@JUDGMENTTAG-ORDER
Vinod K. Sharma, J.@mdashM/s. Dollar Company Pvt. Limited/petitioner has invoked the extraordinary equitable jurisdiction of this Court under
Article 226 of the Constitution of India with the prayer for issuance of a writ in the nature of Certiorari, to quash the order passed in Appeal Nos.
14 & 15/2007 (M-1) dated 23.01.2007, with the consequential relief of a writ in the nature of Mandamus to direct the respondents to refund a
sum of Rs. 60,108.72 (Rupees Sixty Thousand One Hundred Eight and paise Seventy Two only) with interest to the petitioner. The facts pleaded
in the affidavit are as under:
i) The petitioner is engaged in the business of manufacturing pharmaceutical products since 1961 for the allopathic products at their factory at No.
50, Cross Road, Tondiarpet, Chennai. The petitioner manufacturers drugs both under the allopathic system of medicine as well as Indian System
of Medicine.
ii) The petitioner was manufacturing Hadensa Ointment and Lichensa Ointment, which was a patent and proprietary medicine under Item 14E of
the Central Excise Tariff and the retail prices were fixed under the Drug Control Order during the year 1956 to 1974. The prices were inclusive of
Central Excise Duty.
iii) It was in the year 1961, that for the first time central excise duty was levied on patent and proprietary medicines, but the excise duty was not
added to the prices by petitioner and it was absorbed in the price as the Drug Control Order was in force.
iv) The petitioner opted for notification 161/66 dated 18.10.1966, whereby the Central Government exempted patent proprietary medicines under
item 14E so much of the excise duty leviable thereon as in excess of the duty calculated on the basis of value arrived at after allowing a discount of
25% on the prices specified in the price list showing the retail price as ordinarily sold to retailer.
v) An explanation to the notification provided element of excise duty, if any added to the price on any of the medicine to be deducted before
allowing the discount. The petitioner claimed to give effect to the said notification from the year 1996 by giving adhoc discount of 25% by first
deducting from the retail price and the excise duty element to be deducted thereafter to arrive at assessable value.
vi) This request was disallowed by the department by holding that excise duty element had to be first deducted from the list price and thereafter
adhoc discount of 25% was to be deducted in order to arrive at assessable value.
vii) The petitioner, being dissatisfied with the decision of the Assistant Commissioner filed revision u/s 36 of the Central Excise and Salt Act, 1944
before the Government of India, which was also rejected vide order dated 21.01.1976.
viii) The petitioner, being aggrieved by the order passed by the Government of India, filed W.P. No. 4472 of 1976 in this Court, which was
dismissed on 22.02.1978. In view of dismissal of writ petition, the Central Excise Department claimed the differential excise duty and raised a
demand of Rs. 13,052.72 (Rupees Thirteen Thousand Fifty Two and Paise Seventy Two only). The appeal was allowed and the stand of the
department, that applying 25% discount after deducting excise duty from the list price, was held to be incorrect.
ix) In view of the decision of the Hon''ble Division Bench, the petitioner applied for refund of central excise duty paid as per the departmental
formula on 18.04.1986. The Superintendent of Central Excise issued a notice in C.C. No. 701/702 of 1987 dated 19.10.1987, holding that the
assessable value should be determined only by deducting 25% from the retail price for clearance effected between 01.10.1966 to 30.09.1982 and
thereby raised a demand of Rs. 3,09,210.99 (Rupees Three Lakhs Nine Thousand Two Hundred Ten and Paise Ninety Nine only).
x) The case of petitioner is that the demand was totally illegal, as it was based on the fact, that this amount was payable being short payment by
petitioner. This demand, according to the petitioner, was contrary to the decision of this Court in writ appeal.
xi) The petitioner, being aggrieved by the demand, filed W.P. No. 13775 of 1988, which was allowed by the Hon''ble Single Judge on
21.02.1998 and directions were issued to the Central Excise Department to calculate the correct amount payable to the petitioner and refund the
same within twelve weeks of the date of receipt of copy of the order.
