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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6823 OF 2010
RANBAXY LABORATORIES LTD. -- APPELLANT
VERSUS
UNION OF INDIA & ORS. -- RESPONDENTS
WITH
CIVIL APPEAL NO. 7637 OF 2009
AND
CIVIL APPEAL NO. 3088 OF 2010
JUDGMENT
D.K. JAIN, J.:
1. The challenge in this batch of appeals is to the final
judgments and orders delivered by the High Court of Delhi in
W.P. No.13940/2009 and the High Court of Judicature at
Bombay in Central Excise Appeal Nos.163/2007 and 124 of
2008. The core issue which confronts us in all these appeals
relates to the question of commencement of the period for
1
the purpose of payment of interest, on delayed refunds, in
terms of Section 11BB of the Central Excise Act, 1944 (for
short "the Act"). In short, the question is whether 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 or on the
expiry of the said period from the date on which the order of
refund is made?
2. As aforesaid, in all these appeals the question in issue being
the same, these are being disposed of by this common
judgment. However, in order to appreciate the controversy in
its proper perspective, a few facts from C.A. No. 6823 of 2010
may be noted. These are as follows:
The appellant filed certain claims for rebate of duty,
amounting to Rs.4,84,52,227/- between April and May 2003.
However, the Assistant Commissioner of Central Excise, vide
order dated 23rd June 2004, rejected the claim. Aggrieved, the
appellant filed an appeal before the Commissioner, Central
Excise (Appeals), who by his order dated 30th September 2004
allowed the appeal and sanctioned the rebate claim. Being
2
aggrieved by the said order, the revenue filed an appeal before
the Joint Secretary, Government of India, Ministry of Finance,
but without any success. Ultimately rebate was sanctioned on
11th January, 2005. On 21st April 2005, appellant filed a claim for
interest under Section 11BB of the Act on account of delay in
payment of rebate.
3. A show cause notice was issued to the appellant on 5th July
2005, proposing to reject their claim for interest on the
ground that rebate had been sanctioned to them within three
months of the receipt of order of the Commissioner (Appeals)
dated 30th September, 2004. Upon consideration of the reply
submitted by the appellant, relying on Explanation to Section
11BB of the Act, the Assistant Commissioner rejected the
claim.
4. Against the said order, the appellant filed an appeal before
the Commissioner (Appeals). The Commissioner (Appeals)
allowed the appeal and directed the Assistant Commissioner
to compute and pay the interest to the appellant. Aggrieved
by the said direction, the Assistant Commissioner filed an
appeal before the Customs, Excise and Service Tax Appellate
3
Tribunal (for short `the Tribunal'). However, the appeal was
dismissed by the Tribunal on the ground that it did not have
jurisdiction to deal with a rebate claim. Feeling aggrieved,
the Assistant Commissioner filed a revision application
before the Joint Secretary, Ministry of Finance, Govt. of India
who vide his order dated 30th July 2009 set aside the order
passed by the Commissioner (Appeals) and held that the
appellant was not entitled to interest under Section 11BB of
the Act.
5. Being dissatisfied with the said order, the appellant filed a
writ petition in the High Court of Delhi. Relying on the
decision of this Court in Union of India & Anr. Vs. Shreeji
Colour Chem Industries1, by the impugned order, the High
Court has affirmed the decision of the revisional authority and
held that the appellant is not entitled to interest under Section
11BB of the Act. Hence, in the lead case the assessee is in
appeal before us. However, in the connected appeals, the
High Court of Judicature at Bombay having affirmed the
decisions of the Tribunal, upholding the claim of the assessee
1 (2008) 9 SCC 515
4
for interest under Section 11BB of the Act, the revenue is the
appellant.
6. Learned counsel appearing for the assessee contended that
the language of Section 11BB of the Act is clear and admits of
no ambiguity, in as much as the revenue becomes liable to
pay interest at the prescribed rate on refunds on the expiry of
three months from the date of receipt of application under
Section 11B(1) of the Act and such liability continues till the
refund of duty. Learned counsel urged that reliance on the
decision of this Court in Shreeji Colour Chem Industries
(supra) by the Delhi High Court in rejecting the claim for
interest is misplaced. It was contended that the said judgment
deals with two kinds of interest, viz. (i) equitable interest
because of delayed refunds and (ii) statutory interest payable
under Section 11BB of the Act. According to the learned
counsel in terms of the latter, the judgment supports the
assessee's claim, but the High Court has erroneously applied
the principle laid down for payment of equitable interest.
