Bombay High Court
Shelf Drilling International vs The Union Of India And Ors on 16 September, 2016
Bench: S.C. Dharmadhikari
wp.7808.16. judgment.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.7808 OF 2016
Shelf Drilling International Inc.
(Formerly known as Sedco Forex International
Drilling Inc.) ..Petitioner
Vs.
The Union of India through
the Secretary, Ministry of Finance
Department of Revenue, North Block,
New Delhi and Ors. ig ..Respondents
Mr. Prakash Shah a/w Mr. Anil Balani, for the Petitioner.
Mr. Pradeep S. Jetly, for the Respondents.
CORAM :- S. C. DHARMADHIKARI,J. &
B. P. COLABAWALLA, J.
Reserved On :- September 6, 2016.
Pronounced On :- September 16, 2016.
JUDGMENT :- [ Per B. P. Colabawalla, J ]
1. Rule. Respondents waive service. By consent of
parties, rule made returnable forthwith and heard finally.
2. By this Writ Petition filed under Article 226 of the
Constitution of India, the Petitioner challenges the validity and
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legality of the order in Original No. 211/DC/Gr VB/GM/2016-2017
dated 29th April, 2016 (for short the "impugned order") passed
by Respondent No.3 (for short the "Refunding Authority")
purporting to hold that the Petitioner is not entitled to any
interest on the refund granted to it, under the provisions of
Section 27A of the Customs Act, 1962. According to the
Petitioner, the impugned order is contrary to the order in Appeal
No.MUM-CUSTM-SMP-196/2015-16 dated 27th October, 2015,
passed by the Commissioner of Customs (Appeals), as well as the
order passed by this Court on 4th April, 2016 (and which is
annexed at Exh. "B" to the Petition).
3. The brief facts giving rise to the present controversy
are that, the Petitioner (formerly known as "Sedco Forex
International Drilling Inc.") had imported certain spares and
consumables etc for carrying out drilling operations on behalf of
ONGC on board the mobile offshore drilling unit (Jack Up Rig)
named F. G. McClintock. It is averred in the Petition that by
Notification No.21/2002-Cus dated 1st March, 2002 (for short the
"said Notification") the Central Government inter alia exempted
goods required in connection with petroleum operations
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undertaken under petroleum exploration licenses. It is not in
dispute before us that the spares and consumables imported by
the Petitioner are covered under the said Notification, subject to
the conditions set out therein. Condition No.29 of the said
Notification required the Petitioner, as a sub-contractor of ONGC,
to produce an "Essentiality Certificate" from the Directorate of
Hydrocarbons (for short the "DGH"), which would be issued only
on the recommendation of ONGC.
4. It is then stated that the Petitioner could not avail of
the exemption under the said Notification at the time of import,
for want of the Essentiality Certificate from the DGH as ONGC did
not issue any recommendation letters for issuance of the same.
Accordingly, for import of the said spares and consumables, the
Petitioner filed Bill of Entry No. 1744 dated 27th September, 2002
without claiming any benefit under the said Notification and paid
the applicable duty of Rs.1,89,15,549/- on 14th October, 2002 and
took clearance of the said goods.
5. Due to the persistent refusal on the part of ONGC to
issue the recommendatory letters required for issuance of the
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Essentiality Certificate by the DGH, the Petitioner approached the
Delhi High Court by filing Writ Petition No.7019 of 2002 inter alia
praying for directions (i) against ONGC to issue the
recommendatory letters and (ii) against the DGH to issue the
Essentiality Certificate. Be that as it may, pending disposal of this
Writ Petition before the Delhi High Court, on the recommendation
of ONGC, the DGH issued the Essentiality Certificate bearing
No.DGH/EC/ONGC/659/2003 dated 13th March, 2003. The said
Certificate was issued to the Deputy Commissioner of Customs.
Hence nothing survived in the Writ Petition and the same was
disposed of by the Delhi High Court.
6. Thereafter, the Petitioner filed a refund application on
4th April, 2003. It is the case of the Petitioner that
notwithstanding the fact that the Essentiality Certificate was
issued by the DGH, the Asst. Commissioner of Customs, vide his
letter dated 6th May, 2003 returned the refund application/claim
as premature for want of the Essentiality Certificate.
