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Vijay Raj Khariwal v. Union of India

Rajasthan High Court
Apr 26, 2007
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Structured Summary of the Provided Opinion

Factual and Procedural Background

The matter concerns a writ petition seeking refund of excise duty paid on purchase of a motor car. The petitioner purchased a Maruti Esteem AX and claimed concession/refund of excise duty under Exemption Notification No. 66 (Central Government Notification No. 3/2001-Central Excise dated 1-3-2001), specifically invoking condition No. 43 and entry 226 relating to sales of cars for physically handicapped persons.

The petitioner produced a certificate dated 14-9-2001 (Annex.7), issued by the Government of India through the Deputy Secretary of the Department of Heavy Industries, certifying that the car is capable of being driven by the petitioner, identified in the certificate as Shri Vijay Raj Khariwal, who suffers from "Post Polio Residual Palsy Right Lower Limb," and that the certificate was issued for the purpose of availing concessional excise duty under condition No. 43.

The petitioner applied for refund of Rs. 60,868.48 by an application dated 8-10-2001 (Annex.8). Maruti Udyog Limited (MUL), which had charged and paid excise duty at the time of sale, also submitted an application (Annex.9) and was issued a show-cause notice by the Deputy Secretary. The Department ultimately rejected the claim by order dated 3-9-2003 (Annex.13), citing (as recorded) that the disability certification was dated after the transaction and that exemption applied only to persons with left-leg disability in relation to automatic-transmission vehicles.

Earlier, while entertaining the writ petition, the Division Bench passed an order on 13-11-2006 directing respondents to file reply and indicating potential allowance of the writ petition if the Department's stand was not shown to be bona fide. The bench heard counsel for the parties and delivered the final judgment disposing of the matter.

Legal Issues Presented

  1. Whether the petitioner is entitled to refund/exemption of excise duty on purchase of the Maruti Esteem AX under Exemption Notification No. 66 / Central Government Notification No. 3/2001, condition No. 43, given the certificate issued by the Department of Heavy Industries.
  2. Whether the Department could deny the exemption/refund on the ground that the petitioner's disability affects the right lower limb (rather than the left) in relation to automatic-transmission vehicles.
  3. Whether the Department's rejection (Annex.13) was arbitrary or otherwise unsustainable in light of departmental circulars/clarifications and the certificate produced by the petitioner.
  4. Whether the principle of unjust enrichment, as referenced in the show's cause notice to the manufacturer, bars the refund to the petitioner or the manufacturer.

Arguments of the Parties

Petitioner's Arguments (Mr. Manoj Bhandari)

  • The petitioner's status as a physically handicapped person is not in dispute; the requisite certificate issued by the Department of Industries (Annex.7) was produced as required under the notification.
  • Given the certificate and entitlement under the notification, the petitioner should receive the excise-duty exemption/refund; denial by the Excise Department was an absurd and rigid application of policy, particularly as the car purchased had automatic transmission suitable for a handicapped person.

Respondent / Excise Department's Arguments (Mr. Rajesh Joshi)

  • The Department's position was that exemption for automatic-transmission vehicles was available to persons with left-leg disability; the petitioner has disability in the right leg and therefore does not fall within the category entitled to exemption for such vehicles.
  • The Department relied on a circular dated 24-6-2002 (Annex.R/1) to support the view that entitlement was confined to left-leg disability.
  • Reference was also made in the departmental proceedings to the principle of unjust enrichment where manufacturers cleared the vehicle under SRP and passed on the incidence of duty to the customer.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court proceeded through the following analytical steps, based solely on the material in the opinion:

