1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.483 OF 2008 Swaraj Mazda Limited. ...Petitioner. vs. 1. The Union of India & ors. ...Respondents. --- Mr.Sreedharan with Prakash Shah i/b. M/s.PDS Legal for Petitioner. Mr.R.V.Desai, Sr.Advocate with Mrs.N.Masurkar, for Respondents. CORAM: D.K.DESHMUKH & V.C.DAGA, JJ. DATED: 10nd July, 2008. 2 P.C.:- 1. By this petition, the petitioner challenges the order passed by the Joint Secretary (RA) to Government of India, rejecting the revision application filed by the petitioner herein. The facts which are relevant and material for deciding this petition are that the petitioner is a company incorporated under the Companies Act and is engaged in manufacture of motor vehicles. The vehicles are subject to duty of excise. According to the petitioner, it used to send the duty paid chassis fitted with engines manufactured by it to independent body builders for fabricating body on those vehicles. The activity of building body on the duty paid chassis amounts to manufacture. Hence, the duty is again paid on the body built vehicles when the vehicles fitted with the body are cleared from the premises of the body builders. Thus, when the vehicles are cleared from the premises of the body builders, the vehicles suffer duty at two stages viz. 3 At the stage of chassis and at the stage of fitting the body. According to the petitioner, the petitioner had cleared the body built vehicles on payment of appropriate excise duty for home consumption as well as for export under claim of rebate. The export of the body built vehicles under the claim of rebate was effected from the factories of the body builders and not from the factory of the petitioner. According to the petitioner, it filed 47 claims of rebate/refund against the exports made during the period from July,1994 to January,1997. The total amount claimed as refund was Rs.1,17,42,752/-. In respect of 29 out 47 refund claims, the department issued show cause notices to the petitioner proposing to reject the refund claims. The reason stated in the show cause notices for rejection of refund claims was that the petitioner had not exported fully built motor vehicles directly from their factory and that the petitioner has manufactured only the chassis of motor vehicles and not complete motor vehicles in their factory. The Assistant Commissioner of Central Excise adjudicated the show cause notices by his order dated 11.3.1996 4 and rejected the claims for refund on two grounds. An appeal was filed by the petitioner against that order. The order was set aside and the matter was remanded back for denovo adjudication in the light of the circular issued by CBEC dated 30.1.1997. In the circular it was clarified that where the exporter submits proof that the goods have actually been exported, the condition of export being made directly from the factory/ warehouse of the manufacturer is deemed to have been waived. On remand the matter was again heard by the Assistant Commissioner who again by his order dated 10.7.1998 rejected the claims for refund. Feeling aggrieved by that order, the petitioner again filed appeal before the Commissioner (Appeals). That appeal was allowed by order dated 30.7.1999. The appellate authority again remanded the matter back to the Deputy Commissioner of Central Excise directing him to verify the documents and reconsider the claim. On remand again the proceedings were taken up by the Deputy Commissioner of Central Excise, who heard the petitioner and by order dated 19.11.1999 sanctioned the refund against all the 29 claims. The amount to be refunded was 5 Rs.82,74,070/-. So far as the remaining 18 refund claims of the petitioner are concerned, it appears that because the proceedings in relation to 29 claims were going on, those claims were kept pending and no orders were passed on those claims. But after the refund was ordered against 29 claims by order dated 19.11.1999, various orders were passed from 26.12.2001 to 29.3.2003 sanctioning refund against those 18 claims also i.e. Rs.34,68,682/-. 2. Thereafter, the petitioner wrote letters to the authorities claiming interest under the provisions of Section 11BB of the Central Excise Act. There was no response to those letters for a long time, but ultimately by letter dated 1.1.2004 the petitioner was informed that the petitioner is not entitled to payment of any interest on the refund claim under Section 11BB of the Act. Against that letter, an appeal was filed before the Commissioner, Central Excise (Appeals). That appeal was rejected by order dated 20.12.2005, and therefore, a revision was filed before the Joint Secretary, Government of India, Ministry of Finance, Department of Revenue. 6 That revision has been rejected by the order which is impugned in this petition. The Joint Secretary has held that the applications for refunds initially filed by the petitioner were incomplete and that those applications got completed only after the order was passed in the appeal dated 30.7.1999, and that payment of refund has been made within three months thereof, and therefore, no interest is payable to the petitioner. 3. The learned Counsel appearing for the petitioner submits that the applications for refund under Section 11B of the Act is required to be made in the prescribed form. The petitioner had made such applications in the prescribed form. Admittedly on that application, an order for refund has been made. The learned Counsel submits that in the order passed by the Commissioner (Appeals) dated 30.7.1999 or in the order of the Deputy Commissioner who passed the final order after remand, sanctioning refund, there is no finding that the applications of the petitioner filed for refund were incomplete. The learned Counsel submits that the applications filed by the 7 petitioner furnished all the details required to be given by the Rules and it had also submitted all the documents which are required to be filed with the applications, and therefore, according to the learned Counsel, the petitioner was entitled to interest in terms of the provisions of Section 11BB of the Act. 4. The learned Counsel appearing for respondents on the other hand submits that the application for refund that has to be made should be such application as can be granted by the authority. The learned Counsel submits that it is clear from the order passed by the Commissioner (Appeals) that the application was incomplete because the documents which were necessary for establishing the claims of the petitioner for refund were not produced alongwith the applications. According to the learned Counsel, the applications became complete applications only on the date on which the documents were produced after directions were issued by the Commissioner by his appellate order and the payment was made within the period of three months from the date the applications became complete. Therefore, according to the learned 8 Counsel, the petitioner is not entitled to claim any interest. With the help of the learned Counsel we have gone through the entire record. 