7. Thereafter, many years later, by their letter 20th June,
2011 (Exh. "G" to the Petition), the Petitioner brought to the
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notice of the revenue the order of the Delhi High Court passed in
Writ Petition 7019 of 2002 as well as the refund application filed
by them on 4th April, 2003. The Petitioner also enclosed a copy of
the Bill of Entry No. 1744 dated 27th September, 2002 and a copy
of the Essentiality Certificate dated 13th March, 2003. The
Petitioner submitted that instead of granting the refund in
compliance of the Delhi High Court order, the Asst. Commissioner
of Customs, vide his order dated 6th May, 2003 has wrongly
returned the refund application as being premature for want of
the Essentiality Certificate. The Petitioner stated that the
Essentiality Certificate was enclosed with the said refund
application (filed on 4th April, 2003) but for the sake of easy
reference, was again enclosing the same and requested the
authorities to sanction the refund due to them.
8. In reply thereto, the department wrote a letter dated
21st July, 2011, requesting the Petitioner to submit certain
documents, a list of which is set out in the impugned order (at
page 210 of the paper book). These documents were forwarded by
the Petitioner to the department under cover of their letter dated
2nd August, 2011. It transpires that thereafter the Refunding
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Authority passed its order dated 13th December, 2011 (page 67 of
the paper book) rejecting the refund claim of the Petitioner. The
operative part of this order reads as under:-
"14(d): On receipt of the aforesaid Essentiality Certificate dated
13.03.2003, I now proceed to process the refund claim dated
4.4.2003 in respect of the goods cleared on payment of duty for
which the Importer has filed the present refund claim application
under Part-A including various documents such as Original Bill of
Entry, Import Invoices, Original Essentiality Certificate stating
that the goods cleared on payment of customs duty are covered
by a Essentiality Certificate issued by DGH by virtue of which the
goods cleared on payment of duty were liable to be refunded. I
find that the Importer has fulfilled the conditions of Notification
21/2002 dated 1.3.2002, Sr. No. 214 of Table, List 12, Condition
29, by submitting the Essentiality Certificate. I, however, find
the Essentiality Certificate was issued subject to the condition
that the left over items are subject it Re-export by 30.4.2004.
Examining the records, I find that some of the goods were
exported vide Shipping Bill No.1000003625 dated 07.12.2004
i.e. beyond the stipulated date of 30.04.2004. Importer in
response to specific query on this count have replied vide their
letter dated 28.11.11 clarifying that left over items were
exported on 07.12.2004 and have not given any further evidence
as to:
(i) re-export before 30.04.2004.
(ii) relaxation of the conditions of re-export by 30.04.2004.
(iii) List of left over items by 30.04.2004 and permission
from Customs to relax the conditions for export by
stipulated time.
The above position clearly bring out the fact that the importer
has not complied with the conditions of Essentiality Certificate.
In view of the same, the Essentiality Certificate cannot be taken
to be the basis of refund.
Accordingly, I pass the following order:
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ORDER
I reject the refund application dated 4.4.2003 for an amount of
Rs.1,89,15,549/- filed by M/s Sedco Forex International Drilling
INC, Transocean House, Lake Boulevard Road, Hiranandani
Business Park, Powai, Mumbai 400 076."
(emphasis supplied)
9. Aggrieved by the said order, the Petitioner preferred
an appeal before the Commissioner (Appeals), who by his order
dated 10th January, 2013, set aside the order dated 13th
December, 2011 and remanded back the case to the Refunding
Authority stating that the Refunding Authority is directed to
examine the proof of export and process the same after
verification of the original documents. Subsequently, the
Refunding Authority, after going through the documents
submitted by the Petitioner, once again rejected the refund claim
vide its order dated 22nd January, 2014.
