1997 (2) TMI 102 - SC - Central Excise

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 March 1, 1975? Whether the respondent is entitled to refund of the excess duty paid by him pending the decision of the High Court? 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. In view of the admitted fact that it has passed on the burden of duty to its purchasers - that Barmalt should refund to the State the amount received by them by way of refund (pursuant to the impugned judgment of the Delhi High Court) except a sum of Rupees eight lakhs. In view of the fact that H.M.M. Limited is now before us and it has admittedly received the said sum of Rupees eight lakhs from Barmalt, the H.M.M. Limited is directed to reverse the credit taken by it to the extent of ₹ 8,00,000/- (Rupees eight lakhs only) and pay it over to the State.

Summary

Issues:
1. Whether malt and malt extract qualify as "food products" under Exemption Notification No. 55 of 1975.
2. Entitlement of the respondent to refund of excess duty paid pending the High Court's decision.

Analysis:
1. The appeal questioned whether malt and malt extract produced by the respondent fall under the category of "food products" as per Exemption Notification No. 55 of 1975. The Assistant Collector initially denied this classification, but the Delhi High Court ruled in favor of the respondent, stating that malt and malt extract do qualify as food products. The High Court also rejected the Revenue's argument of unjust enrichment. The Supreme Court concurred with the High Court's decision on the classification and entitlement to the exemption. However, the issue of the respondent's right to refund remained unresolved due to a unique situation arising from the judgment.

2. Following the High Court's decision, the respondent became eligible for a refund of Rs. 2,67,00,983.16p. The respondent received a partial refund of Rs. 2,41,53,497.92p., with a balance of Rs. 25,47,485.24p. pending. To address the complexities arising from refunding the excess duty, the respondent proposed a solution involving reimbursing the duty amount to purchasers who had availed proforma credit. However, challenges emerged as other producers and purchasers were not uniformly agreeable to this solution. Despite suggestions to invoke Article 142 of the Constitution to enforce the proposed formula uniformly, the Supreme Court found it impractical due to the absence of all relevant parties before the court.

In conclusion, the Supreme Court directed the respondent to refund the excess duty amount received, except for a specific sum. Additionally, the court instructed a purchaser, H.M.M. Limited, to reverse the credit taken and pay the amount to the State. The Court acknowledged the complexities in implementing a uniform solution across all producers and purchasers and decided to dispose of the appeal as presented. The related appeals were listed for further consideration based on the developments in the primary appeal.