" IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL EASTERN ZONAL BENCH: KOLKATA REGIONAL BENCH – COURT NO. 1 Excise Appeal No. 75230 of 2024 (Arising out of Order-in-Appeal No. 586/GHY(A)/COM/CEX/GHY/2023 dated 19.10.2023 passed by the Commissioner (Appeals), C.G.S.T., Central Excise and Customs, 3rd Floor, G.S.T. Bhawan, Kedar Road, Machkhowa, Guwahati – 781 001) WITH Excise Appeal No. 75231 of 2024 (Arising out of Order-in-Appeal No. 586/GHY(A)/COM/CEX/GHY/2023 dated 19.10.2023 passed by the Commissioner (Appeals), C.G.S.T., Central Excise and Customs, 3rd Floor, G.S.T. Bhawan, Kedar Road, Machkhowa, Guwahati – 781 001) WITH Excise Appeal No. 75232 of 2024 (Arising out of Order-in-Appeal No. 586/GHY(A)/COM/CEX/GHY/2023 dated 19.10.2023 passed by the Commissioner (Appeals), C.G.S.T., Central Excise and Customs, 3rd Floor, G.S.T. Bhawan, Kedar Road, Machkhowa, Guwahati – 781 001) M/s. Godrej Consumer Products Limited APDC CITI Complex, Kalapahar, Guwahati – 781 016 : Appellant VERSUS Commissioner of C.G.S.T. and Central Excise Guwahati Commissionerate, 5th Floor, G.S.T. Bhawan, Kedar Road, Machkhowa, Guwahati – 781 001 : Respondent M/s. Godrej Consumer Products Limited Plot No. 38, By-lane-5, Bamunimaidan Industrial Estate, Guwahati – 781 021 : Appellant VERSUS Commissioner of C.G.S.T. and Central Excise Guwahati Commissionerate, 5th Floor, G.S.T. Bhawan, Kedar Road, Machkhowa, Guwahati – 781 001 : Respondent M/s. Godrej Consumer Products Limited Shed No.9,10,11&12, By-lane-1, Bamunimaidan Industrial Estate, Guwahati – 781 021 : Appellant VERSUS Commissioner of C.G.S.T. and Central Excise Guwahati Commissionerate, 5th Floor, G.S.T. Bhawan, Kedar Road, Machkhowa, Guwahati – 781 001 : Respondent Page 2 of 28 Appeal No(s).: E/75230-75233/2024-DB AND Excise Appeal No. 75233 of 2024 (Arising out of Order-in-Appeal No. 586/GHY(A)/COM/CEX/GHY/2023 dated 19.10.2023 passed by the Commissioner (Appeals), C.G.S.T., Central Excise and Customs, 3rd Floor, G.S.T. Bhawan, Kedar Road, Machkhowa, Guwahati – 781 001) APPEARANCE: Shri Rahul Tangri, Advocate, Smt. Ekta Jhunjhunwala, Advocate For the Appellant Shri Debapriya Sue, Authorized Representative, For the Respondent CORAM: HON’BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL) HON’BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL) FINAL ORDER NOs. 77301-77304 / 2025 DATE OF HEARING: 07.08.2025 DATE OF DECISION: 20.08.2025 ORDER: [PER SHRI K. ANPAZHAKAN] All these appeals have a common issue and hence, are taken up together for decision by a common order. 2. The facts of the case are that M/s. Godrej Consumer Products Ltd. (hereinafter referred to as the “appellant) have set up a manufacturing unit in the state of Assam and was availing refund of 100% duty paid through PLA under area-based exemption Notification No. 20/2007-CE dated 25.04.2007. The M/s. Godrej Consumer Products Limited Shed A12, B2, Mini Industrial Estate, Kalapahar, Guwahati – 781 016 : Appellant VERSUS Commissioner of C.G.S.T. and Central Excise Guwahati Commissionerate, 5th Floor, G.S.T. Bhawan, Kedar Road, Machkhowa, Guwahati – 781 001 : Respondent Page 3 of 28 Appeal No(s).: E/75230-75233/2024-DB said Notification was amended vide the Notification No. 20/2008-CE dated 28.03.2008 wherein the quantum of refund was restricted to the limit of value additions i.e. 34% of total duty paid 2.1. The amended Notification provided an option for fixation of special value addition rate, representing the actual value addition, if as per the manufacturer the value addition rates prescribed in the notification are on a lower side. Accordingly, the Appellant started filing applications for determination of special rates before the Jurisdictional Commissioner for each of its units within the due dates stipulated in the amended notification. 2.2. Simultaneously, the amended Notification was challenged by the Appellant vide Writ Petition (WP No. 3070/2008) before the Hon’ble Gauhati High Court and the same was struck down by Ld. Single Judge of the Hon’ble Gauhati High Court vide its order dated 24.06.2009. The said order was challenged by the department, wherein the Division Bench of the Guwahati High Court vide interim order dated 12.12.2012 directed for releasing 50% of the disputed amount, subject to furnishing of solvent surety to the satisfaction of the jurisdiction officer. Finally, the order of the Ld. Single Judge was also affirmed by the Division Bench of the Hon’ble Gauhati High Court. 