# M/s Shree Balaji Aromatics Pvt. Ltd. & Anr v. Union of India & Ors

- **Citation:** (2014) 1 ILRA 419
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2014-04-24
- **Case number:** Civil Misc. Writ Petition No. 1062 of 2007
- **Bench:** Rajes Kumar, Shashi Kant
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-shree-balaji-aromatics-pvt-ltd-anr-v-union-of-india-ors-42817
- **Pages:** 4

## Headnote

Central Excise Act 1961-Section -11BB-
Claim of interest-on delayed payment of
refund-denial on ground the petitioner
orally given consent for not putting any
claim for interest-held-if refund delayed
beyond 3 month-payment of interest is
automatic and mandatory- can not be
govern by consent of parties.

Held: Para-13
In view of the above, we are of the view
that the petitioner is entitled for the
interest under Section 11BB of the Act on
the refunded amount, if the amount has
been refunded after three months from the
date of receipt of the application. Having
regard to the facts and circumstances, of
the present case, we are not impressed
with the argument of learned counsel for
the petitioner that the petitioner is entitled
for interest on interest.

Case Law Discussed:
2011(273)
ELT,
3(SC);
2013(298)
ELT,
41(All.); 2006(196) ELT, 257(SC)

## Text

1 All] M/s Shree Balaji Aromatics Pvt. Ltd. & Anr. Vs. Union of India & Ors.

419
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.04.2014

BEFORE
THE HON'BLE RAJES KUMAR, J.
THE HON'BLE SHASHI KANT, J.

Civil Misc. Writ Petition No. 1062 of 2007

M/s Shree Balaji Aromatics Pvt. Ltd. & Anr.
......... Petitioners
Versus
Union of India & Ors. ...Respondents

Counsel for the Petitioners:
Sri Pankaj Bhatia

Counsel for the Respondents:
A.S.G.I., Sri B.K.S. Raghuvanshi

Central Excise Act 1961-Section -11BB-
Claim of interest-on delayed payment of
refund-denial on ground the petitioner
orally given consent for not putting any
claim for interest-held-if refund delayed
beyond 3 month-payment of interest is
automatic and mandatory- can not be
govern by consent of parties.

Held: Para-13
In view of the above, we are of the view
that the petitioner is entitled for the
interest under Section 11BB of the Act on
the refunded amount, if the amount has
been refunded after three months from the
date of receipt of the application. Having
regard to the facts and circumstances, of
the present case, we are not impressed
with the argument of learned counsel for
the petitioner that the petitioner is entitled
for interest on interest.

Case Law Discussed:
2011(273)
ELT,
3(SC);
2013(298)
ELT,
41(All.); 2006(196) ELT, 257(SC)

(Delivered by Hon'ble Rajes Kumar, J.)

1. Heard Sri Pankaj Bhatia, learned
counsel
for
the
petitioners
and
Sri
B.K.S.raghuvanshi, learned counsel appearing
on behalf of the respondents.

2. By means of the present writ
petition, petitioner is seeking a direction
to the respondents to pay the refund as
claimed in various refund claims along
with interest thereon, filed under Section
11-BB of the Income Tax Act, 1961.

3. The petitioner filed some of the
refund claims in the year 2005, some in the
year 2006 and some in the year 2007. The
details of the claim are mentioned in the order
of adjudication dated 08.05.2007. The said
refund claim has been allowed by order dated
08.07.2007. However, interest on the pending
refund claim has been denied in view of the
letter dated 26.04.2007, the correct date of
letter is 20.04.2007, by which the petitioner
has informed that they have decided not to
claim the interest against the claim.

4. Learned counsel for the petitioner
submitted that out of the total refund
claims in respect of some of the refund
claims, despite the refund claims being
allowed, show cause notices have been
issued by the Assistant Commissioner to
deny the refund claims. However, in
respect of some claims, refund has been
granted. Submission of learned counsel
for the petitioner is that, interest under
Section 11BB of Central Excise Act, 1944
(hereinafter referred to as the "Act") being
statutory and automatic, is payable
without any claim in case, if refund is not
made within thirty days from the date of
receipt of the application. It does not
depend upon the claim and can not be
denied on the ground of waiver of the
claim of interest by the party. Thus, even
though the petitioner has written a letter
for not claiming the interest, the claim of
interest can not be denied under Section
420 INDIAN LAW REPORTS ALLAHABAD SERIES

11BB of the Act as it is mandatory and
payable automatically.

5. Reliance is placed on the circular
no.670/61/2002-CX, dated 01.10.2002. The
decision of the Apex Court in the case of
Ranbaxy Laboratories Ltd. Vs. Union of
India, reported in 2011 (273) ELT, 3 (SC).
The Division Bench decision of this Court in
the case of Aroma Chemicals Vs. Union of
India, reported in 2013 (298) ELT, 41 (All).

