Kwalit Silk Mills V. Union of India

SCA/12606/2019

AI Insights

The case involves M/S Kwalit Silk Mills, a partnership firm engaged in textile processing, which sought a refund of excise duty along with interest from the Union of India. The dispute centered on whether the processing of fabrics constituted 'manufacturing' and thus liable for excise duty. The Supreme Court had earlier ruled that such processing was manufacturing but the duty was chargeable on the value of processed fabrics. Over the years, various legal proceedings determined the amount refundable to the petitioners, which was eventually deposited in the Consumer Welfare Fund under the doctrine of unjust enrichment. The petitioners contested this decision, leading to the current judgment which affirmed their entitlement to the refund with interest.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 816273 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 28-07-2022
• Assessment Year: misc
• Other Referred Cases: Shri Jagadamba Polymers Ltd. v. Union of India, Union of India v. Guwahati Carbon Ltd, Ranbaxy Laboratories Ltd. v. Union of India & ors., Hamdard (WAQF) Laboratories v. Union of India, Kamakshi Tradexim (India) Pvt. Ltd v. Union of India
• Laws Referred To: Central Excise Act, 1944, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NIKUNT RAVAL
• Assessee Lawyers: AMAL DAVE; PARESH DAVE
• Keywords: Bank guarantee; Central Excise; Interest on Delay; Refund; Unjust enrichment
• Section: 226; 11BB; 11B

Judgement Text

"C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 12606 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? ========================================================== M/S KWALITY SILK MILLS Versus UNION OF INDIA ========================================================== Appearance: AMAL PARESH DAVE(8961) for the Petitioner(s) No. 1,2 MR PARESH M DAVE(260) for the Petitioner(s) No. 1,2 MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 1,2 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 28/07/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) Page 1 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 1. Heard learned advocate Mr. Amal Paresh Dave for the petitioners and learned advocate Mr. Nikunt Raval for the respondent. 2. Having regard to the controversy involved in the present case which lies in a very narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing. 3. Rule returnable forthwith. Learned advocate Mr. Nikunt Raval waives service of notice of rule on behalf of the respondent. 4. The petitioners have filed this petition under Article 226 of the Constitution of India with a prayer to direct the Assistant Commissioner of CGST and Central Excise respondent no.2 herein to pay interest on delayed payment of refund of Rs.9,45,015/- for the period from August 1990 till actual payment. The petitioners have also Page 2 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 prayed for interest on interest as well as to return the bank guarantee of Rs.3,23,195/- lying with the Registry of this Court. 5. Brief facts of the case are that the petitioner no.1 is a partnership firm engaged in the business of textile fabrics. The period involved in this case is from September, 1976 to February, 1987 during which the petitioner no.1 firm was undertaking various processes like dyeing, bleaching, printing, etc. on textile fabrics on job work basis. At that time a dispute arose with regard to levy of excise duty on fabrics processed on job work basis because the claim of the processors like the petitioners was that such job work processing was not “manufacturing” and hence, there was no liability to pay excise duty whereas the respondent authorities were of the view that excise duty was payable by the processors on the price at which traders/merchants actually sold the processed fabrics to their buyers. Page 3 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 5.1) Around March 1979, this Court held that processing was “manufacture” but excise duty was chargeable only on job charges which the job workers like the petitioners recovered from the merchants. 5.2) Decision of this Court was challenged by the respondents before the Hon’ble Supreme Court and the Supreme Court around August, 1983 stayed the judgment of this Court on condition that refund ordered by this Court should be deposited with the Registry of this Court and the petitioners were allowed to withdraw the amount on furnishing bank guarantee for the full amount of refund in favour of the Registrar of this Court. 5.3) The respondent authorities deposited Rs.12,92,778/- with the Registry of this Court which was allowed to be withdrawn by the petitioners against bank guarantee of equal amount. Page 4 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 5.4) For valuation of fabrics processed on job work, a separate litigation was initiated by various processors including the petitioners and Hon’ble Supreme Court by interim order in March, 1987 on several similar petitions restrained the Revenue from levying and recovering excise duty on the difference between the selling price of the merchants/traders and the value of processing done by the petitioners i.e. the job work charges on the condition to furnish bank guarantee to the full extent securing the differential amount of excise duty. The petitioners accordingly furnished bank guarantee of Rs.17,72,085.75 before the respondent authorities for the job work processing undertaken during March, 1987 to December, 1988. 