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Hamdard (Wakf) Laboratories v. Union Of India And Others - WRIT TAX No. 249 of 2001  RD-AH 1718 (22 July 2005)
Civil Misc. Writ Petition No.249 of 2001.
M/S Hamdard (Wakf) Laboratories, Ghaziabad. Petitioner.
Union of India and others. Respondents.
Hon'ble R.K. Agrawal, J.
Hon'ble Rajes Kumar, J.
By means of the present writ petition filed under Article 226 of the Constitution of India, petitioner M/S Hamdard (Wakf) Laboratories , Ghaziabad seeks the following relief:
"(i) to issue a writ of mandamus, or other writ, order or direction in the nature of mandamus, to respondent No.3 to pay interest, to the petitioner, on the amount of Rs. 3,74,00,000/- sanctioned to it, with effect from 25.11.1999, at such rate as it deems fit and proper in the interests of justice.
(ii) to grant costs of this Writ Petition to the petitioner herein, and
(iii) to pass such other order or orders as may be deemed fit and proper in the interests of justice."
Briefly stated the facts giving rise to the present writ petition are as follows:
The petitioner is a Wakf and is engaged in the business of manufacture and sale of various items including Rooh Afza which is non-sweetened alcoholic beverage and has been classified by it under the sub-heading 2201.90 of the Schedule to the Central Excise Tariff Act, 1986 (hereinafter referred to as "the Tariff Act"). The respondents did not accept the classification claimed by the petitioner and their contention was that it is classifiable under the sub-heading 2107.91 of the Tariff Act. Steps were taken for recovery of differential duty and on that basis the petitioner started paying the duty as demanded under protest without charging it from its customers. The petitioner has relied upon the decision of the Apex Court in Civil Appeal No.7766 of 1995 decided vide judgment and order dated 4th August, 1999 in which it was held that the Rooh Afza is classifiable under the heading 2201.90. It has been stated by Sri Hari Shanker, learned counsel appearing on behalf of the petitioner that subsequently by an order dated 09.04.2000 the Apex Court corrected its earlier order dated 4th August, 1999 and substituted the heading 2201.90 to 2202.90. The Apex Court vide order dated 4th August, 1999 had also granted all consequential reliefs to the petitioner. After the decision of the Apex Court, referred to above, the petitioner preferred an application for the refund of a sum of Rs.3,74,00,000/- which had been paid under protest. The claim for refund was filed on 25th August, 1999 and after certain queries were raised, the claim was ultimately decided by the Assistant Commissioner of Central Excise, Division-1, Ghaziabad vide order dated 16th November, 2000. The claim for refund was found in order and, therefore, the. Assistant Commissioner of Central Excise, Division-1, Ghaziabad had sanctioned a refund of Rs. 3,74,00,000/-. A cheque no. 639866 dated 15th November, 2000 payable to Punjab National Bank, Navyugh Market, Ghaziabad was also issued for the settlement of the above refund which the petitioner had accepted. However, the petitioner by means of the present writ petition is claiming interest on the delayed refund in terms of section 11-BB of the Central Excise Act, 1944 (hereinafter referred to as "the Act").
We have heard Sri C. Hari Shankar, learned counsel assisted by Sri Anil Sharma on behalf of the petitioner and Sri A.K.Rai, learned Standing Counsel appearing on behalf of the respondents.
Learned counsel for the petitioner submitted that if the duty is not refunded within three months from the date of the receipt of the application for refund, the respondents are liable to pay interest at the specified rate from the date of the application for refund immediately after the expiry of period of three months from the date of receipt of the application for refund till the date of payment of such duty. He submitted that it is the statutory liability of the respondents to pay the interest on the amount of the refund. Sri A.K. Rai submitted that as the adjudicating authority had made certain queries, the refund was delayed and, therefore, there is no liability to pay any interest to the petitioner.
Having given our anxious consideration to the various pleas raised by the learned counsel for the parties, we find that the claim of the petitioner is well founded. For ready reference, Section 11-BB of the Act is reproduced below:
"11-BB. Interest on delayed refunds.- If any duty ordered to be refunded under sub-section (2) of Section 11-B 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 percent and not exceeding thirty percent 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 where any duty ordered to be refunded under sub-section (2) of section 11-B 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 11 B, the order passed by the Commissioner (Appeals), Appellate 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."
From a bare reading of the provisions of Section 11-BB of the Act, we find that the legislature by the aforesaid provision has cast a duty upon the adjudicating authority to decide the claim for refund immediately within three months failing which the liability for interest start running after excluding the period of three months from the date of the application. Admittedly, in the present case, it is not in dispute that the claim for refund was made on 25th August, 1999 whereas the order for refund has been passed on 16th November, 2000. Under the provision of Section 11-BB of the Act, interest start running after three months from the date of the application irrespective of the fact as to whether the order for refund has been made subsequent to the period of three months. As in the present case, the order for refund has been made on 16th November, 2000 i.e. much after the expiry of period of three months from the date of making the application, therefore, the respondents are liable to pay interest at the specified rate therein. Liability for payment of interest is statutory and, therefore, it was the bounden duty of the Assistant Commissioner of Central Excise, Division-I, Ghaziabad to also pay interest from 26th November, 1999 to 15th November, 2000 at the rate specified under section 11-BB of the Act.
In view of the foregoing discussions, the writ petition succeeds and is allowed. The Assistant Commissioner of Central Excise, Division-1, Ghaziabad is directed to pay interest at the specified rate on the sum of Rs.3, 74,00,000/- from 26th November, 1999 to 15th November, 2000 within a period of thirty days from the date a certified copy of this order is filed before the said officer. As the respondents have failed to discharge the statutory duty; the petitioner has also become entitled for costs, which we assess at Rs.10,000/- payable by the respondents.
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