, learned senior counsel has reste~ 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 oflndia,
 F 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, it had issued a letter on
   · 27 1h 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
 G 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 a span of three days,
     i.e., 301h September, 1999, the same was complied with _by stating that
     the duty had not been passed on by -the assessee to any consumer and
-H _the   amount \¥as deposited under protest. With the said communication,
         UNION OF INDIA v. MIS. HAMDARD (WAQF)                                755
             LABORATORIES [DIPAK MISRA, J.]

the proceedings commenced so that the competent authority could be             A
satisfied as provided under sub-section (2) of Section 11-B. During that
process, a communication was made on I" Dece111ber,. 1.999 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
                                                                               B
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
ofrefund and consequently, whether the respondent-assessee is entitled
to interest. Keeping in view the enumerated facts, the submissions
                                                                               c
canvassed and the provisions referred to, it is necessary to appreciate
the principle stated jn ·Rm1baxy 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 ofreceipt of applicatiqn for refund       D
or on the expiry of the said period from the date on which the order of
refund is made. The two-Judge Bench after analyzing the provision has
held as follows:-
       "12. It is manifest from the afore-extracted provisions that Sec-
       tion 11 BB of the Act comes into play only after an order for re-       E
       fund has been made under Section 11 B of the Act. Section 11 BB
       of the Act lays down that in case any duty paid is found refund-
       able and ifthe duty is not refunded within a period of three months
       from the date ofreceipt of the application to be submitted under
       sub-section (I) of Section 11 B of the Act, then the applicant shall
       be paid interest at such rate, as may be fixed by the Central Gov-      F
       ernment, on expiry of a period of three months from the date of
       receipt of the application. The Explanation appearing below Pro-
       viso to Section 11 BB introduces a deeming fiction that where the
       order for refund of duty is not made by the Assistant Commis-
       sioner of Central Excise or Deputy Commissioner of Central Ex-          G
       cise but by an Appellate Authority or the Court, then for the pur-
       pose 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 11 B of the Act. It is Clear that
       the Explanation has nothing to do with the postponement of the
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756            SUPREME COURT REPORTS                           [2016] 3 S.C.R.


A           date from which interest becomes payable under Section II BB
            of the Act.
            13. Manifestly, interest under Section 11 BB of the Act becomes
            payable, if on an expiry of a period of three months from the date
            ofreceipt of the application for refund, the amount claimed is still
B           not refunded. Thus, the only interpretation of Section 11 BB 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 (I) of Section 11 B of
            the Act and that the said Explanation does not have any bearing
            or connection with the date from which interest under Section
c           11 BB of the Act becomes payable.
                                                           [Emphasis supplied]
            18. While dealing with the said facet, the Court also referred to
      circular dated 0 I. I0.2002 issued by the Central Board of Excise and
D     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 11 BB was inserted in the Act with
E           effect from 26th May 1995, the depart'ment 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 11 B( I ) of the Act."
 F
           The ultimate conclusion was recorded thus:-
            ''19. In view of the above analysis, our answer to the question
            formulated in para ( 1) supra is that 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
G
            application for refund under Section 11 B( I) 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 Ma.fat/al Industries Ltd. & Ors. vs. U11io11
 H
          UNION OF INDIA v. MIS. HAMDARD (WAQF)                                   757
              LABORATORIES [DIPAK MISRA, J.]

 of India & Ors. 3 which has been emphatically relied upon by Mr.                 A
 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
                                                                                   B
 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
                                                                                   c
        in a suit or a writ petition. It is a case of balancing public interest
        vis-a-vis private interest. Where the petitioner-plaintiff has not
        himself suffered any loss or prejudice (having passed on the burden
        of the duty to others), there is no justice or equity in refunding the
        tax (collected) without the authority oflaw) to him merely because         D
        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 purposes. The money really belongs
        to a third pai1y- 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       E
        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           F
  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 (I) 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            G
  that:-
        " ... Such a holding would run against the very grain of the entire
        philosophy underlying the 1991 Amendment. The idea underlying

  '(1997) s sec 536                                                                H
758      SUPREME COURT REPORTS                           [2016] 3 S.C.R.


A     the said provisions is that no refund shall be ordered unless the
      claimant establishes that he has not passed on the burden to others.
      Sub-section (3) of the amended Section I 1-B is emphatic. It leaves
      no room for making any exception in the case of refund claims
      arising as a result of the decision in appeal/reference/writ petition.
      There is no reason why an exception should be made in favour of
B
      such claims which would nullify the provision to a substantial
      degree. So far as "lack of incentive" argument 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
c     the levy and apply for refund in case of success. Secondly, in a
      competitive market economy, as the one we have embarked upon
      since 1991-92, the manufacturer'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
      effect for the subsequent period as well. It is incorrect to suggest
D
      that the disputes regarding 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
      attraction. It may, therefore, be not entirely right to say that the
      prospect of not getting the refund would dissuade the
 E    manufacturers from agitating the questions of exigibility,
      classification, approval of price Iists or the benefit of exemption
      notifications. The disincentive, if any, would not be significant. In
      this context, it would be relevant to point out that the position was
      no different under Rule 11, or for that matter Section 11-B, prior
      to its amendment in 1991. Sub-rules (3) and (4) of Rule 11 (as it
 F    obtained between 6-8-1977 and 17-11-1980) read together 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 ~ifferently. The same position
      continued under Section 11-B, prior to its amendment in 1991.
G      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 emphatic. It made t11e provisions of Section 11-
       B exhaustive on the question ofrefund and excluded the jurisdiction
       of the civil court in respect of all refund claims. Sub-rule (3) of
       Ru le 11 or sub-section (3) of Section 11-B (prior to 1991) did not
 H
         UNION OF INDIA v. M/S. HAMDARD (WAQF)                                759
             LABORATORIES [DIPAK MISRA, J.]

      say that refund claims arising out of or as a result of the orders of   A
      a superior authority or court are outside the purview of Rule 11/
      Section 11-B. They only dispensed with the requirement of an
      application by the person concerned which consequentially meant
      non-application of the rule of limitation; otherwise, in all other
      respects, even such refund claims had to be dealt with under Rule
                                                                               B
      I I/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 Sectio111 l-B. All claims for refund, arising in whatever
      situations (except where the provision under which the duty is
      levied is declared as unconstitutional), has necessarily to be filed,    c
      considered and disposed of only under and in accordance with
      the relevant provisions re.lating to refund, as they obtained from
      time to time. We see no unreasonableness in saying so."
     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        D
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     E
to remove the deficiencies in the application within two days and, in any
event, ifthere 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 Rtmb"xy                      F
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, accordingly, the
appeal, being sans substratum, stands dismissed. There shall be no order       G
as to costs.
Kalpana K. Tripalhy                                       Appeal dismissed.