  1. The court accepted the authenticity and relevance of the certificate (Annex.7): it "indisputably makes out" that the petitioner is a physically handicapped person, that the vehicle is capable of being driven by him, and that the certificate was issued for the purpose of availing the excise-duty concession under condition No. 43.
  2. The court examined departmental clarifications (Annex.18, Paras 4 and 5). Paragraph 4 records that the Ministry of Industry has issued certificates in respect of auto-transmission vehicles for handicapped persons with left-leg disability. Paragraph 5 clarifies that concession should not be denied in respect of any motor vehicle with special features (like auto transmission) which is capable of being used by a handicapped person and for which the necessary certificate from the Ministry of Industry is produced.
  3. The court distinguished two separate propositions: (a) the mere presence of auto-transmission in a vehicle does not automatically entitle any purchaser to exemption (non-handicapped purchasers are not entitled merely because of auto-transmission), and (b) a physically handicapped purchaser who purchases a vehicle capable of being used by him and who produces the Ministry's certificate is entitled to the exemption. The court relied on clause 5 of the clarificatory circular to support the second proposition.
  4. The Department's counsel conceded that, in view of the certificate, it cannot be said that the petitioner is not physically handicapped. The court held that the Department's policy must be applied logically and not turned into an absurdity or a "farce" by making an artificial distinction based on the side (right vs. left) of the disability when the certificate and the clarificatory circular do not mandate such a distinction.
  5. The court found that the concerned officer had ignored the certificate and the departmental clarificatory circular when denying the concession. The denial was characterized as arbitrary, unjust, and amounting to "malice in law," in that it was contrary to the Department's own policy and clarifications.
  6. On the basis of the foregoing, the court concluded that the Department's stand was unsustainable and that the writ petition should be allowed.
  7. Practical relief and conditions: the court ordered the refund to be made within one month. The Department's counsel gave an assurance of no further delay. The petitioner had expressly not sought interest or costs (counsel for petitioner conceded no prayer for interest/costs). The court therefore did not award interest or costs provided payment is made within 30 days; if not, interest at 12% per annum would be payable from the date of lodging the refund claim (8-10-2001).

Holding and Implications

Holding: The writ petition is allowed; the impugned order dated 3-9-2003 (Annex.13) is quashed and set aside.

Direct consequences for the parties:

  • The court holds that the petitioner is entitled to the excise-duty exemption on purchase of the car in view of his status as a physically handicapped person and the certificate produced from the Department of Industries.
  • The Department is directed to refund the excise duty (the claimed amount being Rs. 60,868.48 as per the petition) to the petitioner within one month from the date of the judgment.
  • If the Department fails to make payment within 30 days, the refunded amount will carry interest at 12% per annum from 8-10-2001 (the date of lodging the refund claim) until payment.
  • The petitioner has not pressed for interest or costs in view of the assurance given; accordingly, the court did not order interest or costs so long as payment is made within the stated period.

Broader implications: The opinion limits itself to application of the Department's policy and clarifications to the facts of this case. The court emphasized fidelity to the Department's own clarification (paras 4–5 of Annex.18) and rejected an artificially narrow interpretation that would deny a certified handicapped person entitlement based solely on which limb is affected. The opinion does not purport to announce a broader legal precedent beyond the decision in this matter.

Show all summary ...

[Order per : P.B. Majmudar]. - Heard the learned Counsel for the parties

2. While entertaining the writ petition, the Division Bench of this Court has passed the following order on 13-11-2006 :

“The dispute in this writ petition relates to refund of  excise duty. The appellant claims to have purchased a Maruti Esteem Car of AX model manufactured by the Maruti Udhyog Limited. Claiming to be a physically handicapped person suffering from Post Polio Palsy, he claimed refund of the Excise duty paid on purchase  of the vehicle in terms of Exemption Notification No. 66. Copy of the said notification has been enclosed as Schedule A to the writ petition. In terms of entry 226, sale of cars for physically handicapped persons are exempted from excise duty. The claim of the petitioner however was rejected on the ground that Maruti Udhyog Limited had lodged similar claim. The claim of Maruti Udhyog Limited however was rejected vide Annex. 13 on the two fold ground, namely, that the certificate in respect of the disability was issued two months after and the same was not in consonance with condition No. 43 of notification No. 3/2001 and secondly that the disability of petitioner is in the right lower limb whereas the disability should be in the left limb.
Having stated these basic facts, we call upon the respondents to file reply. If the  respondents fail to convince the Court that their stand was bona fide and in accordance with the relevant circular of the. department, we may allow the writ pettlon with costs.
Put up on 11-12-2006 as prayed for.”

