REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6823 OF 2010

RANBAXY LABORATORIES LTD. — APPELLANT

VERSUS

UNION OF INDIA & ORS. — RESPONDENTS

WITH  

CIVIL APPEAL NO. 7637 OF 2009

AND

CIVIL APPEAL NO. 3088 OF 2010

JUDGMENT

D.K. JAIN, J.:

1. The  challenge  in  this  batch  of  appeals  is  to  the  final  

judgments and orders delivered by the High Court of Delhi in  

W.P.  No.13940/2009  and  the  High  Court  of  Judicature  at  

Bombay in Central  Excise Appeal Nos.163/2007 and 124 of  

2008.  The core issue which confronts us in all these appeals  

relates to the question of commencement of the period  for  

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the purpose of payment of  interest,  on delayed refunds,  in  

terms of Section 11BB of the Central  Excise Act,  1944  (for  

short  “the  Act”).    In  short,  the  question  is  whether  the  

liability of the revenue to pay interest under Section 11BB of  

the Act commences from the date of expiry of three months  

from the date of receipt of application for refund or on the  

expiry of the said period from the date on which the order of  

refund is made?

2. As aforesaid, in all these appeals the question in issue being  

the  same,  these  are  being  disposed  of  by  this  common  

judgment. However, in order to appreciate the controversy in  

its proper perspective, a few facts from C.A. No. 6823 of 2010  

may be noted. These are as follows:

The  appellant  filed  certain  claims  for  rebate  of  duty,  

amounting  to  Rs.4,84,52,227/-  between  April  and  May  2003.  

However,  the Assistant  Commissioner  of  Central  Excise,  vide  

order dated 23rd June 2004, rejected the claim.  Aggrieved, the  

appellant  filed  an  appeal  before  the  Commissioner,  Central  

Excise (Appeals), who by his order dated 30th September 2004  

allowed  the  appeal  and  sanctioned  the  rebate  claim.  Being  

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aggrieved by the said order, the revenue filed an appeal before  

the Joint  Secretary,  Government  of  India,  Ministry of  Finance,  

but  without any success.  Ultimately rebate was sanctioned on  

11th January, 2005. On 21st April 2005, appellant filed a claim for  

interest  under Section 11BB of  the Act on account of  delay in  

payment of rebate.  

3. A show cause notice was issued to the appellant on 5 th July  

2005,  proposing  to  reject  their  claim  for  interest  on  the  

ground that rebate had been sanctioned to them within three  

months of the receipt of order of the Commissioner (Appeals)  

dated  30th September, 2004. Upon consideration of the reply  

submitted by the appellant, relying on Explanation to Section  

11BB  of  the  Act,  the  Assistant  Commissioner  rejected  the  

claim.

4. Against the said order, the appellant filed an appeal before  

the  Commissioner  (Appeals).  The  Commissioner  (Appeals)  

allowed the appeal and directed the Assistant Commissioner  

to compute and pay the interest to the appellant. Aggrieved  

by  the  said  direction,  the  Assistant  Commissioner  filed  an  

appeal before the Customs, Excise and Service Tax Appellate  

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Tribunal (for short ‘the Tribunal’). However, the appeal was  

dismissed by the Tribunal on the ground that it did not have  

jurisdiction to deal with a rebate claim.  Feeling aggrieved,  

the  Assistant  Commissioner  filed  a  revision  application  

before the Joint Secretary, Ministry of Finance, Govt. of India  

who vide his order dated 30th July 2009 set aside the order  

passed  by  the  Commissioner  (Appeals)  and  held  that  the  

appellant was not entitled to interest under Section 11BB of  

the Act.

5.  Being dissatisfied with the said order, the appellant filed a  

writ  petition  in  the  High  Court  of  Delhi.  Relying  on  the  

decision of this Court in  Union of India & Anr.  Vs.  Shreeji   

Colour Chem Industries1, by the impugned order, the High  

Court has affirmed the decision of the revisional authority and  

held that the appellant is not entitled to interest under Section  

11BB of the Act.  Hence, in the lead case the assessee is in  

appeal before us.  However, in the connected appeals, the  

High  Court  of  Judicature  at  Bombay  having  affirmed  the  

decisions of the Tribunal, upholding the claim of the assessee  

1 (2008) 9 SCC 515

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for interest under Section 11BB of the Act, the revenue is the  

appellant.

