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TMI Blog2011 (6) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... iring from the chronology of events submitted by the learned Advocates for the parties, as also from the documents on record, are as under : 2(i). The petitioner is a proprietorship firm belonging to Khambhata Family Trust, engaged in the business of manufacturing Rasna Soft Drink Concentrate (hereinafter referred to as RSDC). In the year 1986, the new Central Excise Tariff Act, 1985 (hereinafter referred to as the CETA), having come into force w.e.f. 28th February, 1986, the Jurisdictional Superintendent of Central Excise informed the petitioner-firm that the RSDC manufactured by the petitioner was classifiable as "edible preparation not elsewhere specified or included," under sub-heading No. 2107.91 of the CETA w.e.f. 28-2-1986. The petitioner, therefore, challenged the said direction of the Superintendent by filing writ petition being Special Civil Application No. 1205 of 1986 before this Court. This Court, vide order dated 20-4-1987, directed the concerned respondents to issue a show-cause notice to the petitioner before adjudicating the matter. The Assistant Collector, thereafter, issued a show cause notice dated 17-6-1987 pursuant to the said order passed by this Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-heading 2107.91 and also confirmed the demand for Rs. 2,06,13,0131.01ps, towards the dues, vide order dated 14-3-1990. The petitioner thereafter challenged the said order and other orders passed by the concerned authorities from time to time, before this Court and before the CEGAT, as in the meantime the Assistant Collector had also passed other seven orders pertaining to the demand of dues amounting to Rs. 4,56,08,162/- for the period from 1-1-1988 to 31-1-1990. 2(iii). It further appears that when the appeals of the petitioner were pending before the CEGAT, the respondent no. 4 - Board issued a circular bearing no. 23/13/1993 dated 20-12-1993, in exercise of powers conferred under Section 37B of the Central Excises and Salt Act, 1944, classifying the product "synthetic soft drink concentrate" under sub-heading 2107.99, where the rate of duty was nil. The CEGAT, therefore, in view of the said circular of the Board, disposed of the said appeals preferred by the petitioner, vide order dated 30-11-1994 and remanded the cases to the concerned Assistant Collector of Central Excise, Ahmedabad for de novo adjudication in the light of the said circular dated 20-12-1993 of the Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Under Secretary, Government of India, Ministry of Finance and Company Affairs, vide letter dated 3-10-2002, conveyed the petitioner that it was not found possible to accede to the request of the petitioner to pay interest as demanded in its letter dated 12th August 2002. The petitioner under the circumstances, approached this Court by way of present petition challenging the legality and validity of the show cause notice dated 10th March 1997 issued by the respondent no. 3 and the decision of the respondent no. 4 - Board contained in the letter dated 3rd October 2002 and also sought issuance of appropriate writ directing the respondents to pay the interest at the rate of 12% per annum on the amounts of deposits, together with further interest at the rate of 24% per annum on the amount of interest. 3. The learned Senior Advocate Mr. K.B. Trivedi placing heavy reliance on the order dated 28th July 1988 passed by this Court in Special Civil Application No. 2505 of 1988 submitted that as per the directions given in the said order which was passed with the consent of the parties, the revenue was liable to pay interest at the rate of 12% on the amounts deposited by the petitioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delayed refunds, the Courts have awarded the interest on the equitable grounds, considering the fact that the revenue had used the amount of deposits made by the assessee, and correspondingly the assessee was kept out of the use of such amount during the relevant period. Mr. Trivedi, further developing his arguments, had submitted that in the instant case despite the order passed by the High Court the Revenue did not pay the interest amount on the huge deposits made by the petitioner pending the proceedings and on the contrary issued impugned show cause notice. It was submitted by him that though the petitioner was paid the amount of deposits, the action of the respondents in not paying the interest on the said deposits and in issuing the impugned show cause notice was ex facie arbitrary and in utter disregard of the order passed by this Court. Pressing into service the principle of "Restitution", as propounded in the case of South Eastern Coalfields Ltd. v. State of M.P. and Ors., (2003) 8 Supreme Court Cases 648, Mr. Trivedi submitted that the petitioner having been deprived of the use of its money, for