According to the learned counsel, the said decision clearly
holds that an assessee is entitled to interest under the said
Section after the expiry of three months from the date of
5
receipt of application for payment of refund. In support of the
claim, learned counsel commended us to the order passed
by this Court in Union of India Vs. U.P. Twiga Fiber Glass
Ltd.2, whereby the appeal preferred by the revenue against
the decision of the Allahabad High Court has been dismissed.
In the said decision, following the decision of the Rajasthan
High Court in J.K. Cement Works Vs. Assistant
Commissioner of Central Excise & Customs3, the Allahabad
High Court had held that the relevant date for the purpose of
determining the liability to pay interest under Section 11BB of
the Act is with reference to the date of application, laying
claim for refund and not the actual determination of refund
under Section 11B(2) of the Act. To bolster the claim, learned
counsel placed strong reliance on a number of Circulars on
the point, issued by the Department of Revenue, Ministry of
Finance, Govt. of India, clarifying that with the insertion of
new Section 11BB of the Act, the department had become
liable to pay interest under the said Section if the refund
applications were not processed within three months from
the date of receipt of refund applications.
2 2009 (243) E.L.T. A27 (S.C.).
3 2004 (170) E.L.T. 4
6
7. Mr. Arijit Prasad, learned counsel appearing for the revenue,
on the other hand, submitted that since in the present cases
no refunds were sanctioned under Section 11B of the Act, the
provisions of Section 11BB of the Act were not attracted. In
the alternative, it was submitted that the refund orders having
been sanctioned within three months of the passing of orders
by the appellate authority, interest under the said Section
was not payable.
8. Before evaluating the rival contentions, it would be necessary
to refer to the relevant provisions of the Act. Section 11B of
the Act deals with claims for refund of duty. Relevant portion
thereof reads as under:
"11B.Claim for refund of 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
7
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 Act
and the same shall be dealt with in accordance with
the provisions of sub-section (2) as substituted by
that Act:
Provided further that the limitation of one year shall
not apply where any 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 of excise 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 current
8
account 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 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 of any Court in
any other provision of this Act or the rules made
thereunder or any other law for the time being in
9
force, no refund shall be made except as provided in
sub-section (2).
(4) .................................................................
(5) ................................................................"
Section 11BB, the pivotal provision, reads thus:
"11BB. 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 or
any Court against an order of the Assistant
Commissioner of Central Excise, under sub-section
(2) of section 11B, the order passed by the
Commissioner (Appeals), Appellate Tribunal or, as
the case may be, by the Court shall be deemed to be
10
an order passed under the said sub-section (2) for
the purposes of this section."
9. 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
11
date from which interest becomes payable under Section
11BB of the Act. 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 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.
10. It is a well settled proposition of law that a fiscal legislation
has to be construed strictly and one has to look merely at
what is said in the relevant provision; there is nothing to be
read in; nothing to be implied and there is no room for any
intendment. (See: Cape Brandy Syndicate Vs. Inland
Revenue Commissioners4 and Ajmera Housing Corporation
& Anr. Vs. Commissioner of Income Tax5.).
4 [1921] 1 K.B. 64
5 (2010) 8 SCC 739
12
11. At this juncture, it would be apposite to extract a Circular
dated 1st October 2002, issued by the Central Board of Excise
& Customs, New Delhi, wherein referring to its earlier
Circular dated 2nd June 1998, 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
application, the Board has reiterated its earlier stand on the
applicability of Section 11BB of the Act. Significantly, the
Board has stressed that the provisions of Section 11BB of the
Act are attracted "automatically" for any refund sanctioned
beyond a period of three months. The Circular reads thus:
"Circular No.670/61/2002-CX, dated 1-10-2002
F.No.268/51/2002-CX.8
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject : Non-payment of interest in refund/rebate cases which are
sanctioned beyond three months of filing - regarding
I am directed to invite your attention to provisions of
section 11BB of Central Excise Act, 1944 that wherever the
refund/rebate claim is sanctioned beyond the prescribed
period of three months of filing of the claim, the interest
thereon shall be paid to the applicant at the notified rate.