6. Learned counsel appearing for the assessee contended that  

the language of Section 11BB of the Act is clear and admits  of  

no ambiguity, in as much as the revenue becomes liable to  

pay interest at the prescribed rate on refunds on the expiry of  

three months from the date of  receipt of  application under  

Section 11B(1) of the Act and such liability continues till the  

refund of duty.  Learned counsel urged that reliance on the  

decision  of  this  Court  in  Shreeji  Colour  Chem  Industries  

(supra)  by the Delhi  High Court  in  rejecting  the claim for  

interest is misplaced. It was contended that the said judgment  

deals  with  two  kinds  of  interest,  viz.  (i)  equitable  interest  

because of delayed refunds and (ii) statutory interest payable  

under  Section  11BB  of  the  Act.   According  to  the  learned  

counsel  in  terms  of  the  latter,  the  judgment  supports  the  

assessee’s claim, but the High Court has erroneously applied  

the  principle  laid  down  for  payment  of  equitable  interest.  

According to the learned counsel, the said decision clearly  

holds that an assessee is entitled to interest under the said  

Section  after  the  expiry  of  three  months  from  the  date  of  

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receipt of application for payment of refund.  In support of the  

claim, learned counsel commended us to the order passed  

by this Court in  Union of India Vs. U.P. Twiga Fiber Glass   

Ltd.2,  whereby the appeal preferred by the revenue against  

the decision of the Allahabad High Court has been dismissed.  

In the said decision, following the decision of the Rajasthan  

High  Court  in  J.K.  Cement  Works  Vs.  Assistant   

Commissioner of Central Excise & Customs3, the Allahabad  

High Court had held that the relevant date for the purpose of  

determining the liability to pay interest under Section 11BB of  

the Act  is  with reference to  the date  of  application,  laying  

claim for refund and not the actual determination of refund  

under Section 11B(2) of the Act. To bolster the claim, learned  

counsel placed strong reliance on a number of Circulars on  

the point, issued by the Department of Revenue, Ministry of  

Finance,  Govt.  of  India,  clarifying that  with the insertion of  

new Section  11BB of  the  Act,  the  department  had become  

liable  to  pay  interest  under  the  said  Section  if  the  refund  

applications  were  not  processed  within  three  months  from  

the date of receipt of refund applications.

2 2009 (243) E.L.T. A27 (S.C.). 3 2004 (170) E.L.T. 4

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7. Mr. Arijit Prasad, learned counsel appearing for the revenue,  

on the other hand, submitted that since in the present cases  

no refunds were sanctioned under Section 11B of the Act, the  

provisions of Section 11BB of the Act were not attracted.  In  

the alternative, it was submitted that the refund orders having  

been sanctioned within three months of the passing of orders  

by  the  appellate  authority,  interest  under  the  said  Section  

was not payable.

8. Before evaluating the rival contentions, it would be necessary  

to refer to the relevant provisions of the Act.  Section 11B of  

the Act deals with claims for refund of duty.  Relevant portion  

thereof reads as under:  

“11B.Claim  for  refund  of  duty.-(1)  Any  person  claiming refund of any duty of excise and interest, if  any, paid on such duty may make an application for  refund of such duty and interest if any, paid on 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  and interest, if any, paid on such duty  in  relation  to  which  such  refund  is  claimed  was  collected from or paid by him and the incidence of  

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such duty and interest if any, paid on 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  application  shall  be  deemed  to  have  been  made under this sub-section as amended by the Act  and the same shall be dealt with in accordance with  the  provisions  of  sub-section  (2)  as  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 and interest, if  any,  paid  on  such  duty  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  and  interest,  if  any,  paid  on  such  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  balance in the applicant’s current  

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account  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 and interest,  if  any, paid on such duty paid by the  manufacturer, if he had not passed  on the incidence of such duty and  interest, if any, paid on such duty  to any other person;

(e) the duty of  excise and interest,  if  any,  paid on such duty borne by  the buyer, if he had not passed on  the  incidence  of  such  duty  and  interest, if any, paid on such duty  to any other person;

(f) the duty of  excise and interest,  if  any,  paid on such duty 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 and interest, if any, paid on such duty has not  been passed on by the persons  concerned to  any  other person.

(3)  Notwithstanding  anything  to  the  contrary  contained  in  any  judgment,  decree,  order  or  direction of  the Appellate Tribunal  of  any Court  in  any  other  provision  of  this  Act  or  the  rules  made  thereunder  or  any other  law for  the time being in  

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force, no refund shall be made except as provided in  sub-section (2).

(4) ……………………………………………………….. (5) ……………………………………………………….”

Section 11BB, the pivotal provision, reads thus:

“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  per  cent  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.