xii) In view of the fact, that the order passed by this Court was not complied with, the petitioner filed Contempt Petition No. 160 of 1999, which
was disposed of by this Court on 11.02.2000, granting liberty to the petitioner to pursue it after the decision in writ appeal filed by the department.
xiii) The Writ Appeal was however dismissed by holding that the first adhoc discount of 25% was to be deducted and thereafter the element of
central excise duty was to be deducted in order to calculate assessable value.
xiv) After dismissal of the Writ Appeal, the petitioner made representation to the respondents for refund of the claim filed in 1986. The
respondents did not accept the request by taking a stand, that the petitioner was not entitled to the refund of excise duty, on the ground of unjust
enrichment. This was not done inspite of the fact, that the Hon''ble Division Bench of this Court had clearly held, that the excise duty element was
absorbed by petitioner and not passed on to the customers, as there was no change in the MRP prior to the introduction of Central Excise Act.
xv) It was held also by this Court that the prices continued to be the same and no element of excise duty was added to the medicinal ointment. It
was further held, that it was not the case of the department, that the central excise duty was passed on to the customers, nor had the petitioner
charged customers the excise duty.
2. The impugned order has been challenged on the ground, that it is against law and facts, being contrary to the stand of the respondents on the
earlier W.A. 370 of 1980, W.P. 13775 of 1988 and W.A. 647 of 1999. It is submitted, that it was not open to the respondents to take a plea of
unjust enrichment in view of finding of this Court, that the petitioner was entitled to refund.
3. It is also pleaded, that the order of the 2nd respondent in denying refund of Rs. 7,034/- (Rupees Seven Thousand and Thirty Four only) and Rs.
12,380/- (Rupees Twelve Thousand Three Hundred and Eighty only), being time barred u/s 11(B) of the Central Excise Act, 1944, to be
erroneous and contrary to the Division Bench judgment.
4. The writ petition is opposed by filing counter, which reads as under:
I, R. Arunachalam, aged about 57 years, son of (Late) T.A. Ramalingam working as Assistant Commissioner of Central Excise, Chennai I
Commissionerate, 26/1 Mahatma Gandhi Road, Chennai I Commissionerate, Chennai-600 034 do hereby solemnly affirm and sincerely state as
follows:
2. I am the Assistant Commissioner of Central Excise, Chennai I Commissionerate, Chennai 34. I am well acquainted with the facts and
circumstances of the case and I am filing this affidavit on behalf of Respondent Nos. 1 & 2.
3. I humbly submit that I have read the averments stated in the affidavit in support of the writ petition and deny all the averments stated therein
except those that are all specifically admitted hereunder.
4. The petitioner filed the above writ petition for the issue of writ of Certiorarified-mandamus calling for the records on the file of 2nd Respondent
relating to the common Order in Appeal Nos. 14 and 15/2007 (M-1) dated 23.01.2007 and quash the same and consequently direct the
respondents to refund a sum of Rs. 60,108.72 with interest to the petitioner herein and to pass such further or other orders as it may deem fit and
proper and thus render justice.
5. I submit that the Petitioner herein had filed a statutory appeal u/s 35B of Central Excise Act, 1944 before the Customs, Excise and Service Tax
Appellate Tribunal, South Zonal Bench, Chennai against the very same impugned order herein. The Appellate Tribunal by its Final Order No.
105/08 dated 13.2.2008 disposed of the Petitioner''s appeal as follows:
3. Thus the claim of refund of Rs. 734.48, being the duty paid for the period prior to 08.10.1996, is not admissible to the assessee on merits. The
claim for the remaining amount of duty (Rs. 12,318) is not time barred and the same is liable to be refunded in cash to the assessee in as much as
the Revenue has no case that this claim is hit by the bar of unjust enrichment.