5.5) The Hon’ble Supreme Court by judgment dated 4.11.1988 and subsequent clarificatory order dated 27.01.1989 held that the processors like the petitioners were liable to pay the excise duty because such processing was Page 5 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 “manufacturing” but the excise duty was chargeable on the “value” of the processed fabrics i.e. the sum total of value of raw materials and job charges. The Apex Court rejected the case of the Revenue for charging and collecting excise duty on the price at which the merchants/traders actually sold the processed fabrics. 5.6) In view of the judgment of the Apex Court, the respondent authorities encashed 11 bank guarantees aggregating to Rs.17,72,085/- and the bank guarantee aggregating to Rs.12,92,778/- lying with the Registry of this Court was also proposed to be invoked and encashed. 5.7) The petitioner therefore, preferred Special Civil Application No.468/1990 challenging the encashment of bank guarantee by the respondent authorities which was decided by this Court vide judgment dated 3.05.1990 directing the respondents to reassess the value Page 6 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 of the processed fabrics and work out the amount refundable to the petitioners within three months from the date of the order/judgment and further directed to refund the excess amount within one month thereafter. The petitioners were directed to submit the claim statement before the respondents within one month and the respondent authorities were allowed to encash 75% of the bank guarantee in the meanwhile. 5.8) The petitioners submitted the claim statement claiming refund of Rs.40,73,077/- with all details of the merchants/traders and also the value of the processed fabrics, excise duty payable thereon etc. The respondent authorities in the meanwhile encashed bank guarantees aggregating to Rs.9,69,583/- being 75% of the bank guarantee furnished by the petitioners before the Registry of this Court. Remaining bank guarantee of Rs.3,23,195/- was lying with the Registry when this petition was filed. 5.9) However, reassessment was not completed Page 7 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 by the respondent authorities for several years inspite of extension of time by this Court till 30.06.1991 and no efforts were made from 1991 to February, 1996 for completing the assessment as directed by this Court. 5.10) On 29.03.1996, the Assistant Commissioner of Central Excise passed an order in original and rejected the claim of the petitioners for refund as if the case was about refund and not for reassessment of assessable value. 5.11) The petitioners therefore, preferred an appeal before the Commissioner (Appeals) who by order dated 28.10.1999 held that the Assistant Commissioner was directed by this Court to work out the excise duties paid and payable and then to work out the amount of refund and therefore, the case was remanded for re-determination of the value for levy of excise duty and for carrying out directions issued by this Court in the year 1991. Page 8 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 5.12) Seven years thereafter on 28.07.2006, the Assistant Commissioner passed a fresh order being order in original No.SRT-I/Refund/29/05-06 and again rejected the case treating it as a case of refund claim. 5.13) The petitioners therefore, again preferred an appeal before the Commissioner (Appeals) Surat who by order dated 9.11.2006 allowed the appeal and held that there were reports of the Range and Divisional Officers that the calculations given by the petitioners were correct and that the order of the Assistant Commissioner not accepting the correct valuation of the goods processed on job work was liable to be set aside. The Commissioner(Appeals) again directed the Assistant Commissioner to complete the exercise of reassessment and also the consequential refund and recovery as directed by this Court in the year 1990 in Special Civil Application No. 468/1990 within one month from the date of receiving the appellate order. Page 9 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 5.14) The Assistant Commissioner of Central Excise thereafter passed an adjudication order dated 27.11.2007 sanctioning the refund of Rs. 9,42,015/- on completing the reassessment based on best judgment method but the amount of refund was directed to be deposited in Consumer Welfare Fund on the basis of Doctrine of Unjust Enrichment. 5.15) The petitioners therefore, again for third time filed an appeal before the Commissioner (Appeals) which was dismissed vide order dated 15.09.2009. 5.16) The petitioners thereafter filed an appeal before the Appellate Tribunal raising various contentions about the correct method of valuation, the evidence available on record for proving the correct value of goods produced on job work, the amount of refund payable to the petitioners and further contended that there is no unjust enrichment in case of the petitioners. Page 10 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 5.17) During the course of hearing on 18.07.2018 in Appeal No.E/1634/2009 before the Tribunal, the petitioners agreed for not claiming the entire amount of original refund claim and agreed that refund of Rs. 9,42,015/- ordered by the Assistant Commissioner vide the adjudication order dated 27.11.2007 is required to be paid to the petitioners with interest because the entire amount of refund sanctioned by the said authority was secured by bank guarantees and the Doctrine of Unjust Enrichment was not applicable when any amount was secured by an assessee by way of bank guarantee. 