Kirloskar Brothers Limited and Another vs Union of India (UOI) and Others

A.M. Sapre, J.—Petitioner, a limited company, has filed this writ under Articles 226 and 227 of Constitution of India, claiming following relief by way of issuance of writ of mandamus against the respondents:-

"The petitioner be awarded interest at the rate of 18% p.a. on amounts illegally realised from the date of realisation till date of repayment. Interest be also awarded on the quntified amount of interest of Rs. 1,376,77,570=70 ps at the rate of 18% from December 1984 till the date of payment thereof.

The Non petitioners be directed to pay the aforesaid amounts to petitioner within a reasonably stipulated period by issuance of a suitable writ, order or direction."

In substance, the petition is for claiming interest on delayed payment of excise duty refunded by the respondents to petitioner. This relief is founded on the allegation that the petitioner - a limited company, is engaged in the business of manufacturing of monoblock pumps. According to petitioner, they filed a classification list in respect of monoblock pumps and claimed that due to their peculiar manufacturing, they are not exigible to any excise duty. In other words, the case of petitioner was that the rate of duty leviable on these pumps was nil in terms of one exemption notification No. 57/78, dated 1-3-1978. The excise authorities did not accept the stand taken by the petitioner and insisted for payment of excise duty. It is the case of petitioner that due to insistence on the part of excise authorities, the petitioner had to pay excise duty under protest. The petitioner then contested the issue before the departmental authorities and contended interalia that they are not liable to pay any excise duty on these pumps in terms of the aforementioned exemption notification. This issue was eventually decided in favour of petitioner at the appellate stage. As a consequence of a declaration granted in favour of petitioner in appeal and it having attained the finality, that no duty is payable on these monoblock pumps, the petitioner became entitled to claim refund of the excise duty which was paid by them under protest. Eventually, after some correspondence, the department refunded a sum of Rs. 1,28,27,885/- in two instalments i.e. one on 29-11-1986 and other on 17-10-1988 to the petitioner. It is on this amount the petitioner claimed interest from the respondents interalia on the ground that due to wrong withholding of the amount for a long period, the petitioner has become entitled to claim interest not only on the ground of equity but also under the general law. Since the respondents (Excise Department) did not acceed to the prayer made by the petitioner, the present petition was filed by the petitioner seeking a writ of mandamus, directing the respondents to pay a sum of Rs. 1,37,77,570/- by way of interest which was calculated at the rate of 18% per annum on the amount which was refunded but late.

Heard Shri J.P. Gupta, learned senior counsel with Shri Abhyankar, learned counsel for petitioner, and Shri B.G. Neema, learned counsel for respondents.

Shri Gupta, learned senior counsel relying upon series of cases decided by Supreme Court as also by High Courts cases viz. 1979 ELT (J 181) Vijay Textile v. Union of India High Court, Gujrat 1979 ELT (J 546) Jyoti Limited v. Union of India High Court, Gujrat 1980 ELT (437) Vallabh Glass Works Co. Ltd. v. Union of India, HC Gujrat, Elpro International Ltd. Vs. Joint Secretary, Govt. of India, Ministry of Finance and Others, , Dilichand Shreelal Vs. Collector of Central Excise and Others, , Calcutta Paper Mills Manufacturing Co. Vs. Customs, Excise and Gold (Control) Appellate Tribunal and Others, , Radheshyam Tulsian Vs. Collector of Customs and Others, , Metal Box India Limited Vs. Union of India and others, Dharangdhara Municipality v. Dharangadhara Chemicals HC Guj., Metal Distributors Ltd., Bombay and another Vs. Union of India and others, , 1988 (18) ECC 117 1988 (36) ELT 537 U. FOAM Private Limited v. Assistant Collector Central Excise HC Hydrabad, 1986 (6) ECR 539 , Guru Charan Industrial Works Vs. Union of India (UOI) and Others, , Kaira Dist. Co-op. Milk Producers Union Ltd. Vs. U.O.I., , Redihot Electricals Vs. Union of India and Others, , 1989 ELT 279 Orient Enterprises v. Collector of Customs CEAT New Delhi, India Cements Ltd. Vs. Collector of Central Excise, , Shri Virendra Amritlal Thakkar Vs. Union of India (UOI), , Union of India Vs. Coromandel Prodorite Ltd., . Sandoz (India) Ltd. Vs. Union of India, , Prestige Engineering (India) Pvt. Ltd. Vs. Union of India (UOI), , Rubber Products Ltd. Vs. Union of India, and Kirloskar Cummins Ltd. Vs. Union of India, urged that the claim of the petitioner towards interest is not only genuine but bonafide and legal as well. According to learned counsel, the decisions cited by him supra, were also dealing with the same issue which is involved in this case and in all these cases the High Court and in some cases Supreme Court was pleased to award interest to the assessee. It was urged that writ does lie even in cases where only a claim of interest is made. It was also urged that in the peculiar facts of this case, where, the amount of duty was not payable since inception but was paid under protest, a claim for interest is well founded in its writ jurisdiction.