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  11B,  the  order  passed  by  the  Commissioner (Appeals),  Appellate Tribunal  or,  as  the case may be, by the Court shall be deemed to be  

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an order passed under the said sub-section (2) for  the purposes of this section.”

9. It is manifest from the afore-extracted provisions that Section  

11BB of the Act comes into play only after an order for refund  

has been made under Section 11B of the Act.  Section 11BB of  

the  Act  lays  down  that  in  case  any  duty  paid  is  found  

refundable and if the duty is not refunded within a period of  

three months from the date of receipt of the application to be  

submitted  under  sub-section  (1)  of  Section  11B of  the  Act,  

then the applicant shall be paid interest at such rate, as may  

be fixed by the Central Government, on expiry of a period of  

three months from the date of receipt of the application. The  

Explanation  appearing  below  Proviso  to  Section  11BB  

introduces a deeming fiction that where the order for refund  

of duty is not made by the Assistant Commissioner of Central  

Excise or Deputy Commissioner of Central Excise but by an  

Appellate Authority or the Court, then for the purpose of this  

Section the order made by such higher Appellate Authority  

or by the Court shall be deemed to be an order made under  

sub-section (2) of Section 11B of the Act. It is clear that the  

Explanation has nothing to do with the postponement of the  

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date  from  which  interest  becomes  payable  under  Section  

11BB of the Act.  Manifestly, interest under Section 11BB of the  

Act becomes payable,  if  on an expiry of a period of  three  

months from the date of receipt of the application for refund,  

the  amount  claimed  is  still  not  refunded.   Thus,  the  only  

interpretation of Section 11BB that  can be arrived at is that  

interest  under  the  said  Section  becomes  payable  on  the  

expiry of a period of three months from the date of receipt of  

the application under Sub-section (1) of Section 11B of the Act  

and that the said Explanation does not have any bearing or  

connection with the date from which interest  under Section  

11BB of the Act becomes payable.

10. It is a well settled proposition of law that a fiscal legislation  

has to be construed strictly and one has to look merely at  

what is said in the relevant provision; there is nothing to be  

read in; nothing to be implied and there is no room for any  

intendment.  (See: Cape  Brandy  Syndicate  Vs.  Inland  

Revenue Commissioners4 and Ajmera Housing Corporation   

& Anr. Vs. Commissioner of Income Tax5.).

4 [1921] 1 K.B. 64 5 (2010) 8 SCC 739

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11. At this  juncture,  it  would be apposite  to extract  a  Circular  

dated 1st October 2002, issued by the Central Board of Excise  

&  Customs,  New  Delhi,  wherein  referring  to  its  earlier  

Circular dated 2nd June 1998, whereby a direction was issued  

to  fix  responsibility  for  not  disposing of  the  refund/rebate  

claims  within  three  months  from  the  date  of  receipt  of  

application, the Board has reiterated its earlier stand on the  

applicability  of  Section  11BB  of  the  Act.   Significantly,  the  

Board has stressed that the provisions of Section 11BB of the  

Act are attracted “automatically” for any refund sanctioned  

beyond a period of three months.  The Circular reads thus:

“Circular No.670/61/2002-CX, dated 1-10-2002

F.No.268/51/2002-CX.8

Government of India

Ministry of Finance (Department of Revenue)  

Central Board of Excise & Customs, New Delhi

Subject  :  Non-payment  of  interest  in  refund/rebate  cases  which are  sanctioned beyond three months of filing – regarding  

I am directed to invite your attention to provisions of  section 11BB of Central Excise Act, 1944 that wherever the  refund/rebate claim is  sanctioned beyond the prescribed  period of  three months  of  filing of  the claim,  the interest  thereon shall be paid to the applicant at the notified rate.  Board  has  been  receiving  a  large  number  of  representations from claimants  to say that  interest  due to  them on sanction of refund/rebate claims beyond a period  

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of  three months  has  not  been granted by Central  Excise  formations.  On perusal of the reports received from field  formations on such representations, it  has been observed  that in majority of the cases, no reason is cited.  Wherever  reasons are given, these are found to be very vague and  unconvincing.   In  one  case  of  consequential  refund,  the  jurisdictional Central Excise officers had taken the view that  since the Tribunal had in its order not directed for payment  of interest, no interest needs to be paid.