3. Having heard the learned Counsel for the  parties, we are now finally disposing of this matter by this judgment.

4. It is unfortunate that the petitioner who is physically handicapped person is required to knock the doors of this Court for getting rebate in the matter of payment of Excise Duty at the time of purchasing motor car. The petitioner had purchased a motor car, namely, Maruti Esteem AX manufactured by Maruti Udyog Limited claiming to be physically handicapped person suffering from Post Polio residual palsy right lower limb. The certificate dated 14-9-2001 (Annex.7) issued by the Government of India through the Dy. Secretary of the Department of Heavy Industries reads as under :

“TO WHOMSOEVER IT MAY CONCERN

Subject :- Purchase of car Model Maruti Esteem AX on concessional excise duty by Shri Vijay Raj Khariwal under condition No. 43 of General Exemption No. 66 of Central Government Notification No. 3/2001-Central Excise dated 1-3-2001.
Certified that car model Maruti Esteem AX manufactured by M/s Maruti Udyog Ltd., is capable of being driven by Shri Vijay Raj Khariwal, resident of Plot No. 5, Paota “B” Road, Jodhpur, who has the following handicap/disability as certified by Principal & Head of the Department of Orthopedic & Rehabilitation Centre, Mahatma Gandhi Hospital, Govt. of Rajasthan, Jodhpur.
“Post Polio Residual Palsy Right Lower Limb”
Accordingly, this certificate is issued only for the purpose of availing concessional excise duty applicable under condition No. 43 of General Exemption No. 66 of Central Government Notification No. 3/2001-Central Excise dated 1-3-2001.”

5.  As per the policy framed by the Department, the person who is physically handicapped is entitled to get concession in the matter of payment of excise duty at the time of purchasing the vehicle. The petitioner had purchased the Maruti car from Maruti Udyog Limited. At that time, the company had charged excise duty from him. Thereafter the petitioner gave an application which is placed at page 57 (Annex.8) dated 8-10-2001 requesting the Dy. Secretary, Central Excise, Gurgaon for refund of Rs. 60,868.48 paid by him at the time of purchasing of vehicle towards the Excise duty. The Excise duty was paid by Maruti Udyog Limited, therefore, the company also applied for such exemption by giving application (Annexure 9) dated 29-10-2001 which is at page 58 of the paper-book. On the said application, a notice was issued by the Dy. Secretary to the Maruti Udyog Limited, Gurgaon asking the company to show cause within 30 days of receipt of the notice as to why the said refund claim amounting to Rs. 60,868.48 should not be rejected. In the said notice, there is also reference to the fact that the party cleared the said vehicle in the normal course under S.R.P. at the appropriate rate of Central Excise duty and passed on the incidence of duty to the customer, thus, the principle of unjust enrichment is applicable in this case. The company thereafter gave its reply dated 13-2-2001 Annex. 11 and asked the petitioner also to give particulars in connection with the case. The petitioner thereafter submitted all necessary evidence about his physical disability and his entitlement for refund of Excise duty. However, the claim for refund of Excise duty was rejected by the Department by order dated 3-9-2003 (Annex. 13) and the Assistant Commissioner while rejecting the claim has observed as under :

“7. Para 4 of the CBEC’s above said circular specifically state that ‘since auto transmission is one of the special devices required by a person with left leg disability, the Ministry of Industry has been issuing appropriate certificate in respct of auto transmission motor vehicles for extending concessional rate of duty to such handicapped persons’ Para 2 of the circular also stated that ‘vehicle manufacturers have represented that they are manufacturing cars with automatic transmission which are suitable for persons having left leg disability. The said car “Esteem-AX” which was cleared by M/s. MUL under SRP on payment of appropriate duty of Central Excise to be sold to any of the customers. The only special feature of the car is that it has automatic transmission system which makes it capable of being driven by a handicapped person with left leg disability.”

6. The petitioner after making some representations has ultimately approached this Court with the prayer that the Department be directed to refund the Excise Duty as he was entitled to such exemption in view of the fact that he is physically handicapped person.

7. Learned Counsel for the petitioner, Mr. Manoj Bhandari submitted that the fact that the petitioner is physically handicapped person is not in dispute; and the certificate issued by the Department of Industries has also been produced, which is the requirement under the notification. In spite of clear entitlement of the petitioner, an absurd and rigid view has been taken by the Excise Department in not giving benefit of exemption from Excise Duty to the petitioner who has purchased the car with auto-transmission that is suitable for physically handicapped person.

8. The learned Advocate Mr. Rajesh Joshi appearing for the Excise Department on the other hand submitted that since the petitioner is physically handicapped by right leg, he does not fall in the category of physically handicapped person in connection with granting exemption from Excise Duty on purchase of the car. Mr. Joshi relied upon the circular dated 24-6-2002 (Annex.R/1) and submitted that the person having disability in left leg is entitled to exemption. As against this, since the petitioner is physically handicapped person by right leg having no disability in left leg, is not entitled to the exemption.