In substance, therefore, the submission of learned counsel for the petitioner on the strength of the cases cited supra was that this is a fit case where this Court in exercise of its writ jurisdiction under Articles 226 and 227 of Constitution can issue or/and should issue a writ of mandamus and grant a relief of payment of interest in the form of a money decree for Rs. 1,37,77,570/-.

In reply, learned counsel for the respondent Shri Neema, Standing counsel for Union of India placing strong reliance on a recent decision rendered by Supreme Court in the case of Union of India and Others Vs. M/s. Orient Enterprises and Another, urged that the issue involved in this petition no longer remains resintegra and infact stands concluded by this decision against the petitioner. Learned counsel urged that all the decisions cited by the learned counsel for the petitioner, whether of High Court or Supreme Court are prior to this decision Union of India and Others Vs. M/s. Orient Enterprises and Another, and therefore they are of no assistance to the petitioner. According to learned counsel all these decisions stands overruled on this issue by subsequent decision. It was urged that facts of the present case and that of one in the case of Orient Enterprises (supra) are identical in nature and hence law laid down by the Supreme Court squarely applies and concludes the controversy against the petitioner. In substance, therefore, the submission of learned counsel for the respondent on the basis of this decision was that writ tiled by petitioner under Article 226 of Constitution for claiming interest is not maintainable and has to be dismissed accordingly.

The foremost question that falls for consideration in this writ is whether a writ petition under Article 226 of the Constitution of India seeking the relief of payment of interest on delayed refund of the amount paid by the petitioner (assessee) towards the custom duty under protest is maintainable?

Having heard the learned counsel for the parties and having analysied the entire senario in the context of the cases cited at the bar and the question posed, I am inclined to accept the submission of learned counsel for the respondent. In my opinion, the controversy involved in this writ is squarely covered by the decision of Supreme Court in the case of Orient Enterprises supra. In that case also the writ was filed claiming interest only on the delayed refund of the duty paid by the assessee towards custom duty. Indeed, precisely the question posed by their Lordships of Supreme Court for the decision was this:-

"The common question that falls for consideration in these appeals is whether a writ petition under Article 226 of Constitution of India seeking the relief of payment of interest on delayed refund of the amount paid by the assessee towards the custom duty, redemption, fine and penalty under the Custom Act was maintainable?

After posing the aforesaid question, their Lordships then examined the issue in the context of earlier decision of Apex Court and eventually held that no writ lies in a case of this nature - namely where the petitioner (assessee) has only claimed a relief of interest by way of mandamus. This is what their Lordship ruled:-

"The Court has emphasised that there was no legal right in the appellant who had filed the writ petition to claim refund under the relevant statute.

In the present case also till the insertion of Section 27A in the Act by Act 22 of 1995 there was no right entitling payment of interest on delayed refund under the Act. Such a right was conferred for the first time by the said provisions. Act 22 of 1995 also inserted Section 28AA which provides for payment of interest on delayed payment of duty by a person who is liable to pay the duty. Thus at relevant time there was no statutory right entitling the respondent to payment of interest on delayed refund and the writ petition filed by them was not for the inforcement of a legal right available to them under any statute. The claim for interest was in the nature of compensation for wrongful retention by the appellants of money that was collected from the respondents by way of customs duty, redemption fine and penalty. In view of the law laid down by this Court in Suganmal Vs. State of Madhya Pradesh and Others, a writ petition seeking the relief of payment of interest on delayed refund of the amount so collected could not, in our opinion be maintained. The decisions on which the reliance has been made by Shri Rawal were cases where the legality of the orders requiring payment of tax or duty were challenged and the High Court in exercise of its jurisdiction under Article 226 of the Constitution, while setting aside the said orders has directed the refund of the amount so Collected with interest. The direction or payment of interest in these cases was by way of consequential relief alongwith the main relief of setting aside the order imposing the tax or duty. Those cases stand on a different footing and have no application to the present case. The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and the writ petition filed by the respondents before the High Court is dismissed. No order as to costs.