4. In so far as the claim of refund of duty of Rs. 47,056/- is concerned, -------------, I find that the Assistant Collector of Central Excise was
directed to calculate the correct amount payable to the writ petitioner and refund the same within 12 weeks...In the result, the appeal is allowed
except in respect of refund claim of duty of Rs. 734/= paid for the period 01-4-1966 to 08-10-1966
5. In the above circumstances the writ petition becomes infructuous and liable to be dismissed.
6. I further submit that the prayer of the Petitioner relating to Order-in-Appeal No. 15/2007 (M-1) dated 23.1.2007 against the order of rejection
of refund claim in order in original no. 16/2006 RF dated 28-03-06, the petitioner ought to have filed one more writ petition. However the
petitioner had filed a statutory appeal u/s 35B before the CESTAT with a stay petition. It is further submitted that the Tribunal has also stayed the
impugned Order-in-Appeal No. 15/2007 vide stay Order No. 125/08 dated 8.2.08 and the main appeal in E/316 of 2007 is pending disposal.
7. It is clear that the Petitioner having filed the statutory appeal before the Appellate Tribunal and simultaneously invoked the Writ jurisdiction
which is not maintainable. In this regard, reliance is placed on the Division Bench Judgment of this Hon''ble High Court rendered in the case of
M/s. Nivaran Pharma Pvt. Ltd. vs. Commissioner of Central Excise, Chennai reported in 2006 (205) E.L.T. 9 (Mad) held that the High Court was
absolutely right in dismissing Writ Petition stating that the assessee should have first raised objection before the concerned Departmental authority
but given liberty to approach High Court in case of adverse order.
5. The petitioner filed a reply affidavit to the counter. The stand in the rejoinder is that the fact of petitioner having filed statutory appeal before
CESTAT was disclosed in the writ petition. It is also submitted, that the matter came up for hearing before the Hon''ble Single Judge on
18.12.2008, it was then brought to the knowledge of the Hon''ble Single Judge, that the final orders were also passed by CESTAT in favour of the
writ petitioner ordering refund and holding, that there was no unjust enrichment, as the department had not challenged the order passed in Writ
Appeals.
6. It is further submitted, that the Deputy Commissioner granted refund without awarding interest, therefore, the petitioner filed statutory appeal
against the order of the Deputy Commissioner to the Commissioner (Appeals) in non granting of interest, which is pending. Therefore, there was
no misstatement or suppression of facts by the petitioner.
7. The stand in the rejoinder is that now the claim of petitioner relates to the period from April 1966 to September 1986. That two Division
Benches of the Hon''ble High Court and the Hon''ble Single Judge have already decided the issue in favour of the writ petitioner and the
proceedings have already attained finality, wherein the refund was directed.
8. It is also submitted, that awarding of interest for the period earlier to the introduction of Section 11B can be only by the Hon''ble High Court,
therefore, the writ petition as framed is maintainable.
9. That the order 125 of 2008 dated 08.02.2008 referred to by the respondent nos. 1 & 2 was also enclosed in the typeset of papers, for which
refund of Rs. 29,860/- (Rupees Twenty Nine Thousand Eight Hundred and Sixty only) was awarded. The issue raised in the present writ petition
pertains to the period between April 1966 and September 30, 1982, therefore, the stay order referred to by the respondent, deals with staying of
transfer of refund amount to consumer welfare fund, but does not deal with the issue raised in the present writ petition. Reference was also made to
the previous writ petitions and the writ appeal.
10. Learned counsel for the petitioner vehemently contended, that the petitioner is entitled to interest on the amount of refund for the period prior
to coming into force of Section 11B, as admittedly this was used by the respondents. The interest therefore was payable under the Interest Act.
Therefore, petitioner is entitled to interest even prior to enforcement of Section 11BB of the Act.