5.18) The Tribunal decided Appeal No.E/1634/2009-DB by order dated 27.07.2018 holding that the petitioners were entitled for refund of Rs.9,42,015/- along with interest as prescribed under the Central Excise Act, 1944 and further directions were issued as to how and for what period interest should be calculated and paid by the Revenue in the said order. Page 11 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 5.19) After the order passed by the Tribunal, respondent no.2 did not pass any order giving effect either to refund of Rs. 9,42,015/- or to release the bank guarantee of Rs. 3,23,195/- lying with the Registry of this Court. The petitioners therefore, submitted various letters and applications and thereafter on 15.05.2019, respondent no.2 sanctioned refund of Rs.9,42,015/- in favour of the petitioners and ordered its transfer from the Consumer Welfare Fund to the account of the petitioners within prescribed time limit as mentioned in the Central Excise Act, 1944. However, respondent no.2 refused to sanction and pay interest on the said amount of refund inspite of directions by the Tribunal to pay the same as per the rates applicable under the Act by observing that the matter was under continuous litigation/judicial proceedings during the complete period for which interest was being claimed. 5.20) Inspite of the order passed by Page 12 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 respondent no.2, amount of Rs.9,42,015/- was not paid nor the bank guarantee of Rs.3,23,195/- lying with the Registry of this Court was released and therefore, the petitioners again made representations before respondent no.2 and as the same were not considered, the petitioners have filed this petition. 6. During the pendency of this petition, the petitioners did not press the prayers contained in paragraph no.20(B) for claim of interest on interest. With regard to release of the bank guarantee of Rs.3,23,195/-, a statement was made on behalf of respondent no.2 that there is no objection if the same is allowed. In view of above, the following order was passed by this Court (Coram : Hon’ble Ms. Justice Bela M.Trivedi and Hon’ble Mr. Justice A.C.Rao) on 27.02.2020: “1. Learned Advocate Mr.Amal P. Dave for the petitioners does not press for the prayer contained in Paragraph No.20(B). 2. So far as the prayer contained in Page 13 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 Paragraph No.20(C) is concerned, the learned Advocate Mr.Nirzar Desai for the respondent No.2 – Assistant Commissioner of CGST & Central Excise has no objection, if the same is allowed. 3. Accordingly, the Registry of the High Court is directed to release the Bank Guarantee furnished by the petitioners aggregating to Rs.3,23,195/-. 4. Learned Advocate Mr.Amal Dave for the petitioners seeks permission to amend the prayer contained in Paragraph No.20(A). 5. Permission as sought for is granted. Necessary amendment be carried out within two days. 6. Both the learned Advocates for the parties are directed to furnish the details as regards the payment of interest that may be paid to the petitioners as per the order dated 27.7.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal, without prejudice to the contentions raised by them. 7. Put up on 6.3.2020.” 7. Learned advocate Mr. Amal Dave for the petitioners submitted that the petitioners are entitled to interest as per the directions issued by the Tribunal and respondent no.2 Page 14 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 cannot deny the payment of the same. It was submitted that the Tribunal in order dated 27.07.2018 has observed that the petitioners are entitled to refund of Rs.9,42,015/- along with interest as prescribed under the Act and while granting interest for the period for which the entire amount was refunded to the petitioners in the year 1983 and 75% of which was recovered from the petitioners in 1990 was ordered to be adjusted. 7.1) Learned advocate Mr. Dave for the petitioners submitted that as per the calculation of the interest receivable by the petitioners as per the certificate of the Chartered Accountant M/s. Avakash C. Jariwala & Co. dated 06.10.2021, it is certified that the petitioners are entitled to interest at the rate of 6% per annum from 1990-1991 on Rs.9,42,015/- amounting to Rs.17,57,261/-. 7.2) It was submitted that the respondent authorities are required to pay the aforesaid Page 15 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 amount by way of interest to the petitioners on the amount of refund to which the petitioners were entitled as there was no unjust enrichment as the said amount was duly secured by the bank guarantee furnished by the petitioners in favour of the respondent authorities. 7.3) It was submitted that as per the provisions of section 11BB of the Central Excise Act, 1944 the petitioners are entitled to interest on the refund amount. It was contended that right from May 1990, the petitioners were dragged into litigation in respect of the refund claimed and interest due and payable to the petitioners for delay in payment of refund and therefore, as held by this Court in case of Shri Jagadamba Polymers Ltd. v. Union of India reported in 2013(289) E.L.T. 429 (Guj), Revenue cannot avoid the liability on account of payment of interest on the delayed payment of refund. 7.4) It was submitted that this Court passed the order in the year 1991 for refund of the Page 16 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 amount which was not calculated by the authority till 2007 and therefore, for the period of delay in paying the refund, the petitioners are entitled to interest on the said amount which is accepted by the petitioners before the Tribunal. It was submitted that the Tribunal also during the course of hearing of the appeal on merits has held in favour of the petitioners after considering the directions of the Apex Court as well as this Court. 7.5) It was therefore, submitted that the petitioners are entitled to refund as per the provisions of the Central Excise Act, 1944 from 3.09.1990 till actual payment of amount of Rs.9,42,015/- as calculated by the Chartered Accountant being amount of Rs.17,57,261/- as directed by this Court in order dated 27.02.2020. 