5. Now, the first provision which is relevant for the purpose of deciding this petition is Section 11B of the Central Excise Act, it reads as under:- “Section 11B. Claim for refund of duty:- (1) any person claiming refund of any duty of excise may make an application for refund of 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 in relation to which such refund is claimed was collected from, or paid by, him and the incidence of 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 9 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 provisions of sub-section (2) of 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 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 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 10 balance in the applicant's account current 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 paid by the manufacturer, if he had not passed on the incidence of such duty to any other person; (e) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person; (f) the duty of excise 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 has not been passed on by the persons concerned to any other person.” Perusal of the above quoted provision makes it clear that if any person desires to claim refund of any excise duty, he has to make an application for refund of such duty to the Assistant Commissioner of Central 11 Excise or the Deputy Commissioner of Central Excise within the time prescribed by that section and that application is to be made “in the 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 in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person. Following things are clear from the perusal of the provision of sub- section (1) of Section 11B of the Act viz. (a) the application has to be made in the form which is prescribed; (b) alongwith the application documents are to be submitted for establishing two aspects viz. (i) that excise duty of which refund is claimed was actually paid, and (ii) that the burden has not been passed on. The rule making authority has framed Rule 173S which 12 reads as under:- “RULE 173S. Application for refund of duty – (1) Any person claiming refund of any duty of excise shall make an application in duplicate, for refund of such duty in the proper form to be [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] having jurisdiction over the factory of manufacture. (2) An application for refund shall be made in accordance with the provisions of section 11B of Act.]” Perusal of this Rule shows that all that the rule requires is that an application is to be made in duplicate and is to be made in proper form. Form-R is prescribed by the Rule for making an application for refund of excise duty. Perusal of that form shows that in the application, the applicant has to mention the amount of which refund is claimed, he has to mention the ground on which he claims refund and he has to enclose documents in support of the claim. He has also to give details of the Challan and the date showing payment of duty. Perusal of the provisions of Section 12A of the Act shows that they also relate 13 to duty paid on the goods. Perusal of the provisions of sub-section (2) of Section 11B of the Act shows that after receipt of the application, the Assistant Commissioner has to hold inquiry to satisfy himself that the duty has been paid by the applicant and that it is refundable and has to make an order accordingly. In the present case, the refund application of the petitioner was first rejected by the Assistant Commissioner by order dated 18.3.1996 on two grounds viz. (i) that the condition of the goods being exported directly from the factory or warehouse of the manufacturer stipulated in notification no.41/94 in respect of the claims filed thereafter, has not been met, and (ii) the description of the goods cleared on payment of duty from the factory does not tally with that of the goods exported. This order was set aside in the appeal by order dated 6.6.1997. The Assistant Commissioner was directed to reconsider the matter in the light of Boards circular dated 30.1.1997. After the remand, the Assistant Commissioner again disallowed the refund applications again on two reasons viz. (i) that the duty liability on buses was 14 not discharged at the time of export and (ii) that the fabrication of body on chassis should have been regulated under Rule 191B and the notification issued under Rule 12(i)(b). So far as the second ground given by the Assistant Commissioner this time is concerned, the Commissioner (Appeals) in his order dated 30.7.1999 in paragraph (7) has recorded finding that in view of the earlier remand order, the Assistant Commissioner could not have rejected the claim for refund on the second ground. 6. Perusal of the order of the Commissioner (Appeals) dated 30.7.1999 shows that in paragraph (9) a clear finding has been recorded that “the present case would therefore, be covered within the transitory concession allowed by the Board in their circular dated 30.1.97.” By the earlier order of remand dated 6.6.1997, the Commissioner (Appeals) had directed the Assistant Commissioner to examine the case in the light of the Board circular dated 30.1.97 and now the appellate authority recorded a clear finding that the case of the petitioner for refund was covered fully by the circular dated 30.1.1997. 15 Then in paragraph (9) in the appeal order it is observed thus:- “Accordingly as long as the chassis and engine Nos. referred in the original duty paying documents for the said goods correspond with those referred in the corresponding AR4, shipping bill and the bill of lading including export invoice, it can be reasonably considered that subject duty paid goods had been duly exported to satisfy the authorities in sanction of rebate.” Now it is clear from these observations that the only inquiry that was to be made was that the same chassis and engine number which is mentioned in the duty paying documents when the duty was paid on chassis and engine is mentioned in the documents by which the bus was exported. In short, the inquiry that was to be made was to compare the number of chassis mentioned in the duty paying documents when the chassis went out of the factory of the petitioner with the number mentioned in the documents when the bus was exported. Then in the appeal order it has been observed thus:- 16 “However, I find that while it is accepted by the Assistant Commissioner that the exporter had manufactured and cleared chassis fitted