so many years, the loss was required to be compensated by directing the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Collector. She also submitted that the petitioner kept on challenging the orders passed by the various authorities from time to time and did not make the payment as directed by the said authorities and the Courts. Ultimately, runs the submissions of Ms. Mandavia, when the proceedings were pending before the CEGAT, the respondent no. 4 - Board, suo motu took an independent decision considering the various representations made by various parties and considering the various assessment practices prevailing at the relevant time, the benefit of which was conferred to the petitioner. Under the circumstances, it could not be said that the petitioner had finally succeeded in its challenge as sought to be canvassed by the petitioner. 6. It was further submitted by Ms. Mandavia that the Assistant Collector having already refunded the amount of deposits as per the orders dated 21-8-1995 and 30-5-1996, the question of payment of interest on the said amount did not arise. Ms. Mandavia has relied upon the judgment of Hon'ble Supreme Court in the case of Union of India v. Orient Enterprises, 1998 (99) E.L.T. 193 (Supreme Court) in support of her submission that the writ petition under Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition filed only for the purpose of seeking refund, it was observed in the said case as under : "We do not consider it proper to extend the principle justifying the consequential order directing the refund of amount illegally realised, when the order under which the amount had been collected has been set aside, to cases in which only orders for the refund of money are sought. The parties had the right to question the illegal assessment orders on the ground of their illegality or unconstitutionality and, therefore, could take action under Article 226 for the protection of their fundamental right and the Courts, on setting aside the assessment orders, exercise their jurisdiction in proper circumstances to order the consequential relief for the refund of the tax illegally realised. We do not find any good reason to extend this principle and, therefore, hold that no petition for the issue of a writ of mandamus will be normally entertained for the purpose of merely ordering a refund of money to the return of which the petitioner claims a right." 8. The said proposition of law has been reiterated and followed in the case of Union of India v. Orient Enterprises (supra), wherein th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainability of petition any further, the petition is being decided on merits. 10. In the instant case, the main controversy revolves round the order dated 28th July, 1988 passed by this Court in Special Civil Application No. 2505 of 1988, and more particularly, the use of the words, "in the event the assessee finally succeeds in his challenge." The relevant portion of the said order has already been reproduced hereinabove. In order to appreciate the said controversy, in the light of the submissions of the learned advocates of the parties, it would be necessary to recapitulate the proceedings and the events which took place since the commencement of the petitioner's challenge till its culmination. It appears that consequent to the commencement of Central Excise Tariff Act, 1985 w.e.f. 28-2-1986, the petitioner was requested by the Range Superintendent to observe the Central Excise formalities, as their product RSDC was liable to be classified under heading 2107 of schedule, chargeable to duty. The petitioner, therefore, filed Special Civil Application No. 1205 of 1986 before this Court challenging the said action of the Superintendent of Central Excise directing the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the Assistant Collector for de novo adjudication holding that the Assistant Collector had the jurisdiction to decide the issue involved. Against the said order, the petitioner preferred an appeal before the CEGAT, New Delhi, however, the same came to be rejected vide order dated 20-7-1989. Again, in view of the said orders of remand passed by the Collector (Appeals) and the CEGAT, the Assistant Collector in de novo proceedings being No. O.LO. 49/VC/90 confirmed the classification of petitioner's product under the sub-heading 2107.91 and confirmed the demand for Rs. 2,06,13,031.01ps. towards the duty vide his order dated 14-3-1990. Further, the petitioner again challenged the order of Assistant Collector dated 14-3-1990 by filing Special Civil Application No. 2759 of 1990 before this Court and this Court by order dated 19-5-1990 directed the petitioner to deposit Rs. 50 lakhs in addition to Rs. 30 lakhs already deposited pursuant to the order passed in Special Civil Application No. 2505 of 1988 and also directed the petitioner to file appeal before the Collector of Central Excise (Appeals) against the