8. On the other hand, learned advocate Mr. Hirak Shah for learned advocate Mr. Nikunt Raval for respondent nos.1 and 2 referred to and relied Page 17 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 upon the affidavit in reply filed on behalf of respondent no.2 to contend that by order dated 27.11.2007, refund of Rs.9,42,015/- was sanctioned but the same was transferred to the Consumer Welfare Fund which was further ordered to be granted to the petitioners pursuant to the order passed by the Appellate Tribunal by respondent no.2 in the year 2019. 8.1) It was submitted that Pay and Accounts Officer is the disbursing authority to transfer the sanctioned amount from Consumer Welfare Fund to the account of the petitioners and respondent no.2 by letter dated 17.05.2019 requested the Pay and Account officer to transfer the said amount of refund from Consumer Welfare Fund and on inquiry, it is learnt that the amount of refund is already transferred into the account of the petitioners from the Consumer Welfare Fund. 8.2) With regard to the release of bank guarantee of Rs.3,23,195/-, it was submitted Page 18 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 that respondents have no objection for release of such bank guarantee and the same is already released by the Registry of this Court as per letter dated 29.05.2019 issued by respondent no.2. 8.3) It was further submitted that with regard to the claim of the petitioners for interest on Rs.9,42,015/-, the same was rejected by order dated 15.05.2019 on the ground that during the entire period for which interest is claimed, the matter was under continuous litigation and therefore, the interest on refund would not be justified. 8.4) It was submitted that the petitioners have an alternative efficacious remedy as the petitioners could have filed an appeal before the Commissioner(Appeals) against the order in original dated 15.05.2019 and reliance was placed on the decision of Apex Court in case of Union of India v. Guwahati Carbon Ltd reported in 2012(278) ELT 26 (SC) wherein it is Page 19 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 held that the assessee has a remedy in the form of a right to appeal under the statute and such remedy must be exhausted first. 9. Considering the submissions made by learned advocates of both the sides and in view of order dated 27.02.2020 passed by this Court, scope of this petition is now limited as to whether the petitioners are entitled to grant of interest on the amount of refund of Rs.9,42,015/- as per order dated 27.07.2018 passed by CESTAT or not. 10. It is therefore, necessary to refer to the observations made by the Tribunal in order dated 27.07.2018 in Appeal No.E/1634/2009-DB which reads as under : “5. We have gone through the rival submissions. The appellant had originally field a refund claim of Rs. 40,73,077/-. However, they are not disputing the amount calculated by the original adjudicating authority by adopting best judgment method. The original adjudicating authority quantified the amount of refund admissible as Rs. 12,92,778/-. The Adjudicating Authority held that the refund to the appellant is in pursuance of the direction of Hon'ble Apex Court order dated 04.08.1983, to the extent Page 20 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 the said amount was not refunded by the appellant to the department in pursuance of the order of the Hon'ble Gujarat High Court order dated 03.05.1990. The Hon'ble High Court directed the appellant to pay 75% of the amount that was refunded to them under the direction of Hon'ble Apex Court dated 04.08.1983. The appellant however, retained the balance 25% amount by furnishing bank guarantee. For the said bank guarantee, the appellant claimed that it is still being maintained with the office of the Registrar of Hon'ble Gujarat High Court. In view of the above it is apparent that the amount of Rs. 3,23,195/- does not stand paid to Revenue and therefore, it needs to be adjusted against the admissible refund of Rs. 12,65,209/- Consequently, the appellant are entitled to refund of an amount of Rs. 9,42,015/- as adjudged by original adjudicating authority. 6. The next issue relates to the applicability of principles of unjust- enrichment to the present case. The appellant have cited a long list of case laws in support of their argument. The decision in the case of Saheli Synthetics Pvt. Limited vs. CC & CE, Surat - 2001 (99) ECR 47 (Tribunal) squarely covers the issue. In para 5 of the said order, the following has been observed: - “5. On hearing both sides we note that the appellant's claim right from the start that their refund claim is restricted to the excess amount and does not represent the refund of excise duty has not been disputed by the adjudicating authority in the final order dated Page 21 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 19-9-1995. The Commissioner (Appeals) also in the present impugned order does not hold that the amount for which the refund is sought represents excise duty payable by the appellants. Therefore, the learned Counsel is correct in his submission that the present situation is covered by the decision of the Hon'ble Supreme Court in the case of Oswal Agro Mills Ltd. v. CCE 1994 (51) ECR 330 (S.C.), holding that bank guarantee furnished by an assessee in compliance with a Court order is in the form of a security or deposit and cannot be held as payment of duty attracting the provisions of unjust enrichment. This decision of the Hon'ble Supreme Court has been) followed by the Tribunal in the case of Grasim Industries Ltd. vs CCE-2001 (94) ECR 222 and in the case of CCE, Rajkot v. Jupiter Cement Industries Ltd. 1997 (72) ECR 733.” Similarly, in the case of UOI vs, Grasim Industries Limited - 2005 (183) ELT 12 (Roj.) has been observed as follows: - \"3. We have heard Mr. Ravi Bhansali, learned counsel for the department and Mr. Rajendra Mehta, learned counsel for the assessee. In our opinion, no referable question of law arises from the order of the CEGAT, as the same has been decided by the Apex Court, it is held by the Apex Court in Oswal Agro Mills case (supra) that furnishing of a bank guarantee for all or part of the Page 22 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 disputed excise duty pursuant to an order of the court is not equivalent to payment of excise duty. It is also held that Section 118 applies when an assessee claims refund of excise duty. A claim for refund is a claim for repayment. It presupposes that the amount of the excise duty has been paid over to the excise authorities. The amount of disputed tax or duty that is secured by a bank guarantee cannot, therefore, be held to be paid to the revenue. Therefore, the question of refund under Section 118 is not attracted. 4. In these circumstances, the petitioner department is under obligation to make repayment of the encashed amount of the bank guarantee to the respondent assessee. The view of the Apex Court in Oswal Agro Mills case has been approved by this receipt decision of the Apex Court In Somalya Organics (India) Ltd. and Another v. State of U.P. ond Another reported in 2001 (130) E.LT. 3 (S.C) 2001 (5) SCC 519.” By following the aforesaid decisions, we hold that the refund is not hit by the provisions of unjust-enrichment and needs to be refunded to the appellant and not to be credited in Consumer Welfare Fund. 7. The next issue relates to grant of interest on the refund amount. The appellant contended that interest at the rate of 12% should be granted to them as per directions of Hon'ble Gujarat High Court order dated Page 23 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 13.03.1979 in their own case. It is seen that in 1983, the entire amount deposited by the appellant was refunded to them after the directions of Hon'ble Supreme Court. Thus, the directions of Hon'ble Gujarat High Court dated 13.03.1979 which were applicable to the amount collected at the material time were given effect by refund on the direction of Hon'ble Apex Court vide order dated 04.08.1983. Subsequently, there is no further direction of Hon'ble High Court or Hon'ble Apex Court regarding interest. Thus, the claim of the appellant for payment of interest at the rate 12% on the strength of the directions of Hon'ble High Court does not hold any force. Moreover, when the direction of Hon'ble High Court dated 13.03.1979 regarding payment of interest was issued, there was no duty liability arising on the appellant and only refund was to be granted. As the appellant were liable to pay duty only on the job work charges. Subsequent proceedings in 1983 onwards, the appellant were required to pay duty not only on the job charges but also on the cost of material and consequently the amount deposited by them were a differential amount required to be deposited against the duty liability and thus it was not a case of pure refund. There may be periods where duty was short paid and secured by bank guarantee. 8. The appellant is therefore, entitled for refund of Rs. 9,42,015/- along with interest as prescribed under the Act. However, while granting the said interest, the interest for the period for which the entire amount was refunded to them in 1983, and 75% of Page 24 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 which was recovered from them in 1990, needs to be adjusted. 9. In view of the above, the appeal is partly allowed on above terms.” 11. In view of the above findings arrived at by the Tribunal, it appears that so far as issue of unjust enrichment is concerned, the conclusion arrived at by the Tribunal has achieved finality as the aforesaid order of the Tribunal is not challenged by the Revenue before this Court. 12. So far as granting of interest on amount of refund is concerned, the Tribunal has directed the respondent authorities to pay interest as prescribed under the Act after giving adjustments for the amount which was refunded in the year 1983 and 75% of which was recovered in 1990. 13. As per the certificate issued by the Chartered Accountant, the petitioners are entitled to refund of Rs.17,57,261/- at the rate of 6%. Relevant extract from the certificate Page 25 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 dated October 6, 2021 of the Chartered Accountant placed on record by the petitioners reads as under: “This is to certify that Interest calculation on the basis of Final Order No.A/11554/2018 dated 27.07.2018 issued by the Customs, Excise and Service Tax Appellate Tribunal (West Zonal Bench Ahmedabad). Interest is calculated 6% per annum as per the mentioned in the Order as rate prescribed under the Act. Year Amount Number of Days Interest amount 1990-1991 942015 From 03.09.1990 to 31.03.1991 (209 Days) 32364 1991-1992 942015 365 days 56521 1992-1993 942015 365 days 56521 1993-1994 942015 365 days 56521 1994-1995 942015 365 days 56521 1995-1996 942015 365 days 56521 1996-1997 942015 365 days 56521 1997-1998 942015 365 days 56521 1998-1999 942015 365 days 56521 1999-2000 942015 365 days 56521 2000-2001 942015 365 days 56521 2001-2002 942015 365 days 56521 2002-2003 942015 365 days 56521 2003-2004 942015 365 days 56521 2004-2005 942015 365 days 56521 2005-2006 942015 365 days 56521 2006-2007 942015 365 days 56521 2007-2008 942015 365 days 56521 2008-2009 942015 365 days 56521 2009-2010 942015 365 days 56521 Page 26 