9. We have considered the rival submissions and examined the record.

10. As noticed hereinbefore, the certificate (Annex.7) indisputably makes out that the petitioner is a physically handicapped person; that the vehicle in question is capable of being driven by him; and that the concerned department had issued the said certificate for the purpose of availing Excise duty concession. In this connection reference may also be made to the Departmental clarification (Annex. 18), Paras 4 and 5 whereof read as under :

“4. Since auto-transmission is one of the special devices required by person, with left leg disability, the Ministry of Industry has been issuing appropriate certificates in respect of auto-transmission motor  vehicles for extending concessional rate of duty to such handicapped persons. The concession will obviously not be available to all automatic transmission vehicles, but only in respect of those vehicles which are bought by physically handicapped persons and who produce necessary certificate from Ministry of Industry.
5. In view of the above, it is clarified that the concession should not be denied in respect of any motor vehicle with special features (like auto transmission) which is capable of being used by a handicapped person and for which necessary certificate from the Ministry of Industry is produced in this regard.”

11. It is true that simply because the vehicle in question is having auto-transmission facility that by itself cannot be the ground for claiming exemption as the Department has found that even non-handicapped person can also purchase the said car with auto-transmission and obviously, in such a case the person who is not physically handicapped is not entitled to exemption simply because he purchased the vehicle with auto-transmission facility. Apparently, the person who is physically handicapped and purchases a vehicle having auto-transmission facility, is entitled to such exemption in view of clause 5 of the clarificatory circular.

12. The learned Counsel for the Department has fairly conceded that it cannot be said that the petitioner is not the physically handicapped person in view of certificate issued by the Department of Industries. The Policy framed by the Department is required to be considered in its logical way; and cannot be reduced to farce. When a person who is physically handicapped, suffering from mal-functioning or non-functioning of a limb and has purchased a vehicle suitable to him, we see no reason that he is not entitled to get exemption regarding payment of Excise duty, irrespective of the fact as to whether he is phycially handicapped in a particular manner or not. Even clause 5 of the clarificatory circular makes it clear that it does not make such a distinction that the person having disablity in right leg may not be entitled to get exemption. The said Clause 5 of the clarficatory circular clearly provides that if a vehicle is purchased by a physically handicapped person for which necessary certificate issued by the Ministry of Industries is produced, he is entitled to exemption.

13. As pointed out earlier, it is not in dispute that the petitioner is a physically handicapped person and he has also produced the certificate to that effect. Once the policy is framed to give exemption to the physically handicapped person, it would be absolutely unjust to deny him such benefit on a pretext that he is physically handicapped only in connection with right leg and not the left one. Such type of distinction drawn by the Department is unjust, arbitrary and uncalled for; and appears nothing less than malice in law as it stands contrary to the policy framed by the Department for giving exemption to the physically handicapped persons. The stand taken by the Department in denying just claim of the petititoner in the matter of concession on payment of Excise Duty is absolutely arbitrary. At the time of considering the exemption application the certificate issued by the Ministry of Industries has been totally ignored and clarfication circular of the Department has also been ignored by the concerned officer. In our view, the officer has acted in absolutely unjust and improper manner in denying the just claim of the petitioner in the matter of getting rebate on Excise Duty. The stand of the Department is unsustainable and the writ petition filed by the petitioner is required to be allowed.

14. For the reasons mentioned above, this writ petition allowed. The impugned order dated 3-9-2003 (Annex. 13) quashed and set aside and we hold that the petitioner entitled to get exemption in the matter of Excise Duty at the time of purchasing car in view of the fact that he is a physically handicapped person. The refund of Excise Duty be made to the petitioner within a period of one month from today. Learned Counsel Mr. Rajesh Joshi appearing for the Excise Department has assured that thereshall not be any further delay in making such payment which may amount to adding insult to the injury. Though in the facts and circumstances of the case and in view of the order passed by this Court, the petitioner can legitimately claim interest on delayed payment and cost of litigation, however, learned Counsel Mr. Bhandari appearing for the petitioner conceded that he is not praying for refund with interest and costs, especially in view of the assurance that the payment shall be made within a period of 30 days from today. Considering this aspect, we do not direct the Department to pay the aforesaid amount with interest and make the cost easy, if the amount is paid within the period as indicated above. However, if the payment is not made within a period of 30 days, said amount will be paid with interest @12% per annum from the date of lodging of claim of refund by the petitioner, i.e. From 8-10-2001.