11. In support of this contention, learned counsel for the petitioner placed reliance on the judgment of the Hon''ble Supreme Court in the case of
Alok Shanker Pandey Vs. Union of India (UOI) and Others, , holding therein that the interest is not a penalty or punishment, but is the normal
accretion on capital.
12. Learned counsel for the petitioner also placed reliance on the judgment of the Hon''ble Allahabad High Court in Hello Minerals Water (P) Ltd.
Vs. Union of India (UOI), , wherein the Hon''ble Allahabad High Court was pleased to lay down as under:
34. For instance, if A had to pay a certain sum of money to B at a particular time, but he pays it after a delay of several years, the result will be that
the money remained with A and he would have earned interest thereon by investing it somewhere. Had he paid that amount at the time when it was
payable then B would have invested it somewhere and earned interest thereon. Hence, if a person has illegally retained some amount of money
then he should ordinarily be directed to pay not only the principal amount but also the interest earned thereon.
35. Money doubles every six years (because of compound interest). Rs. hundred in the year 1990 would become Rs. two hundred in the year
1996 and it will become Rs. 400 in the year 2002. Hence, if A had to pay B a sum of rupees 100 in the year 1990 and he pays that amount only in
the year 2002, the result will be that A has pocketed Rs. 300 with himself. This clearly cannot be justified because had he paid that amount to B in
the year 1990, B would be having Rs. 400 in the year 2002 instead of having only Rs. 100/-. Hence, ordinarily interest should always be awarded
whenever any amount is detained or realized by someone, otherwise the person receiving the amount after considerable delay would be losing the
entire interest thereon which will be pocketed by the person who managed the delay, it is for this reason that we have ordered for payment of
interest alongwith the amount realized as export pass fee.
13. It was vehemently contended, that as the refund was admittedly due to the petitioner, therefore, there was statutory obligation under the
Interest Act to pay interest to the petitioner. The action of the respondents in not granting interest prior to coming into force of Section 11B,
therefore, is in violation of the provision of the Interest Act, and against law laid down by the Hon''ble Supreme Court referred to above.
14. Learned counsel for the respondents opposed the writ by contending, that the writ petition is not maintainable, as the order impugned in this
writ petition stands set aside, and for the reasons best known to the petitioner, the petitioner did not challenge the order passed by CESTAT in
setting aside the impugned order and not granting interest. In absence of challenge to the order of CESTAT, the writ petition, as framed is not
competent.
15. That the claim of interest by petitioner in this writ petition is not maintainable, as admittedly, the refund was denied to the petitioner, on the
ground of unjust enrichment, meaning thereby that the refund was lying with the Consumer Welfare Fund and was not with the department.
Therefore, no interest is payable to the petitioner.
16. In support of this contention, learned counsel for the respondents placed reliance on the judgment of the Hon''ble Gujarat High Court in
Manisha Pharmo Plast Pvt. Ltd. and Another Vs. Union of India (UOI) and Others The learned counsel for the respondents also placed reliance
on this judgment to challenge the maintainability of writ petition in view of the availability of alternative statutory remedy. The Hon''ble Gujarat High
Court in this case was pleased to lay down as under:
29.1. As stated earlier, the revenue has filed affidavit of one Shri A.B. Lala, Assistant Commissioner, Central Excise Division, Vapi. The learned
Assistant Solicitor General of India invited attention of the Court to the contents of paras 5 to 8 of the said affidavit which are produced at length in
the earlier part of this judgment. Taking into consideration the said averments, this Court is of the opinion that the challenge to order dated
22.8.2005 passed by the CESTAT is not maintainable in the present because the earlier application was dismissed and the Tribunal had held that
no new facts have come into existence and that the applicants ought to have approached the department for interest and on department denying the
same, should have obtained an order which would have been appealable order and thereafter should have followed the procedure for filing appeal
against the denial of interest.