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 2010-2011 942015 365 days 56521 2011-2012 942015 365 days 56521 2012-2013 942015 365 days 56521 2013-2014 942015 365 days 56521 2014-2015 942015 365 days 56521 2015-2016 942015 365 days 56521 2016-2017 942015 365 days 56521 2017-2018 942015 365 days 56521 2018-2019 942015 365 days 56521 2019-2020 942015 365 days 56521 2020-2021 942015 365 days 56521 2021-2022 942015 From 01.04.2021 to 06.10.2021 (189 Days) 29267 Total 17,57,261 We are giving this Certificate on the basis of documents, explanation and information provided to us.” 14. The above calculation placed on record by the petitioners as per the certificate issued by the Chartered Accountant Avakash C. Jariwala & Co. is not objected or controverted by the respondent authorities. As per the provisions of the Act, 6% p.a. rate of interest is considered by the Chartered Accountant in the aforesaid calculation. 15. From the facts emerging from record, it Page 27 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 appears that the respondent authorities did not decide the claim of refund of the petitioners till 27.11.2007 though directed by this Court to reassess the value of the processed fabrics on the principles of valuation laid down by the Apex Court i.e. the sum total of cost of raw materials and job work charges to work out the amount payable/refundable to the petitioners vide order dated 3.05.1990 in Special Civil Application No.468/1990. Thus, the respondent authorities have slept over the matter from 1990 till 2007 to determine the amount of refund of Rs.9,42,015/- and thereafter, also it was directed to be deposited in Consumer Welfare Fund applying the principles of unjust enrichment. The Tribunal vide order dated 27.07.2018 has held that the petitioners were entitled for refund of Rs.9,42,015/- with interest as prescribed under the Act as there was no unjust enrichment in facts of the case. Hence, refund which has been ordered to be paid by the Tribunal of Rs.9,42,015/- would relate Page 28 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 back to the three months’ time period granted by this Court by order dated 3.05.1990. The Chartered Accountant has calculated interest from 3.09.1990 onwards and therefore, the same is in accordance with the order passed by this Court on 03.05.1990 in Special Civil Application No.468/1990 which was further extended for a period of three months for reassessment till 30.06.1990, therefore, the order of refund would relate back to the completion of three months upto 30.09.1990. 16. Section 11BB of the Central Excise Act, 1944 provides for interest on delayed refunds and reads as under: “SECTION 11BB: Interest on delayed refunds If any duty ordered to be refunded under sub-section (2) of section 11B to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, there shall be paid to that applicant interest at such rate, not below five per cent and not exceeding thirty per cent per annum as is for the time being fixed by the Central Government, by notification in Page 29 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 the Official Gazette, on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty: Provided that where any duty ordered to be refunded under sub-section (2) of section 11B in respect of an application under sub-section (1) of that section made before the date on which the Finance Bill, 1995 receives the assent of the President, is not refunded within three months from such date, there shall be paid to the applicant interest under this section from the date immediately after three months from such date, till the date of refund of such duty. Explanation.-Where any order of refund is made by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or any court against an order of the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, under sub-section (2) of section 11B, the order passed by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or, as the case may be, by the court shall be deemed to be an order passed under the said sub-section (2) for the purposes of this section.] 17. On perusal of the above provision, it is clear that section 11BB of the Act comes into Page 30 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 play only after an order of refund has been made under section 11B of the Act. Section 11BB of the Act provides that in case any duty paid is found refundable and the duty is not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section(1) of section 11B of the Act, the applicant shall be paid interest at such rate as may be fixed by the Central Government on expiry of period of three months from the date of receipt of the application. The explanation to section 11BB of the Act provides for a deeming fiction that where the order of refund or duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise but by an appellate authority or the Court, then for the purpose of this section, the order made by such higher appellate authority or the Court shall be deemed to be an order made under sub- section(2) of section 11B of the Act. Page 31 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 18. It is therefore, clear that as per the provisions of section 11BB of the Act interest is payable on expiry of three months from the date of receipt of the application under sub-section(1) of section 11B of the Act. 19. The Apex Court in case of Ranbaxy Laboratories Ltd. v. Union of India & ors. reported in (2011) 10 SCC 292 as well as in case of Union of India and others v. Hamdard (WAQF) Laboratories reported in (2016) 6 SCC 621, has interpreted section 11BB of the Act by holding that liability of the Revenue to pay the interest under the said provision commences from the expiry of three months from the date of receipt of application for refund. In the facts of the case, the respondent authorities have failed to pay the refund inspite of the order passed by this Court in the year 1990 within the time stipulated in the said order as well as even after passing of the order granting the Page 32 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 refund, the respondent authorities have failed to pay interest on the amount of refund to which the petitioners were entitled to. Merely because the amount of refund was ordered to be deposited in Consumer Welfare Fund cannot be said to be a ground for denying the interest to the petitioners. 