6. He further submitted that for the
illegal withholding of the amount of
interest, the petitioner is also liable for
interest on interest. Reliance has been
placed on the decision of the Apex Court
in the case of Sandvik Asia Ltd. Vs.
Commissioner of Income TAx-1, Pune,
reported in 2006 (196) ELT, 257 (SC). He
further submitted that the petitioner has
waived the claim for interest on the verbal
undertaking given by the respondent that
the claim of refund would be allowed
expeditiously, within a reasonable period
but the same has not been allowed within
a
reasonable
period,
inasmuch
as
subsequently out of the total refund
claims, despite being allowed, show cause
notices have been issued to withdraw the
claim, which is pending consideration.

7.

Learned
counsel
for
the
respondent submitted that the petitioner
has written a letter for not claiming the
interest and, therefore, the petitioner is not
entitled to claim the interest as the
petitioner has waived his right to claim
the interest.

8. We have considered the rival
submissions.

9. Section 11BB of the Act reads as
follows:

"Interest on delay refunds.---- If any
duty ordered to be refunded under subsection (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 application 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 [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]."

10. A bare perusal of Section 11BB
of the Act, reveals that the payment of
interest is not depended on the claim by
1 All] M/s Shree Balaji Aromatics Pvt. Ltd. & Anr. Vs. Union of India & Ors.

421
the party. It is automatic. In case, if
refund is not paid within three months
from the date of receipt of the application,
the
authority
concerned
is
under
obligation to pay the interest. In Section
11BB of the Act the word used is "there
shall be paid to the applicant." It means
that it is not discretionary and has to pay.
The payment of interest is statutory and
automatically. The waiver of the interest
by the party has no relevance and on the
said ground payment of interest can not
be denied.

11. Circular no.670/61/2002-CX,
dated 01.10.2002 reads as follows:

"In this connection, Board would like to
stress 2. 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."

12. The Apex Court in the case of
Ranbaxy Laboratories Ltd. Vs. Union of
India, (Supra) has held that Section 11BB
of the Act comes into play only after an
order for refund is being made. 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 subsection (1) of Section 11BB 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 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.
422 INDIAN LAW REPORTS ALLAHABAD SERIES

13. In view of the above, we are of the
view that the petitioner is entitled for the
interest under Section 11BB of the Act on
the refunded amount, if the amount has
been refunded after three months from the
date of receipt of the application. Having
regard to the facts and circumstances, of the
present case, we are not impressed with the
argument of learned counsel for the
petitioner that the petitioner is entitled for
interest on interest.

14. In the result, the writ petition is
allowed in part. The authority concerned
is directed to calculate the amount of
interest under Section 11BB of the Act
within a period of one month and pay the
same within another period of one month
in accordance to law.
--------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 23.04.2014

BEFORE
THE HON'BLE DEVI PRASAD SINGH, J.
THE HON'BLE ASHWANI KUMAR MISHRA, J.

First Appeal from Order No. 1135 of 2010
Alongwith FAFO No. 977 of 2010 and FAFO
No. 1004 of 2010

The Oriental Insurance Co. Ltd. ..Appellant
Versus
Smt. Nirala Shukla & Ors. ...Respondents

Counsel for the Appellant:
Sri Vashu Deo Mishra, Sri Sandeep Kumar
Agarwal, Sri Vishal Tahlani

Counsel for the Respondents:
--

Motor
Vehicle
Act-1989-Section-173-
Appeal against award of claim Tribunal
fastened liability of Insurance Company to
pay the awarded amount-with liberty to
recover from vehicle owner-subject to
validity of insurance policy-submission
that instead of giving liberty to recover
from owner of vehicle-directly liability
should be cost upon vehicle owner itselfheld-misconceived-in
view
of
specific
provision under section 149(c) of Act
coupled with judgment of Apex CourtTribunal rightly issued direction-warrant
no interference-appeal dismissed.

Held:Para-13
Keeping in view the statutory mandate
as contained in Section 149 of the Motor
Vehicles Act, coupled with the judgment of
Hon'ble Supreme Court, we are of the view
that
the Tribunal has
committed
no
illegality
in
directing
the
appellant
Insurance
Company
to
pay
the
compensation and thereafter, recover the
same from the owner of the vehicle. Apart
from the above, Section 174 provides to
recover the compensation as arrears of land
revenue. The procedure prescribed under
Section 174 Motor Vehicles Act, is not
applicable
to
the
cases
where
compensation is sought to be recovered
from the owner of the vehicle. In case the
Insurance Company after satisfying the
award proceed to recover the outstanding
dues from the owner, then the provisions
contained in Section 174 of the Motor
Vehicles Act shall equally be applicable to
recover the outstanding dues as arrears of
land revenue from the owner of the vehicle.
It shall speed up the recovery process and
satisfy the award within reasonable period.

Case Law Discussed:
2013(3) T.A.C. 29(S.C.); 2009(4) T.A.C. 382(S.C.);
2013 ACJ 1944(S.C.).

(Delivered by Hon'ble Devi Prasad Singh, J.)

1. These three appeals under Section
173 of Motor Vehicles Act, contain the
same controversy and the impugned
award dated 7.5.2010 delivered by the
Motor Accident Claims Tribunal in Claim
Petition No.282 of 1997 and judgment
and award dated 7.5.2010 in Claim
Petition
No.377
of
1997.