While dealing with Civil Appeal No. 3374 of 91 we have held that a writ petition seeking relief of interest in respect of the amount deposited to wards redemption charges under an adjudication order which amount had been refunded after the said order was set aside could not be maintained under Article 226 of Constitution of India. For the reasons given in the said judgment the impugned judgment of the High Court can not be sustained and has to be set aside. The appeal is, therefore, allowed. The impugned judgment of the High Court is set aside and the writ petition filed by the respondent is dismissed. No order as to costs."

In the light of an authoratative pronouncement of Supreme Court on an identical issue, I have no hesitation in dismissing this writ as not maintainable for the simple reason that this writ is also for claiming only an interest on delayed refund of excise duty. The submission of learned counsel for the petitioner was that the decision rendered by the Supreme Court in the case of Orient Enterprises supra is per incurium because according to learned counsel earlier decisions of Supreme Court on this issue where interest was awarded were rendered by larger Bench and secondly, those decisions still hold the filed. I do not agree to this submission. The cases on which reliance was placed by learned counsel for the petitioner was Elpro International Ltd. Vs. Joint Secretary, Govt. of India, Ministry of Finance and Others, . Perusal of these two decisions clearly show that firstly these two decisions were rendered by Bench of two Hon''ble Judges and secondly, these decisions turned on their own facts. So far as the case reported in Elpro International Ltd. Vs. Joint Secretary, Govt. of India, Ministry of Finance and Others, was concerned, it was a case where petition was filed in High Court questioning the validity of the levy of excise on certain items manufactured by the assessee. The issue was then decided in favour of assessee by the High Court. When the matter went to Supreme Court at the instance of department, their Lordships while granting leave to appeal imposed a condition that it will be open for the assessee to claim interest if the appeal filed by Union of India is eventually dismissed. It is in this context when the appeal filed by Union of India was ultimately dismissed by the Supreme Court, their Lordships then gave effect to their interim order and allowed some interest. This decision can not be therefore cited as an authority for the proposition which Supreme Court posed in the case of Orient Enterprises. In other words, the decision turned on its own facts. The same is the situation with other case cited i.e. 1989 (41) ELT 338 (SC). This was also a case where a claim was made by the assessee before the departmental authorities for refund of excise duty. So the issue before the authorities was whether assessee is entitled for refund or not? It was being contested by the department that the claim of assessee for refund is barred. It is this issue which went upto the Supreme Court at the instance of assessee. While allowing the claim of refund, their Lordships passed a consequential order of paying interest. As observed supra, this case was also decided on its facts. Indeed this type of case was also cited in the case of Orient Enterprises (supra) and that was distinguished by their Lordships holding that a direction to pay interest as a consequential relief stand on a different footing. To quote the wording of their Lordship in para 7 this is how it was observed:--

"The direction for payment of interest in these cases was by way of consequential relief along with the main relief of setting aside the order imposing the tax or duty. Those cases stand on a different footing and have no application to the present case."

The same reasoning applies to the case cited by petitioner for its distinction. So far another cases cited by the learned counsel for the petitioner which are mostly of various High Courts they need not be dealt with case wise as in my considered view all these cases no longer considered to be good law after the pronouncement of the decision of Supreme Court in the case of Orient Enterprises Case (Supra) and in any event, perusal of these cases also exhibit distinguishing features.

Since, admittedly, this is not a petition arising out of a claim of interest claimed on delayed refund made after the insertion of Section 11BB of Section 75 of the Finance Act, 1995 (22 of 1995) in the Act, no benefit can be extended to petitioner of this newly inserted Section which has a prospective operation.

In view of aforesaid discussion, I do not find any merit in this writ. It is accordingly dismissed as not maintainable.

No costs, Security amount, if deposited by the petitioner be refunded.