Case: Union Of India &amp; Ors. Etc Vs. Barmalt (India) Limited, Gurgaon Etc

1. In this appeal preferred against the judgment of the Delhi High Court, two questions arise, viz., whether the malt and malt extract produced by the respondent, Barmalt (India) Private Limited (Barmalt), falls within the expressionin Exemption Notification No. 55 of 1975 dated March 1, 1975 and whether the respondent is entitled to refund ofthe excess duty paid by him pending the decision of the High Court. The Assistant Collector took the view that malt and malt extract cannot be treated as food products and, therefore, not entitled to the benefit of the said Notification. On a writ petition being filed, the Delhi High Court upheld the respondents plea and also held that it is entitled to the benefit of the said Exemption Notification. On the second issue, the Delhi High Court has overruled the Revenues plea based on the theory of unjust enrichment. When this appeal came up for hearing on an earlier date, we held that the High Court was right in saying that malt and malt extract do qualify as food products and, therefore, the respondent has been rightly held entitled to the benefit of the aforesaid Notification. But then the question arose about the respondents right to refund. On this aspect, we posted the matter for further hearing because of the peculiar situation arising in this matter, to which we shall now advert.The respondent, Barmalt, is one of the three major producers of malt and malt extract in the country. The other two being Malt Company of India Limited and A.K. Malt (Private) Limited. The malt and malt extract produced by these units is purchased by certain specified industries only. The industries purchasing malt and malt extract fall under two categories, (i) industries engaged in the manufacture of beverages, like Bournvita and Horlicks etc., and (ii) the breweries and distilleries engaged in manufacturing Indian Made Foreign Liqours. One of the category (i) industries is H.M.M. Limited, now known as Smith Kline Beecham Consumer Health Care Limited, respondent in the connected appeal. Like other purchasers in category (i), H.M.M. Limited took proforma credit of the duty paid by it on the purchase of malt/malt extract in terms of Notification No. 201 of 1979, which was in force at the relevant time. Other purchasers in category (i) also did the same. [So far as category (ii) purchasers, i.e., distilleries and breweries are concerned, Mr. Salve says that they were not entitled to and did not avail of any proforma credit for the duty paid by them when they purchased malt/malt extract from the respondent or the other two units, as the case may be.] But when the Delhi High Court held, under the judgment impugned herein, that no duty was payable on the clearance/removal of malt and malt extract by virtue of Exemption Notification No. 55 of 1975, the Revenue was obliged to refund the duty collected back to Barmalt. Having done that, the Revenue served notices upon the purchasers of malt and malt extract [H.M.M. Limited and others] calling upon them to reverse the proforma credit taken by them and pay or adjust the duty payable accordingly. This put the purchasers like H.M.M. Limited in peril. They had already paid the duty [to Barmalt and other two producers] while purchasing the malt/malt extract and now they were being asked to pay the same duty over again to the State on the ground that the State has refunded the duty to Barmalt [and the other two producers] pursuant to the judgment of the High Court. When this demand was raised against H.M.M. Limited, it disputed the same on several grounds including limitation and the Tribunal appears to have accepted its claim only on the ground of limitation. [As already stated, there are other purchasers, like H.M.M. Limited, falling in the first category mentioned above.]

Court's reasoning:
The solution suggested by Mr. Salve sounded attractive when suggested and accordingly notices were directed to the other two producers of malt and malt extract, viz., Malt Company of India Limited and A.K. Malt (Private) Limited––and then we discovered the several difficulties in the way of accepting the suggestion of Mr. Salve. They are: (a) While the Revenue has filed the appeal against the decision of the Delhi High Court in favour of Barmalt [against the order impugned herein], no appeals have been preferred by the Revenue against similar orders in favour of other two producers aforesaid. Those two producers have taken the refund and the orders in their favour are said to have become final. Their Counsel stated that they are not willing to abide by or implement the said suggestion––or formula, if we can call it one––and that there is no reason why they should pay over the amounts which they have received by way of refund when the orders of refund in their favour have become final. (b) The purchasers like H.M.M. Limited have not purchased exclusively from Barmalt. They have purchased from all the three producers. The other purchasers are not before us. Only the H.M.M. Limited is before us. It is the respondent in connected appeal, viz., Civil Appeal Nos. 3387-88 of 1992. An undertaking has been filed on behalf of H.M.M. Limited stating that they are agreeable to the said formula provided the formula is applied uniformly to other two producers viz., Malt Company of India Limited and A.K. Malt (Private) Limited also.Faced with these difficulties, it was suggested by Mr. Lakshmi Kumaran and by Mr. Salve that if the other two producers, [Malt Company of India Limited and A.K. Malt (Private) Limited] refuse to abide by the said formula, this Court should, in the interest of justice, invoke its powers under Article 142 of the Constitution and direct them to abide by and implement the said formula. We have considered the said suggestion but we think that it would not be feasible or possible to work out the said formula in the facts and circumstances brought to our notice. Neither the other two producers are before us nor are all the purchasers before us. It would be an endless and a highly complicated exercise which we do not think advisable to undertake. In the circumstances, we have no alternative but to dispose of the appeal as they