UNION OF INDIA Vs. BARMALT INDIA LTD

JUDGEMENT

(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 expression "food product" in Exemption Notification No. 55 of 1975 dated 1/3/1975 and whether the respondent is entitled to refund of the 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, are not entitled to the benefit of the said notification. On a writ petition being filed, the Delhi High court upheld the respondent's 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 Revenue's 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 respondent's 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.

(2.) Consequent upon the decision of the High court, Shri Harish Salve, learned counsel for the respondent, says, the respondent, Barmalt, became entitled to refund of Rs. 2,67,00,983.16p which was the amount of duty paid by it. Pursuant to the impugned judgment of the High court, it is stated, an amount of Rs. 2,41,53,497.92 has been refunded to it. The balance amount of Rs. 25,47,485.24p is still refundable to it. On these facts, in the ordinary , course, we would have disposed of the matter in terms of Mafatlal Industries Ltd. v. Union of India and the format order, which we have devised pursuant to the said judgment but Shri Harish Salve brought to our notice certain facts on the basis of which he asks for certain specific directions. The facts stated by him are the following.

(3.) 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 Boumvita and Horlicks etc. and (ii) the breweries and distilleries engaged in manufacturing Indian Made Foreign Liquors. 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 pro forma 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 (/) also did the same. [so far as category (ii) purchasers, i. e. , distilleries and breweries are concerned, Shri Salve says that they were not entitled to and did not avail of any pro forma 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 pro forma 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. )