2.3. In view of the aforesaid interim order of the Hon’ble High Court, the Appellant was sanctioned 50% of the disputed amount as provisional refunds. 2.3.1.Details of provisional refunds sanctioned to the Appellant unit wise and period wise are mentioned in the Table-A below: - Page 4 of 28 Appeal No(s).: E/75230-75233/2024-DB TABLE-A Unit Refund Order Period Amount Unit A Order No. R- 1851/ACG/2013-14 dated 28.01.2014 April 2008 to September 2012 Rs. 3,39,48,729/- Order No. R- 26/DR/ACG/2016- 17 dated 20.05.2016 October 2012 to November 2015 Rs.1,81,13,269/- Order No. R-468/DR (SC-HC)/ACG- II/2016-17 dated 03.02.2017 October 2012 to November 2015 Rs.2,88,66,729/- Order No. R-58/DR (SC-HC)/ACG- II/2016-17 dated 05.05.2017 December 2015 to December 2016 Rs. 1,09,38,833/- Unit B Order No. R- 1819/ACG/2013-14 dated 28.01.2014 April 2008 to July 2010 Rs. 3,72,65,151/- Unit C Order No. R- 1845/ACG/2013-14 dated 28.01.2014 April 2008 to November 2011 Rs. 1,67,52,044/- Order No. R- 479/ACG/2014-15 dated 28.05.2014 Rs. 90,66,199/- Unit D Order No. R- 1850/ACG/2013-14 dated 28.01.2014 April 2008 to March 2012 Rs. 8,50,56,673/- Total Rs. 24,00,07,627 2.4. Subsequently, the issue with respect to amendment of area based exemption notification was decided by the Hon’ble Apex Court vide the common order in the matter of UOI v. VVF Ltd. & Another [2020-VIL-14-SC-CE], wherein the validity of Notification No. 20/2008 was upheld and it was Page 5 of 28 Appeal No(s).: E/75230-75233/2024-DB clarified that the pending refund applications would be decided in terms of the amended notification, which stands reinstated by the Hon’ble Supreme Court. 2.5. Pursuant to the Hon’ble Supreme Court’s order, the Applicant preferred a writ petition before the Hon’ble Gauhati High Court seeking stay on recovery of the refund granted, pending the adjudication of special value addition rates. The Hon’ble Gauhati High Court vide its order dated 20.10.2020 directed the department to decide on pending special value addition rate applications and not to proceed with recovery. 2.6. Accordingly, Ld. Principal Commissioner determined Appellant’s application for special value addition rates. Details of value addition rate fixed by the Ld. Principal Commissioner and cumulative figures of refund eligible to the Appellant pursuant to the fixation of the special value addition rate, unit wise and period wise are mentioned below. TABLE-B Unit Period Order date Spl. VAR Fixed Total amt. refundable Refund sanctioned @34% Refund receivable after fixation of Spl. VAR Unit A 2010- 11 29.12.2021 76.81% (Refund allowed @ 59.03%, as per claim) 1,56,21,251/- 89,97,502/- 66,23,749/- 2013- 14 06.12.2021 43.36% 2,03,51,022/- 1,59,57,904/- 43,93,118/- 2014- 15 06.12.2021 43.39% 2,46,60,483/- 1,93,23,725/- 53,36,758/- Page 6 of 28 Appeal No(s).: E/75230-75233/2024-DB 2015- 16 06.12.2021 55.82% (Refund allowed @ 55.36%, as per claim) 3,28,98,230/- 2,02,04,838/- 1,26,93,392/- 2016- 17 06.12.2021 56.34% 3,28,33,378/- 1,98,14,249/- 1,30,19,129/- 2017- 18 06.12.2021 58.29% 78,21,159/- 46,08,052/- 32,13,107/- 5,09,60,442/- Unit B 2008- 09 28.12.2021 64.57% 7,63,99,390/- 4,02,28,885/- 3,61,70,505/- 2010- 11 28.12.2021 67.57% 1,67,67,191/- 84,36,947/- 84,36,947/- 4,45,00,749/- Unit C 2011- 12 30.12.2021 81.80% 7,68,86,216/- 7,68,86,216/- 2,42,39,814/- Unit D 2008- 09 29.12.2021 48.92% 4,40,04,656/- 3,05,83,775/- 1,34,20,881/- 2010- 11 28.12.2021 72.71% 11,68,04,499/- 5,97,14,675/- 5,70,89,824/- 2011- 12 28.12.2021 64.59% 8,89,07,310/- 4,42,07,964/- 4,42,07,964/- 11,52,10,051/- Total 23,49,11,056/- 2.7. Consequent to fixation of special rate vide the aforementioned order, the Ld. Assistant Commissioner vide order dated 14.07.2022 / 15.07.2022 sanctioned refund as per fixation of special value addition rates. However, the said refund sanctioned to the appellant pursuant to fixation of value addition rate was adjusted against outstanding dues of the appellant, on account of sanction of provisional refunds as per the orders of the Hon’ble Page 7 of 28 Appeal No(s).: E/75230-75233/2024-DB High Court of Gauhati and the Hon’ble Apex Court. After adjustment, the excess refund sanctioned to the appellants has been worked out to Rs. 50,96,571/- . 