order dated 14-3-1990 under challenge passed by the Assistant Collector. It a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said order of the CEGAT. The High Court of Delhi, vide order dated 23-10-1992, directed the petitioner to deposit Rs. 3.5 crores and to furnish a security of immovable property for the balance amount. It appears that the petitioner complied with the said directions issued in the said order passed by the Delhi High Court. When the said appeals against the orders of Collector (Appeals) passed in O.I.A. No. 738 of 1991 to 745 of 1991 were pending before the CEGAT, New Delhi, the respondent no. 4 - Board issued a circular dated 20-12-1993 classifying the product "synthetic soft drink concentrate" under the sub-heading 2107.99 in which the rate of duty was nil. 13. It is pertinent to note that the petitioner in its petition has not specifically stated about the said proceedings filed by it in the CEGAT and about the petitions filed in the High Court of Gujarat and of Delhi. It has also not stated in its petition about the circular dated 20-12-1993 issued by the respondent No. 4. The said circular was produced on record as Annexure-II by the respondents along with their affidavit-in-reply. Now, in the very first para of the said circular, it is stated that there was no uniformity i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner, and the orders passed by the judicial and quasi judicial authorities from time to time, it emerges that the proceedings initiated against the petitioner by the respondents, initially by issuing the show cause notice dated 17-6-1987 making demand of duty for the period from March-1986 to April-1987, and thereafter by issuing other seven show cause notices for different periods ranging from January-1988 to September-1991, were dropped by the Assistant Collector, vide order dated 12-7-1995, considering the circular dated 20-12-1993 issued by the respondent No. 4 Board. Hence, the petitioner after a long battle finally succeeded in its challenge by virtue of the Board's circular classifying "Synthetic Soft Drink Concentrate" under the sub-heading No. 2107.99 not chargeable to duty. Though the said circular was issued for the purpose of ensuring uniformity in the classification and in exercise of the powers conferred under Section 37-B of the Central Excises and Salt Act, 1944, the said circular was made applicable to the product of the petitioner RSDC by the respondent authorities, and ultimately the deposits of Rs. 5.56 crores and Rs. 4.56 crores were refunded to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payment of interest on the refunds. The Division Bench of this Court, dealing with the provisions of the said Act as regards question of payment of interest on refunds, in the case of Satellite Engineering Ltd. v. Assistant Collector of Central Excise, 1992 (58) E.L.T. 503 (Guj.) and in case of Ramakrishna Wire Works v. Union of India, 1996 (81) E.L.T. 450 (Guj.) has held inter alia that there is no statutory provision in the said Act, unlike other taxing statutes such as, Sales Tax Act and Income Tax Act, on the basis of which the petitioner could have claimed interest on the amount of refund of dues granted to them. Negativing the contention that the interest can be claimed on the principle of justice, equity and good conscience, the Court held inter alia that interest cannot be allowed by way of damages, more particularly, when Section 40 of the said Act, protected the Government and its officers for the acts done in good faith in pursuance to the Act. Further, in the case of G.H. Industries v. Collector of Central Excise, Ahmedabad, 1997 (94) E.L.T. 483 (Guj.), the Court held to the effect that when there was scope for difference of opinions as regards the correct classifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls), the Assistant Collector, after the remand of the said proceedings from the Collector (Appeals) and CEGAT, heard and adjudicated upon the said proceedings arising out of the show cause notice dated 17-6-1987, along with the other proceedings arising out of seven other show cause notices, against the challenge of the petitioner regarding the payment of the duty. The said proceedings and the challenge of the petitioner could attain finality only when the respondent no. 4 Board issued the circular, on the basis of which the said proceedings came to be dropped. Under the circumstances, as rightly submitted by Mr. Trivedi for the petitioner, the order dated 28-7-1988 of this Court could not be confined to the challenge of the petitioner before the Assistant Collector, Collector (Appeals) or CEGAT, but the said order was required to be read in the context of the challenge of the petitioner regarding his liability to pay the duty, and therefore the Court had used the words that "in the event the assessee finally succeeds in his challenge". If the Court wanted to restrict the order only up to the