31. Coming to the crux of the matter, what is required to be seen is that the petitioners filed application for refund on 30.12.1999; on the said
application, an order was passed on 21.12.2001, whereby the department admitted the refund, but transferred the amount to Consumer Welfare
Fund; being aggrieved by that order, the petitioners filed an appeal before the Commissioner (Appeals), which was allowed by order dated
01.10.2003 holding that there was no unjust enrichment on the part of the petitioners; against this order, the department filed an appeal before the
CESTAT; in the said appeal, the petitioners filed cross objections; the CESTAT by order dated 12.1.2005 dismissed the appeal filed by the
department and allowed the cross-objections; against that order, the department filed before the High Court and that appeal was finally dismissed
by the High Court on 18.07.2005. That being so, the petitioners finally became entitled to refund on 18.07.2005, whereas the department has
already paid refund amount to the petitioners on 26.06.2005. That being so, the interest which can be allowed to be paid to the petitioners is only
from the final adjudication in the matter (as the decision of the High Court was not carried further in appeal), i.e. from 18.07.2005, whereas the
department has already paid the amount of refund to the petitioners on 26.06.2005 and therefore, there is no question of passing any order of
payment of interest to the petitioners. Otherwise also, for a substantial period, the amount was lying with the Customer Welfare Fund and not with
the department.
17. Learned counsel for the respondents further contended, that the relief claimed by petitioner for interest is not competent, as in order to claim
interest on equitable ground under the Interest Act, written demand was must, but in this case, neither any written demand has been made for grant
of interest on equitable ground, nor relief of interest is claimed in this writ petition. The order impugned in this writ petition is that of the
Commissioner of Central Excise (Appeals), which already stood set aside.
18. In support of this contention, reliance was placed on the judgment of the Hon''ble Supreme Court in the case of Union of India (UOI) and
Another Vs. Shreeji Colour Chem Industries, wherein the Hon''ble Supreme Court was pleased to lay down as under:
7. A three-Judge Bench of this Court in Modi Industries Limited, Modinagar and Others Vs. Commissioner of Income Tax, Delhi and Another,
dealt with the position relating to grant of statutory interest. In paras 58 & amp; and 59 it was inter alia observed as follows:
58. The argument, which was upheld in some of the cases now under appeal, is that it will be inequitable if the assessee does not get interest on the
amount of advance tax paid, when the amount paid in advance is refunded pursuant to an appellate order. This is not a question of equity. There is
no right to get interest on refund except as provided by the statute. The interest on excess amount of advance tax u/s 214 is not paid from the date
of payment of the tax. Nor is it paid till the date of refund. It is paid only up to the date of the regular assessment. No interest is at all paid on
excess amount of tax collected by deduction at source. Before introduction of Section 244(1-A) the assessee was not entitled to get any interest
from the date of payment of tax up to the date of the order as a result of which excess realisation of tax became refundable. Interest u/s 243 or
Section 244 was payable only when the refund was not made within the stipulated period up to the date of refund. But, if the assessment order
was reduced in appeal, no interest was payable from the date of payment of tax pursuant to the assessment order to the date of the appellate
order.
59. Therefore, interpretation of Section 214 or any other section of the Act should not be made on the assumption that interest has to be paid
whenever an amount which has been retained by the tax authority in exercise of statutory power becomes refundable as a result of any subsequent
proceeding
8. In Clariant International Ltd. and Another Vs. Securities and Exchange Board of India, it was observed as follows:
30. Interest can be awarded in terms of an agreement or statutory provisions. It can also be awarded by reason of usage or trade having the force
of law or on equitable considerations. Interest cannot be awarded by way of damages except in cases where money due is wrongfully withheld and
there are equitable grounds therefor, for which a written demand is mandatory.
31. In absence of any agreement or statutory provision or a mercantile usage, interest payable can be only at the market rate. Such interest is
payable upon establishment of totality of circumstances justifying exercise of such equitable jurisdiction. (See The Municipal Corporation of Delhi
Vs. Smt. Sushila Devi and Others, , SCC para 16.)