with engine for body building under Chapter 8707 on payment of duty and that duties were also discharged on body building activity and the goods subsequently exported, there is no indication that any correlation of the goods, subjected to body building thereon, were made with reference to the unit chassis no. and engine no. available on these goods.” It is, thus, clear that the appellate authority found that the Assistant Commissioner had found that the duty was paid when the chassis was cleared from the factory of the petitioner and the duty was paid also after completion of the body building on that chassis. The appellate authority has found that, however, no attempt was made to correlate the chassis number mentioned in the duty paying document in the factory of the petitioner with the number of chassis mentioned in the document whereby the duty was paid on the bus and therefore, thereafter the appellate authority observed thus:- 17 “As long as the duty paying documents issued, evidencing payment of duties under Chapter sub-heading 8707 of the schedule, by the body builder specifically refer to the chassis and engine numbers, and the same correspond with the numbers referred in the appellants invoice for chassis/engine submitted along with the rebate claim, the appellants as exporter of the said goods would be eligible for benefit of rebate both in respect of duty as paid on the chassis fitted with engine as also on the body building.” It is clear from the above observations that when the matter was before the Assistant Commissioner, the duty paying documents about the duty as paid on the chassis fitted with engine and the duty paying documents about the duty as paid after the body building of buses were available on record. The only inquiry that was to be made after the remand of the matter was to correlate chassis numbers mentioned in those two sets of documents. The fact that those documents were available on record already, is also clear from the following observations found in 18 paragraph 11 of the appeal order:- “It is their claim that the payments of duties at both stages of clearances of chassis and later on body building are established from the duty payment documents and the records maintained at the two places with references to the peculiar chassis and engine numbers. These establish both the duties paid at the stage of clearance of chassis with engine from the appellants unit under Chapter sub-heading 8706 and also duties paid on body building under Chapter sub-heading 8707 by the body building unit." It is nobody's case that the document showing payment of duties on the chassis and engine and the document showing payment of duties on the bus were not produced with the application. The appellate authority directed production of a certificate from the jurisdictional Central Excise authorities certifying that the duties have been paid at both the times. 7. From the careful consideration of the order of the appellate authority, it is clear that the appellate authority did not find that the documents 19 necessary for granting of refund were not filed alongwith the application. On the contrary, the appeal order shows that two necessary documents showing (i) that the duty has been paid on the chassis and (ii) that the duty has also been paid on the buses, were produced on record and the finding in favour of the petitioner on both these aspects are recorded by the Assistant Commissioner. The only thing that was not done and the appellate authority had directed to be done was correlation of those documents to find out the identity of the chassis numbers and the proceedings were remanded by the appellate authority only for establishing correlation. Thus, we find that the findings recorded by the Revisional authority in the impugned order that the applications submitted by the petitioner for refund were not complete and were completed only on production of certificate pursuant to the appeal order, is unsustainable. 8. Now it will be necessary to see the provisions of section 11BB of the Act which reads as under:- 20 “Section 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 percent] 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. 21 Explanation.- where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal [National Tax Tribunal] or any court against an order of the [Assistant Commissioner of Central Excise or Deputy 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 an order passed under the said sub- section (2) for the purposes of this section.]” Perusal of the above provision shows that if any duty recovered is found to be refundable still the payment is not made within a period of three months from the receipt of application for refund then interest is liable to be paid. Perusal of the above provision makes it clear that liability to pay interest arises on expiry of period of three months “from the date of receipt of application under sub-section (1) of Section 11B.” We have already referred to above as to how application under section 11B is to be 22 made, therefore, unless a finding is recorded that the application that was filed by the petitioner under Section 11B cannot be termed as an application made under section 11B, liability to pay interest after expiry of period of three months from the date of receipt of that application cannot be denied. Firstly there is no such finding recorded in the order impugned and secondly on close examination of the order of the appellate authority dated 30.7.1999 we find that it cannot be said that the application filed by the petitioner for refund was found to be so incomplete that it would not be termed as an application at all. The revisional authority in the order impugned has observed that the appellate authority found that a certificate from the authority was found necessary for establishing correlation by the appellate authority. Perusal of the order of the appellate authority does not show that production of the certificate was necessary for establishing correlation. Correlation was to be established by looking at the chassis number in the duty paying document executed at the time of payment of duty on the chassis with engine and the chassis number 23 mentioned in the duty paying document executed at the time of payment of duty on the bus. The documents evidencing payment of duty at both the occasions were already available on record because it is only on the basis of those two documents that the Assistant Commissioner had recorded finding that the duty has been paid on both the occasions. It is, thus, clear that the correlation could be established only on the basis of those two documents which were on record. A certificate was required to be submitted by the appellate authority only to reinforce