UNION OF INDIA AND ORS. versus BARMALT (INDIA) LTD., GURGAON

Citation: [1997] 2 S.C.R. 125 · Decided: 18-02-1997 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Case Partly allowed

Judgment (excerpt)

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UNION OF INDIA AND ORS. 
v. 
BARMALT (INDIA) LTD., GURGAON 
FEBRUARY 18, 1997 
[B.P. JEEVAN REDDY AND S.B. MAJMUDAR, JJ.) 
Excise-Central Excises and Salt Act 1944---Exemption Notification 
No. 55 of 1975 dated !st March 1975-Malt and malt products-Finding of 
High Court to the effect that benefit of exemption available to the assessee, 
A 
B 
as Malt and Malt Products fall within the expression 'Food Products'. 
C 
Excise-Unjust Enrichment-Refund of Excess duty paid-Respondent, 
one of the producers of malt and malt extracts-Respondent seeking certain 
specific directions instead of disposal in tem1s of Ma[ atlal Industries cas~ 
Suggestions put forth by Respondent, held not f easible--On peculiar facts of 
the case, Respondent directed to refund to State the amount of refund received D 
by it excepting the specified amount already returned earlier to a pur-
chase~Also, since the purchaser had taken prof om1a credit of duty paid by 
it on purchase of the products, direction issued to reverse the credit entry and 
pay it over to State. 
Respondent is one of the three major producers of malt and malt 
extract in the country. The purchase of malt and malt extracts is by certain 
specified industries only • (A) industries engaged in the manufacture of 
beverages like Bournvita, Horlicks Etc. and (b) breweries and distilleries 
engaged in manufacture of Indian made foreign liquors. 
One of the purchasers of category (a), HMM Limited like the other 
purchasers, took proforma 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 
E 
F 
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force at the relevant time. The purchasers of category (b) were however 
not entitled to and did not avail of any proforma credit from the respon- G 
dent. 
The Assistant Collector took the view that malt and malt extract 
produced could not he treated as food products and therefore the benefit 
of notification No. 55 of 1975 was not available. On the writ petition 
preferred, the High Court accepted the case of the Respondent and held_ H 
125 
126 
SUPREME COURT REPORTS 
f 1997) 2 S.C.R. 
A that the benefit of the said exemption notification could be availed of. The 
High Court thus held that the Respondent was entitled to refund of excess 
duty paid, on the basis of unjust enrichment. 
Pursuant to the judgment of the High Court, Revenue was under an 
obligation to refund the duty collected to Respondent Barmalt. Sub-
B sequently, notices were issued to the purchasers .including HMM Limited 
calling upon them to reverse the proforma fredit taken by them and pay 
the purchasers like HMM Limited. This put them in peril as in addition 
to the duty already paid by them while purchasing the produce, they were 
now once again asked to pay the same duty over again to the State on the 
C ground that the State had refunded the duty to Barmalt, the Respondent 
and other two producers pursuant to the High Court Judgment. 
D 
· On the demand raised against it, HMM Limited, disputed the same 
on several grounds including on limitation and the Tribunal accepted its 
Claim only on the ground of limitation. Hence these appeals. 
A solution to the problem was envisaged by the counsel for the 
Respondents. It was suggested that Barmalt, the Respondent would pay 
over the entire amount received by it by way of refund to HMM Limited ' 
and other similar purchasers who have availed of proforma credit and that 
'the purchasers would then pay or adjust the amount to the Revenue. It 
E was thus contended that on completion of these two steps, neither the 
Revenue nor the purchaser would stand to lose and that there would be 
no question of unjust enrichment. 
F 
Though this Court felt that the solution put forth by the Respondent 
sounded attractive, it found that there were difficulties in the way of 
implementation of the same. 
Disposing of the appeals, this Court 
HELD : 1.1. The suggestion put forth by the counsel for the Respon-
G dents would not be feasible, nor would it be possible to work out a formula 
in the present case, in view of the fact that no appeals had been preferred 
against the other two producers who had also taken refunds and because 
of the fact that the other two producers and all the purchases were. not 
before this Court. [130-G] 
H 
1.2. In view of the admitted fact that the respondent had passed on 
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U.0.1. v. BARMALT (I) LTD. [B.P.JEEV AN REDDY, J.] 
127 
the burden of duty to its purchas

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