9. As was observed in para 30 referred to above, if the claim of interest is on equitable ground, a written demand therefor is imperative.
10. In the instant case admittedly no such written demand has been made. In terms of Section 11BB (1), the respondent-assessee is entitled to
interest from 12th April, 2004 to 26th August, 2004. The quantum shall be worked out and the amount shall be paid within a period of four
weeks. The order of the High Court is accordingly modified and the appeal is allowed to the aforesaid extend. No costs.
19. Finally reliance was placed on the judgment of the Hon''ble Supreme Court in the case of Union of India (UOI) and Others Vs. E. Merck
(India), , holding that no writ in the nature of Mandamus is competent for payment of interest, in absence of any statutory provisions of law. That
learned counsel for the petitioner however contended, that this judgment does not take note of the Interest Act, therefore, cannot be taken to be a
binding precedent.
20. On consideration, I find that this writ petition is totally misconceived, and is nothing but misuse of the process of the Court. The petitioner in
this writ petition challenged the order of Commissioner of Central Excise (Appeals) dated 23.01.2007. In the counter filed to the writ petition, it
was disclosed, that the impugned order already stood set aside in appeal. The copy of the order was also placed on record. Inspite of order of the
CESTAT, the petitioner did not choose to challenge that order in not granting interest.
21. The stand in the rejoinder to the counter, cannot be accepted, firstly for the reason that there is no order dated 18.12.2008 as mentioned in the
counter. The practice of mentioning of proceedings, which do not form part of written order, deserves to be depreciated. It is settled law, that no
notice of alleged oral observations can be taken. It cannot be believed, that the Hon''ble Single Judge would have allowed the petitioner to
continue with the proceedings, inspite of knowing, that the impugned order challenged in the writ petition stood set aside, and the writ petition was
rendered infructuous. It was open to petitioner to amend the writ petition to challenge the order of CESTAT. It was not open to petitioner to
continue with the writ petition to claim relief, which was not subject matter of writ and qua which there was no foundation laid in the affidavit.
22. It is well settled law, that no relief can be granted, which is not claimed and qua which there is no pleadings in the affidavit to support the
prayer made.
23. It is not understood how altogether a new case can be set up in rejoinder based on additional set of papers. Only those typeset of papers can
be taken note of, which form part of pleadings, as the Court is to decide the case on the basis of pleadings set out in the writ petition, and not on
the typeset of papers or additional typeset of papers as is sought to be projected by petitioner in this case.
24. The Hon''ble Supreme Court in the case of Union of India vs. Shreeji Colour Chem Industries (supra) has been pleased to lay down, that in
absence of written demand claiming interest, the petition is not competent, whereas in this case, leaving the written demand, even the case pleaded
is not for refund of interest.
25. The order under challenge in the writ petition, was admittedly set aside.
26. It is true, that the petitioner had disclosed in the writ petition, that the petitioner had also challenged the order before CESTAT and that the writ
petition was on the plea, that petitioner did not expect justice from the Tribunal.
27. This cannot be a ground to maintain the writ petition. The writ as framed itself was not maintainable in view of the settled law, that it is not open
to the party to continue two parallel proceedings, i.e., appeal and writ petition on the same cause of action. It seems, that though it was disclosed in
the pleadings, that petitioner had filed appeal before CESTAT, but it must not have been disclosed at the time of hearing. It cannot be believed that
after knowing this fact, without asking petitioner to withdraw the appeal, this writ could have been entertained.
28. Even on merit, the plea raised by petitioner for grant of interest is not sustainable in law, in view of the law laid down by the Hon''ble Supreme
Court in the cases of Union of India vs. Shreeji Colour Chem Industrie and Union of India vs. E. Merck (India) (supra).
29. The conduct of petitioner in pressing this writ petition, which had been rendered infructuous, deserves to be depreciated in strong words. No
merit. Dismissed. No costs.