challenge before the Assistant Collector or the Collector (Appeals), it would have specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other proceedings having arisen pursuant to the other show cause notices issued against the petitioners subsequent to the said order. If the said order passed in Special Civil Application No. 2505 of 1988 was confined only to the proceedings of O.I.O. No. 48 of 1988 in which the Assistant Collector had passed the order dated 19-4-1988, the Collector (Appeals) while disposing of the said eight appeals on 15-10-1991 would not have referred to the said order dated 28-7-1988 passed in Special Civil Application No. 2505 of 1988, for directing the petitioners to pay balance amount along with the interest at the rate of 12% per annum. It is also pertinent to note that the said order of Collector (Appeals) was further carried before the CEGAT by filing other eight appeals and when the said appeals were pending, the respondent No. 4 Board had issued the said circular and thereafter ultimately on the basis of said circular the proceedings against the petitioner were dropped by the Assistant Collector vide order dated 12-7-1995 (Annexure-A). Thus, the respondents themselves having made applicable the order dated 28-7-1988 of the High Court to all the proceedings which took place subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Collector (Appeals) and the CEGAT, wherein the petitioner's challenge was that they were not liable to pay any excise duty. The petitioners having finally succeeded in that challenge, the said amount of deposits were required to be returned to the petitioners with interest considering the doctrine of restitution and on equitable principles as such deposits made by the petitioner as per the orders of the Court, had resulted into impoverishment which it would not have suffered, but for the orders of the Court. The Hon'ble Supreme Court in case of ONGC Ltd. v. Commissioner of Customs, Mumbai (supra) has also awarded the interest on the amounts deposited by the concerned appellants, applying the principle of restitution. It is, therefore, held that the petitioner was entitled to the refund of deposits with interest at the rate of 12% per annum, as per the order dated 28-7-1988 passed by the Court in Special Civil Application No. 2505 of 1988 as well as on the application of principles of restitution and equity. Under the circumstances, the show cause notice dated 10-3-1997 issued by the respondent No. 3, and the letter dated 3-10-2002 of the respondent No. 4 Board, not acceding to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calling upon the petitioner to show cause as to why their claim for interest on deposits should not be rejected, the petitioner kept on making representations before the various authorities for about five years and thereafter filed the present petition in the year 2002. As per the case of the petitioner, since the respondent Board had rejected its request for payment of interest on the deposits only on 3rd October, 2002, they had preferred the petition in 2002. However, it appears that the said letter was written by the respondent No. 4 Board in response to the letter of the petitioners dated 12-8-2002. There is no explanation coming forth as to why the petitioner waited for a period of five years and did not take any legal action for about five years. Further it is also required to be noted that the present petition filed in 2002 is being decided in 2011. Therefore, the said delay from 1997 to 2011 cannot be attributed to the respondent authorities for making them liable to pay interest on interest amount as claimed in this petition. In that view of the matter, it is required to be held that the respondents cannot be directed to pay interest on the interest as claimed by the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sifying the product 'Rasna' under Chapter Sub-heading No. 2107.91 and confirming the demand therein was upheld by the Collector (Appeals) in the order-in-appeal dated 15-10-1991. According to the respondents the directions issued by this Court in SCA No. 2505 of 88 were relevant for payment of interest only at the stage when the Collector of Appeals was to dispose of the appeal. That the Collector (Appeals) decided the matter against the petitioner hence, in terms of the directions issued by this High Court the petitioner became liable to pay interest. However, the petitioner did not do so and instead chose to prefer an appeal against the said order before the Tribunal. It is the case of the respondents that the directions of this Court had become inoperative, once the Collector (Appeals) finalised the issue and the petitioner had not paid the interest. That the Tribunal as well as the Delhi High Court had not issued any directions to pay interest and as such the respondents have processed and scrutinised the admissibility or otherwise of the liability to pay interest on the amounts deposited by the petitioner which does not warrant any interference. 