10. Aggrieved by the order dated 22nd January, 2014, the
Appellant directly approached this Court, who by its order dated
5th February, 2014, set aside the order dated 22nd January, 2014
and remanded the case back to the Refunding Authority to decide
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the matter afresh after granting a hearing to the Petitioner. In
pursuance of the order of the High Court dated 5th February, 2014,
and after taking into consideration the documents submitted by
the Petitioner, an order was passed by the Refunding Authority on
23rd June, 2014, sanctioning the refund of Rs.1,89,15,549/-.
Pursuant to the aforesaid order of refund, the Petitioner also
received cheque No. 026271 dated 11th July, 2014 for an amount
of Rs.1,89,15,549/- issued by the Government of India, Ministry of
Finance, Central Board of Customs and Excise.
11. However, as the Petitioner was not granted any
interest against this refund amount, the Petitioner filed an appeal
before the Commissioner (Appeals). The Commissioner (Appeals),
after considering the statutory provisions and more particularly
Section 27A, as well as the case law relied upon by the Petitioner,
opined that as per the aforesaid section, the Petitioner was eligible
for interest on delayed refund. However, the Refunding Authority
had nowhere in the entire order discussed the issue of interest
which, according to the Commissioner (Appeals), ought to have
been examined by it. The Commissioner (Appeals) further held
that the decisions relied upon by the Petitioners were squarely
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applicable to the facts of the present case and hence concluded
that since the calculation of interest was not possible at his level,
the matter needed to be remanded. Accordingly, the Petitioner
was directed to cooperate and furnish all submissions before the
Refunding Authority and the Refunding Authority was to decide
this issue within six week's time. It is pursuant to this direction
that the Refunding Authority has passed the impugned order
dated 29th April, 2016, under which it held that the refund
application filed by the Petitioner was complete in all respects for
sanction of refund, only after the Petitioner submitted all the
essential documents during the personal hearing held on 12th
May, 2014. The refund claim was processed and refund was
granted to the Petitioner on 23rd June, 2014 which was well
within three months as stipulated in Section 27A of the Customs
Act, 1962. Hence, the Petitioner was not entitled to any interest.
It is aggrieved by this order that the Petitioner is before us.
12. In this factual backdrop, Mr. Prakash Shah, learned
counsel appearing on behalf of the Petitioner, submitted that the
impugned order is wholly perverse and directly contrary to the
provisions of Section 27A of the Customs Act, 1962. He laid great
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emphasis on Section 27A which deals with interest on delayed
refunds which inter alia stipulates that if any duty ordered to be
refunded under sub-section (2) of Section 27, is not refunded
within three months from the date of receipt of the refund
application under sub-section (1) of section 27, then, the
Applicant would be entitled to such rate of interest (as notified),
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. He submitted that in the facts of the present case, the
original refund application was filed on 4th April, 2003. Even
though the same was wrongly returned to the Petitioner on the
ground that the same was not accompanied with the Essentiality
Certificate, the Petitioner, vide their letter dated 20th June, 2011,
once again enclosed all the documents including a copy the refund
application filed on 4th April, 2003 and a copy of the Essentiality
Certificate dated 13th March, 2003. He submitted that even
though the Petitioner would be entitled to interest from the expiry
of 3 months from 4th April, 2003, the Petitioner is restricting its
claim for interest from the expiry of 3 months from 20th June,
2011 till 11th July, 2014 (i.e. the date when the payment of refund
was made to the Petitioner). Mr. Shah submitted that the finding
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of the Refunding Authority that the refund claim was complete in
all respects for sanctioning the refund only after the Petitioner
had submitted all essential documents at the personal hearing
held on 12th May, 2014, is wholly perverse and does not find any
support even from the provisions of Section 27A. He submitted
that the Refunding Authority by its order dated 13th December,
2011 (page 67 of the paper book) rejected the refund application
of the Petitioner on merits and not on the ground that the same
was incomplete. He submitted that this is ex-facie apparent from
the operative part of the order (and which is reproduced by us
earlier). For all the aforesaid reasons, Mr Shah submitted that the
impugned order is liable to the quashed and set aside and the
Refunding Authority ought to be directed to calculate the interest
payable on the refund granted to the Petitioner.