2. In this connection, Board would like to stress that the  provisions of section 11BB of Central Excise Act, 1944 are  attracted automatically for any refund sanctioned beyond a  period of three months.  The jurisdictional Central Excise  Officers are not required to wait for instructions from any  superior officers or to look for instructions in the orders of  higher  appellate  authority  for  grant  of  interest.  Simultaneously,  Board  would  like  to  draw  attention  to  Circular No.398/31/98-CX, dated 2-6-98 [1998 (100) E.L.T.  T16] wherein Board has directed that responsibility should  be fixed for not disposing of the refund/rebate claims within  three  months  from  the  date  of  receipt  of  application.  Accordingly,  jurisdictional  Commissioners  may  devise  a  suitable monitoring mechanism to ensure timely disposal of  refund/rebate claims.  Whereas all necessary action should  be  taken  to  ensure  that  no  interest  liability  is  attracted,  should  the  liability  arise,  the  legal  provision  for  the  payment of interest should be scrupulously followed.”

(Emphasis supplied)

12. Thus, ever since Section 11BB was inserted in the Act with  

effect from 26th May 1995, the department has maintained a  

consistent  stand  about  its  interpretation.   Explaining  the  

intent,  import  and  the  manner  in  which  it  is  to  be  

implemented,  the  Circulars  clearly  state  that  the  relevant  

date in this regard is the expiry of three months from the date  

of receipt of the application under Section 11B(1) of the Act.  

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13. We, thus find substance in the contention of learned counsel  

for the assessee that in fact the issue stands concluded by the  

decision of this Court in U.P. Twiga Fiber Glass Ltd. (supra).  

In the said case, while dismissing the special leave petition  

filed by the revenue and putting its seal of approval on the  

decision  of  the  Allahabad  High  Court,  this  Court  had  

observed as under:

“Heard both the parties.

In our view the law laid down by the Rajasthan  High Court succinctly in the case of  J.K. Cement Works  v.  Assistant  Commissioner of  Central  Excise & Customs  reported in 2004 (170) E.L.T. 4 vide Para 33:  

“A close reading of Section 11BB, which  now governs the question relating to payment  of  interest  on  belated  payment  of  interest,  makes  it  clear  that  relevant  date  for  the  purpose  of  determining  the  liability  to  pay  interest  is  not  the  determination  under  sub- section (2) of Section 11B to refund the amount  to the applicant and not to be transferred to the  Consumer Welfare Fund but the relevant date  is to be determined with reference to date of  application  laying claim to  refund.   The non- payment  of  refund  to  the  applicant  claimant  within  three  months  from  the  date  of  such  application or in the case governed by proviso  to  Section  11BB,  non-payment  within  three  months from the date of the commencement of  Section  11BB  brings  in  the  starting  point  of  liability  to  pay  interest,  notwithstanding  the  date on which decision has been rendered by  the  competent  authority  as  to  whether  the  

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amount is to be transferred to Welfare Fund or  to  be  paid  to  the  applicant  needs  no  interference.”

The  special  leave  petition  is  dismissed.   No  costs.”

14. At this stage, reference may be made to the decision of this  

Court  in  Shreeji  Colour  Chem  Industries (supra),  relied  

upon  by  the  Delhi  High  Court.   It  is  evident  from  a  bare  

reading of the decision that insofar as the reckoning of the  

period for the purpose of payment of interest under Section  

11BB of the Act is concerned, emphasis has been laid on the  

date of receipt of application for refund.  In that case, having  

noted that application by the assessee requesting for refund,  

was filed before the Assistant Commissioner on 12th January  

2004, the Court directed payment of Statutory interest under  

the said Section from 12th April 2004 i.e. after the expiry of a  

period  of  three  months  from  the  date  of  receipt  of  the  

application.   Thus,  the  said  decision  is  of  no  avail  to  the  

revenue.

15. In  view  of  the  above  analysis,  our  answer  to  the  

question formulated in para (1) supra is that the liability of  

the  revenue to  pay interest  under  Section  11BB of  the Act  

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commences from the date of expiry of three months from the  

date of receipt of application for refund under Section 11B(1)  

of the Act and not on the expiry of the said period from the  

date on which order of refund is made.

16. As  a  sequitur,  C.A.No.6823  of  2010,  filed  by  the  

assessee is allowed and C.A.Nos.7637/2009 and 3088/2010,  

preferred by the revenue are dismissed.  The jurisdictional  

Excise officers  shall  now determine the amount  of  interest  

payable  to  the  assessees  in  these  appeals,  under  Section  

11BB of the Act, on the basis of the legal position, explained  

above.  The amount(s), if any, so worked out, shall be paid  

within eight weeks from today.

17. However, on the facts and in the circumstances of the  

cases, there will be no order as to costs.  

. ………………….…………….….J.        (D.K. JAIN)

………………………………….….J.      (ANIL R. DAVE)

NEW DELHI; OCTOBER 21, 2011.

R.S.

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