27. The Apex Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry provision, the same is based upon an order passed by this Court. Hence, the case cannot be equated with a case where a petition is filed seeking interest on delayed refund directly before this court based on general principles without any statutory or other basis. The petition is filed for enforcement of a right conferred under the said order. 30. A perusal of the order dated 28th July, 1988 passed by this court in Special Civil Application No. 2505 of 1988 shows that under the said order by consent of the parties it was inter alia directed that the assessee will file an undertaking that in the event he finally fails in his challenge and is held liable to pay Excise Duty, he will pay the difference with interest at 12% per annum and that on behalf of the revenue an undertaking will be filed that in the event the assessee finally succeeds in his challenge and is found not liable to pay excise duty on his product, the revenue will refund the amount with interest at 12% per annum. Thus liability to pay interest would arise under the said order when the challenge becomes final. The question that arises for consideration in view of the rival contentions is as to when can the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in SCAs filed by them. It is relevant to mention here that in terms of the last order dated 19-4-90 of Gujarat High Court in SCA No. 2759 of 1990, all the 3 trustees of Khambhatta Family Trust were required to file undertaking in the court to the effect that in the event the petitioners fail in the challenge before the Collector (Appeals), they will pay the excise duty difference as expeditiously as possible, subject to any different orders of the higher authorities. It is further noticed that out of the total demand of duty amounting to Rs. 6,21,21,193/- covered by the eight impugned orders, the appellants have so far paid only an amount of Rs. 80 lakhs (30 + 50), as directed by the High Court of Gujarat. As such the appellants are directed to immediately pay the balance amount alongwith interest at 12% in pursuance of the undertaking given by them before High Court of Gujarat, as directed in its order dated 28-7-88 in SCA No. 2505 of 1988." 32. Thus, from the aforesaid order it is apparent that the parties have proceeded on the footing that all amounts in respect of similar proceedings pertaining to classification of the petitioner's product would be covered by the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can never be any wrongful retention by an authority until this Court holds that their stand is not in accordance with law. Therefore, that on this issue as well, the impugned judgment cannot be sustained and ought to be reversed. 46. The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was undisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money had been unjustifiably withheld by the Department for 17 years without any rhyme or reason. The interest was paid only at the instance and the intervention of this Court in Civil Appeal No. 1887 of 1992 dated 30-4-1997. Interest on delayed payment of refund was not paid to the appellant on 27-3-1981 and 30-4-1986 due to the erroneous view that had been taken by the officials of the respondents. Interest on refund was granted to the appellant after a substantial lapse of time and hence it should be entitled to compensation for this period of delay. The High Court has failed to appreciate that while charging interest from the assessees, the Department first adjusts the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the order dated 28th July, 1988 passed by this court in Special Civil Application No. 2505 of 1988 the petitioner would not even be entitled to claim interest on the amounts so deposited in a writ petition under Articles 226 of the Constitution. Any claim for interest could then be made on general principles by pursuing the ordinary civil remedy. As held by the Supreme Court in the case of Tata Refractories Ltd. and another v. Sales Tax Officer (supra) when deposit is made not by invoking the provisions of the Act but as directed to be made by the High Court, any direction made while making an order under Articles 226 and 227, to deposit any sum will be governed by the conditions imposed in the order directing such deposit. Applying the aforesaid decision to the facts of the present case, the deposits made by the petitioner will be governed by the aforesaid order dated 28th July, 1988. A perusal of the said order makes it clear that the same does not make provision for payment of interest on interest. In the circumstances, the petitioner in a writ petition under Article 226 of the Constitution of India cannot be granted any further relief than that flowing from the said order. ..... 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