13. On the other hand, Mr. Jetly, learned counsel
appearing on behalf of the Respondents, submitted that the
interest free period of three months for processing the claim
would start from the date of receipt of a complete refund
application. In this regard, he placed reliance on Circular No. 59
of 1995 dated 5th June, 1995, issued by the Government of India,
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Ministry of Finance, (Department of Revenue), Central Board of
Excise and Customs, New Delhi. He placed reliance on paragraph
3 of this Circular which reads as under:-
"3.: The new regulations provide for the form and manner in
which an application of refund is to be made. As may be seen,
the regulations also provide for the scrutiny of an application and
its return of the applicant within a period of 10 working days, if it
is found incomplete in any manner or detail. If however, the
application is found to be complete in all respects for the
purpose of processing the refund claim the same is to be
acknowledged within the period of 10 working days. The
interest free period of 3 months for processing the claim while be
deemed to start the date of receipt of the complete refund
application."
(emphasis supplied)
14. Mr. Jetly submitted that in the facts of the present
case, the impugned order correctly states that the refund claim
was complete in all respects for sanctioning the refund only after
the Petitioner submitted all essential documents at the personal
hearing held on 12th May, 2014 and the refund was processed and
granted to the Petitioner on 23rd June, 2014. This was well within
three months as stipulated under Section 27A. He, therefore,
submitted that no fault can be found with the impugned order and
the Writ Petition ought to be dismissed.
15. We have heard the learned counsel at length and
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perused the papers and proceedings in the Writ Petition as well as
the annexures thereto. Before we deal with the present
controversy, it would be appropriate to set out certain provisions
of the the Customs Act, 1962. Section 27 deals with a claim for
refund of dues and inter alia stipulates that any person claiming
refund of any duty or interest paid by him or borne by him, may
make an application in such form and manner as may be
prescribed for such refund, to the Assistant Commissioner of
Customs or Deputy Commissioner of Customs, before the expiry of
one year, from the date of payment of such duty or interest. This
section further stipulates that the application shall be
accompanied by such documentary or other evidence as the
applicant may furnish to establish that the amount of duty or
interest in relation to which such refund is claimed was collected
from, or paid by him, and the incidence of such duty or interest,
has not been passed on by him to any other person. Thereafter,
Section 27A deals with interest on delayed refunds. This section
was brought on the Statute Book with effect from 26 May, 1995
and reads as under:-
"27-A. Interest on delayed refunds.-- If any duty ordered
to be refunded under sub-section (2) of Section 27 to an
applicant is not refunded within three months from the date of
receipt of application under sub-section (1) of that section, there
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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 27 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 Customs under sub-
section (2) of Section 27, the order passed by the Commissioner
(Appeals), Appellate Tribunal, National Tax Tribunal or, as the
case may be, by the court shall be deemed to be an order passed
under that sub-section for the purposes of this section."
16. This section clearly stipulates, if any duty ordered to
be refunded under sub-section 2 of Section 27 to the applicant and
the same is not refunded within three months from the date of
receipt of the refund application, then the applicant would be paid
interest at such rate as more particularly stipulated in the said
section. This interest would be payable immediately after expiry
of three months from the date of receipt of such application till the
date of refund of such duty. For the purposes of the present
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controversy, the proviso and the explanation to said section are
not really germane to the present dispute. In a nutshell, what this
section stipulates is that, once an application for refund has been
made and the same is granted within a period of three months
from the date of receipt of the application, then there would be no
liability to pay interest to the applicant. However, if the refund is
granted beyond the period of three months from the date of
receipt of the application, then, on the amount of refund granted,
interest would also be payable from the date immediately after
expiry of three months from the date of receipt of such
application, till the date of refund.