20. This Court in case of Shri Jagadamba Polymers Ltd.(supra) has held as under: “18. As already noted, the petitioners were made to engage in continuous litigation for years together before initially their refund claims were sanctioned even after the issue of classification by the Board and the appeal was decided in their favour. Thereafter, on such refund, interest was improperly denied. Eventually, interest was also paid after a delay of 530 odd days. If such principal claim of refund was sanctioned with interest, question of further interest would not have arisen. In the present case, sizable amount of interest in excess of Rs.1 crore was withheld wholly illegally for over 530 days. With these peculiar facts, we may now look at some of the decisions cited before us. 19. In case of Sandvik Asia Ltd. (supra), the Apex Court considering the gross delay caused by the Department in realising the interest, held that such interest would be paid with interest. Page 33 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 It was observed as under: - “28. In our view, there is no question of the delay being 'justifiable' as is argued and in any event if the revenue takes an erroneous view of the law, that cannot mean that the withholding of monies is 'justifiable' or 'not wrongful'. There is no exception to the principle laid down for an allegedly 'justifiable' withholding, and even if there was, 17 (or 12) years delay has not been and cannot in the circumstances be justified.” 20. Way back in the year 1992, a Division Bench of this court in case of D.J. Works (supra) had similarly in the background of the Income Tax Act, 1961 held that the assessee would be entitled to interest on delayed payment of interest. 21. We are conscious that ordinarily grant of interest flows either from statutory provision or contractual relations between the parties. In the present case, there is no statutory provision providing for interest on interest. In the present case, however, we find that the excise authorities acted rather unjustly and initially delayed not only the refund, but thereafter, unjustly withheld the interest payable thereon. At all stages, the petitioners had to approach higher authorities in further appeals. Though the Commissioner (Appeals) had specifically provided that the refund shall be granted along with interest under section 11BB if payable, the same was not realised on the ground that the interest would be payable only after Page 34 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 the date of appellate order and that the refund application was filed after the date of the appellate order completely ignoring the fact that refund claims were filed much earlier and also ignoring the instructions of the CBEC issued in exercise of powers under section 37B of the Act. 22. In sum and substance, in the facts of the present case, the Department cannot avoid the liability of accounting for interest on the delayed payment of interest to the extent the same was paid late. Since such claim does not fall within the statutory provisions contained in section 11BB of the Act, in exercise of writ jurisdiction, we would not direct payment of such interest at the statutory rate but would provide for reasonable interest looking to the present trend. Under the circumstances, the petition is allowed. The respondents shall pay simple interest at the rate of 9% per annum on the sum of Rs.1,06,12,678/- for the period between 1-4-2003 to 23-9-2004 which shall be done within a period of eight weeks from the date of receipt of a copy of this order. The petition is disposed of accordingly. Rule made absolute. No costs.” 21. This Court in case of Kamakshi Tradexim (India) Pvt. Ltd v. Union of India reported in 2017 (351) ELT 102(Guj), after analysing the provisions of section 11BB of the Act and applying the decision of Apex Court in case of Page 35 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 Ranbaxy Laboratories Ltd.(supra), held as under: “8. Thus, the Supreme Court, in the above decision has clearly held that the liability of the Revenue to pay interest under section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under section 11B(1) of the Act and not on the expiry of the said period from the date on which the order of refund is made. Under the circumstances, the contention advanced by the respondents that the orders sanctioning rebate having been passed and the amount having been paid within the time limited stipulated by the High Court in its judgment and order dated 18.02.2016 made in Special Civil Applications No.14616 of 2015 and No.14617 of 2015, the petitioners are not entitled to interest under section 11BB of the Act, cannot be countenanced even for a moment. In the facts of the present case, initially the respondents had kept the rebate claims of the petitioners in abeyance, due to which the petitioners were constrained to approach this court and with a view to obviate any further delay in deciding the application, in the light of the observations made in its judgment and order dated 18.02.2016 made in the above