Board has been receiving a large number of
representations from claimants to say that interest due to
them on sanction of refund/rebate claims beyond a period
13
of three months has not been granted by Central Excise
formations. On perusal of the reports received from field
formations on such representations, it has been observed
that in majority of the cases, no reason is cited. Wherever
reasons are given, these are found to be very vague and
unconvincing. In one case of consequential refund, the
jurisdictional Central Excise officers had taken the view that
since the Tribunal had in its order not directed for payment
of interest, no interest needs to be paid.
2. In this connection, Board would like to stress that the
provisions of section 11BB of Central Excise Act, 1944 are
attracted automatically for any refund sanctioned beyond a
period of three months. The jurisdictional Central Excise
Officers are not required to wait for instructions from any
superior officers or to look for instructions in the orders of
higher appellate authority for grant of interest.
Simultaneously, Board would like to draw attention to
Circular No.398/31/98-CX, dated 2-6-98 [1998 (100) E.L.T.
T16] wherein Board has directed that responsibility should
be fixed for not disposing of the refund/rebate claims within
three months from the date of receipt of application.
Accordingly, jurisdictional Commissioners may devise a
suitable monitoring mechanism to ensure timely disposal of
refund/rebate claims. Whereas all necessary action should
be taken to ensure that no interest liability is attracted,
should the liability arise, the legal provision for the
payment of interest should be scrupulously followed."
(Emphasis supplied)
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.
14
13. We, thus find substance in the contention of learned counsel
for the assessee that in fact the issue stands concluded by the
decision of this Court in U.P. Twiga Fiber Glass Ltd. (supra).
In the said case, while dismissing the special leave petition
filed by the revenue and putting its seal of approval on the
decision of the Allahabad High Court, this Court had
observed as under:
"Heard both the parties.
In our view the law laid down by the Rajasthan
High Court succinctly in the case of J.K. Cement Works
v. Assistant Commissioner of Central Excise & Customs
reported in 2004 (170) E.L.T. 4 vide Para 33:
"A close reading of Section 11BB, which
now governs the question relating to payment
of interest on belated payment of interest,
makes it clear that relevant date for the
purpose of determining the liability to pay
interest is not the determination under sub-
section (2) of Section 11B to refund the amount
to the applicant and not to be transferred to the
Consumer Welfare Fund but the relevant date
is to be determined with reference to date of
application laying claim to refund. The non-
payment of refund to the applicant claimant
within three months from the date of such
application or in the case governed by proviso
to Section 11BB, non-payment within three
months from the date of the commencement of
Section 11BB brings in the starting point of
liability to pay interest, notwithstanding the
date on which decision has been rendered by
the competent authority as to whether the
15
amount is to be transferred to Welfare Fund or
to be paid to the applicant needs no
interference."
The special leave petition is dismissed. No
costs."
14. At this stage, reference may be made to the decision of this
Court in Shreeji Colour Chem Industries (supra), relied
upon by the Delhi High Court. It is evident from a bare
reading of the decision that insofar as the reckoning of the
period for the purpose of payment of interest under Section
11BB of the Act is concerned, emphasis has been laid on the
date of receipt of application for refund. In that case, having
noted that application by the assessee requesting for refund,
was filed before the Assistant Commissioner on 12th January
2004, the Court directed payment of Statutory interest under
the said Section from 12th April 2004 i.e. after the expiry of a
period of three months from the date of receipt of the
application. Thus, the said decision is of no avail to the
revenue.
15. 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 11BB of the Act
16
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.
16. As a sequitur, C.A.No.6823 of 2010, filed by the
assessee is allowed and C.A.Nos.7637/2009 and 3088/2010,
preferred by the revenue are dismissed. The jurisdictional
Excise officers shall now determine the amount of interest
payable to the assessees in these appeals, under Section
11BB of the Act, on the basis of the legal position, explained
above. The amount(s), if any, so worked out, shall be paid
within eight weeks from today.
17. However, on the facts and in the circumstances of the
cases, there will be no order as to costs.
. ..........................................J.
(D.K. JAIN)
............................................J.
(ANIL R. DAVE)
NEW DELHI;
OCTOBER 21, 2011.
R.S. 17
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