17. We must note here that almost identical and pari
materia provisions under the Central Excise Act, 1944 came up
for consideration before the Supreme Court in the case of
Ranbaxy Laboratories Ltd Vs. Union of India.1 The Supreme
Court, after noting the provisions of section 11B and 11BB of the
Central Excise Act, 1944 (and which are almost identical and pari
materia to sections 27 and 27A of the Customs Act, 1962) [in the
SCC Report], held as under:-
"12. It is manifest from the aforeextracted provisions that Section
1 (2011) 10 SCC 292 : 2011 (273) E . L. T. 3 (SC)
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11-BB of the Act comes into play only after an order for refund
has been made under Section 11-B of the Act. Section 11-BB 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 11-B 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
the proviso to Section 11-BB introduces a deeming fiction that
where the order for refund of duty is not made by the Assistant
Commissioner of Central Excise or the 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 11-B of the Act. It is
clear that the Explanation has nothing to do with the
postponement of the date from which interest becomes payable
under Section 11-BB of the Act.
13. Manifestly, interest under Section 11-BB of the Act becomes
payable, if on 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 11-BB 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 11-B of
the Act and that the said Explanation does not have any bearing
or connection with the date from which interest under Section 11-
BB of the Act becomes payable.
14. 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 v. IRC [(1921) 1 KB 64]
and Ajmera Housing Corpn. v.CIT [(2010) 8 SCC 739] .)
15. At this juncture, it would be apposite to extract a Circular
dated 1-10-2002, issued by the Central Board of Excise and
Customs, New Delhi, wherein referring to its earlier Circular
dated 2-6-1998, whereby a direction was issued to fix
responsibility for not disposing of the refund/rebate claims within
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three months from the date of receipt of application, the Board
has reiterated its earlier stand on the applicability of Section 11-
BB of the Act. Significantly, the Board has stressed that the
provisions of Section 11-BB 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 11-BB
of the 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. The Board has been receiving a large number of
representations from the claimants to say that interest due to them on
sanction of refund/rebate claims beyond a period 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, the Board would like to stress that the
provisions of Section 11-BB of the 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 the higher appellate authority for grant of
interest. Simultaneously, the Board would like to draw attention to
Circular No. 398/31/98-CX, dated 2-6-1998 [(1998) 100 ELT T-16]
wherein the 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, the 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)
16. Thus, ever since Section 11-BB was inserted in the Act with
effect from 26-5-1995, the Department has maintained a
consistent stand about its interpretation. Explaining the intent,
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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 11-B(1) of the Act."
(emphasis supplied)
18. On a harmonious reading of the provisions of section
27 and 27A alongwith the observations of the Supreme Court,
what becomes abundantly clear is that once a refund is granted to
the applicant and the said refund is not given to the applicant
within three months from the date of receipt of the refund
application, then the applicant would automatically be entitled to
interest on the said refund, from the date immediately after
expiry of three months from the date of receipt of such refund
application, till the date of the refund of such duty.
19. Applying this law to the facts of the present case, we
find that originally, the Petitioner had made an application for
refund on 4th April, 2003. However, this application was returned
back as premature for want of submission of the Essentiality
Certificate with the refund application. Even though this fact (of
non-submission of the Essentiality Certificate) is disputed by the
Petitoner, we find that admittedly, the Petitioner, by their letter
dated 20th June, 2011 enclosed copies of the relevant Bill of entry,
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the refund application dated 4th April, 2003 and a copy of the
Essentiality Certificate.