referred writ petitions, this court had directed the concerned authority to decide the rebate applications within a period of four months from the date of receipt of the said order. When the statute clearly provides that interest shall be payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of section 11BB of the Act, merely because Page 36 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 this court had stipulated the period within which the concerned respondent should decide the application, the same would not operate in favour of the respondents and against the petitioner and curtail the statutory period prescribed under section 11BB of the Act. 9. Moreover, it is settled legal position that an interpretation of any provision of law by the Supreme Court is the law of the land and the respondents are duty bound to respect and follow the same. When the Supreme Court way back on 21.10.2011 has, in the case of Ranbaxy Laboratories Ltd. v. Union of India (supra), held that interest shall be payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1) of section 11BB of the Act and not on the expiry of the said period from the date on which the order or refund is made, the respondents cannot be heard to contend otherwise. The approach of the respondents, therefore, borders on being contumacious. In the opinion of this court, if the respondent authorities duly follow the decisions of the Supreme Court and the jurisdictional High Courts, such unnecessary litigation could be obviated and precious judicial time of the court would not be wasted and assessees like the petitioner would not be subjected to undue harassment without any justification. The respondent authorities are, therefore, not justified in refusing to grant interest on the rebate claims made by the petitioners in accordance with law laid down by the Supreme Court in Page 37 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 Ranbaxy Laboratories Ltd. v. Union of India (supra) and hence, the petitions deserve to be allowed in terms of the relief prayed for by the petitioners. 10. For the foregoing reasons, the petitions succeed and are, accordingly, allowed. The respondents are directed to sanction and pay to the petitioners, interest on the delayed payment of rebate in accordance with law, within a period of four weeks from the date of receipt of a copy of this judgment. Rule is made absolute in both the petitions, accordingly, with no order as to costs.” 22. The contention raised on behalf of the respondent that in view of pending litigation, the petitioners are not entitled to interest on the amount of refund is also not tenable inasmuch as it is not in dispute that the petitioners were entitled to refund but the same was ordered to be deposited in the Consumer Welfare Fund on the ground of principles of Doctrine of Unjust Enrichment. The fact remains that petitioners were entitled to refund and therefore, the period for which the refund was withheld due to inaction on part of the respondent authorities, the petitioners are Page 38 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 entitled to interest on amount of refund which was granted by the respondent authorities. This Court in case of D.J. Works v. Deputy Commissioner of Income tax reported in 195 ITR 227 has held that in case of refund under the Income Tax Act, 1961 to the effect that the assessee was entitled to interest at the rate applicable to the excess amount refunded which has been wrongfully retained by the department. This Court in case of Chimanlal S. Patel v. Commissioner of Income Tax and others reported in 210 ITR 419 held that “the Government is liable to pay interest on the interest amount at the same rate at which interest is payable on the excess amount refundable to the assessee. Excess tax cannot be returned without payment of interest so also interest which is payable thereon cannot be retained without payment of interest. There is no specific provision for payment of interest on the interest amount. Interest would be payable at the same rate at which the excess amount carries interest.” Page 39 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 Whereas in facts of the case, the petitioners have not pressed for amount of interest on interest, at-least, the petitioners are entitled to interest on the amount which is refunded. 23. In view of forgoing reasons and conspectus of law, when the petitioners are held to be entitled for interest by the Tribunal as per order dated 27.07.2018 which has achieved finality, the respondent authorities cannot deny payment of interest on the amount of refund of Rs.9,42,015/-. It is also pertinent to note that amount of refund of Rs.9,42,015/- is calculated by the respondent authorities in the order passed in the year 2007 after considering 75% of the amount which was already refunded as per the directions issued by this Court in the year 1990 and therefore, the Chartered Accountant has calculated interest from 1990-1991 on the said amount. Hence, in the opinion of this Court, the petitioners are entitled to payment of Rs.17,57,261/- as calculated by the Chartered Page 40 of 41 C/SCA/12606/2019 JUDGMENT DATED: 28/07/2022 Accountant in the Certificate dated October 6, 2021. 24. The petition is thus partly allowed by directing the respondent authorities to pay amount of Rs.17,57,261/- to the petitioners within eight weeks from the date of receipt of this order, failing which, the respondent authorities shall be liable to pay interest at the rate of 6% on the aforesaid amount from the date of this order till actual date of payment. 25. Rule is made absolute to the aforesaid extent. No order as to costs. (N.V.ANJARIA, J) (BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 41 of 41 "