20. This request for refund (made on 20th June, 2011) was
rejected by the Refunding Authority by its order dated 13th
December, 2011 (Exh "L" page 67 of the paper book). What is
important to note is that the rejection of refund was not on the
ground that it was incomplete or that all the relevant documents
were not submitted by the Petitioner. The operative part of the
order (and which has been set out earlier), in fact states that the
Petitioner had "fulfilled the conditions of Notification 21/2002
dated 1.3.2002, Sr. No. 214 of Table, List 12, Condition 29, by
submitting the Essentiality Certificate." The Refunding Authority,
however, held that the Essentiality Certificate was issued subject
to the condition that the left over items are subject to Re-export by
30th April, 2004. Examining the records, the Refunding Authority
came to a finding that some of the goods were exported beyond the
expiry date of 30th April, 2004 and in view thereof, the Refunding
Authority found that the Petitioner had not complied with the
conditions of the Essentiality Certificate. It therefore held that the
Essentiality Certificate could not be taken to be the basis of the
refund and accordingly rejected the refund application of the
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Petitioner. This order dated 13th December, 2011 was thereafter
subjected to an appeal and as well as further proceedings (as more
particularly set out earlier), which finally culminated in a refund
being granted to the Petitioner on 23rd June, 2014 in the sum of
Rs.1,89,15,549/-. As no interest was granted on this refund, the
Petitioner challenged the said order before the Commissioner
(Appeals). The Appellate Authority (by its order dated 27th
October, 2015), after taking into consideration provisions of
Section 27A of the Act opined that the Petitioner was eligible for
interest on the delayed refund. It further held that since the
calculation of interest was not possible at its level it remanded the
matter back to the Refunding Authority for the purpose of
calculation of interest. As this order of the Appellate Authority
was not being implemented, the Petitioner preferred Writ Petition
No. 2793 of 2016 before this Court, who by its order dated 4th
April, 2016, (Exh. "B", page 35 of the paper book) clarified that
the authorities were now not permitted to ignore the order dated
27th October, 2015 passed by the Commissioner (Appeals) or any
directions contained therein. If the interest was payable as held in
the appeal, then the calculation thereof was the limited issue
which the Refunding Authority was to examine. This Court also
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held that the statutory provisions are clear that where there is a
delay in the grant of refund, then interest must follow. It is only
the calculation thereof which would be determined by the
Authority.
21. Looking to all these facts, we are unable to agree with
the submission of Mr Jetly that the refund application was
complete in all respects for sanctioning the refund only after the
Petitioner had submitted all essential documents at the personal
hearing held on 12 May, 2014 and thereafter the refund claim was
processed and granted to the Petitioner on 23 June, 2014, which
was within the period of 3 months as stipulated in Section 27A of
the Act. The facts of this case and the orders passed not only by
the Appellate Authority but also by this Court, clearly indicate
otherwise. We must mention here that the Refunding Authority is
not powerless. If a refund application filed by a party is
incomplete, the Refunding Authority can always return back the
refund application saying that it is incomplete in all respects or
reject the same on the ground that it is incomplete. As mentioned
earlier, initially when the Refund Application was rejected by the
Refunding Authority, (by its order dated 13th December, 2011), it
was not the case of the Refunding Authority that all the essential
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documents were not supplied by the Petitioner along with the
refund application. The said refund application was rejected on
the ground that the Petitioner had not complied with the
conditions set out in the Essentiality Certificate. Hence the refund
application was rejected on merits. This being the position, we are
unable to accept the arguments of Mr Jetly that the refund
application filed by the Petitioner was complete in all respects only
in May 2014.
22. In light of these facts, and having rejected Mr. Jetly's
argument, we have no hesitation in setting aside the impugned
order dated 29 April, 2016 and holding that the Petitioner would
be entitled to interest on the sum of Rs.1,89,15,549/- from the
date immediately after expiry of three months from 20th June,
2011 till 11th July, 2014 (being the date when the refund was
actually paid to the Petitioner). For the limited purpose of
calculating and paying this interest, the matter is remanded back
to the Refunding Authority. It is clarified that the Refunding
Authority shall not undertake any other or further exercise, other
than to calculate interest on the refund amount and in terms of
what is stated earlier. We grant the Authority six weeks time,
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which shall commence from the date of receipt of a copy of this
order, for the above purpose.
23. For all the aforesaid reasons, rule is made absolute in
the aforesaid terms. However, in the facts and circumstances of
the case, there shall be no order as to costs.
24. Before parting, we direct that a copy of this order be
forwarded to the Secretary, Ministry of Finance (Department of
Revenue), Government of India and the Chairman, Central Board
of Excise and Customs, New Delhi for necessary action. It is only
they who would possibly realise that the object and purpose is to
take expeditious action on refund applications so that revenue
loss is avoided in payment of statutory interest. The intent is to
discourage the tendency of not taking prompt action on these
applications, thereby defeating all policies aimed at creating a
business friendly atmosphere. They must also realise that
litigation in Court on this score results in precious time and money
being wasted.
(B. P. COLABAWALLA, J.) (S. C. DHARMADHIKARI, J.)
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