2.8. However, vide the above said orders passed by the Ld. Assistant Commissioner, the appellant was directed to pay interest on the entire amount of provisional refund sanctioned to the Appellant in terms of interim order of the Hon’ble Supreme Court as well as Hon’ble High Court on the following grounds: - That subject to the final outcome of Hon’ble Supreme Court in SLP (C) No. 11878/2015, the Appellant was sanctioned refund representing 50% of the disputed amount in terms of the interim order dated 07.12.2015 of Hon’ble Supreme Court and order dated 01.12.2016 of Hon'ble Guahati High Court; - That the Hon’ble High Court has eventually decided the matter in favour of the revenue vide common order dated 22.04.2020 passed in SLP (C) No. 28194-28201/2010; - Consequently, the amount of refund so sanctioned to the Appellant (as mentioned in Table-A above) became unjust and the same is thus liable to be recovered from the Appellant along with interest. 2.9. The appellant challenged the order passed by the Ld. Assistant Commissioner before the Ld. Commissioner (Appeals). The Ld. Commissioner (Appeals), vide Order-in-Appeal No. 586/GHY(A)/COM/CEX/GHY/2023 dated 19.10.2023 Page 8 of 28 Appeal No(s).: E/75230-75233/2024-DB (‘impugned order’), upheld the adjudication order with following findings: (a) The authority neither invoked any provision for recovery of interest nor gave any working of the interest amount, thus, this ground raised by the Appellant is beyond the scope of appeal and cannot be gone into. (b) Amount paid to the assessee provisionally was a consequence of court’s direction under Bond/ Surety. Thus, the appellant was contractually bound to pay back the inadmissible amount. It is a settled principle of law that where an amount becomes liable for recovery, the same is required to be paid back with appropriate interest. (c) As the amount finally found admissible was based on appellant’s own submissions before the officers, the appellant must have been aware all along since the judgment of the Hon’ble Supreme Court regarding the tentative amount which would be admissible to them. Thus, the appellant has faulted by not refunding the amounts back immediately after the Supreme Court’s judgment. 2.10. Thus, vide the impugned order, the Ld. Commissioner (Appeals) has upheld the demand of interest upon the Appellant. Aggrieved against the confirmation of the demands of interest on the entire amount of provisional refund sanctioned, the appellant has filed these appeals. 3. The Ld. Counsel appearing on behalf of the appellant submits that prior to introduction of Section 11AA of the Central Excise Act, 1944, w.e.f. Page 9 of 28 Appeal No(s).: E/75230-75233/2024-DB 08.04.2011, Section 11AB was the governing provision for levy of interest; in terms of Section 11AB of the Act, interest was leviable on such amount which has been erroneously refunded to the assessee, but from 08.04.2011, the phrase ‘erroneously refunded’ has been consciously dropped from Section 11AA of the Excise Act. It is his stand that the omission of the term ‘erroneously refunded’ reflects the intent of the legislature that no interest ought to be levied on such category of amount. Hence, the appellant contends that in the absence of any substantive provision for recovery of interest, interest liability cannot be fastened upon the appellant and the same is liable to be set aside. 3.1. In this regard, the appellant placed reliance on the following decisions, wherein it has been held that in absences of substantive provision, no interest liability can be fastened upon the assessee: India Carbon Ltd. v. State of Assam [(1997) 6 SCC 479]. C.C.E. & C., Surat-I v. Ukai Pradesh Sahakari Khand Udyog Mandli Ltd. [2011 (271) E.L.T. 32 (Guj.)] 3.2. Without prejudice to the above, the Ld. Counsel for the appellant submits that provisional refund amounting to Rs.24,00,07,627/- was sanctioned to the Appellant in terms of interim order of the Hon’ble Gauhati High Court and Hon’ble Supreme Court, directing the Department to refund 50% of the disputed amount. In this regard, he points out that in terms of Article 141 of Constitution of India, a law declared by Hon’ble Supreme Court is binding on all courts within territory of India and is considered as “law of land”; accordingly, the departmental Page 10 of 28 Appeal No(s).: E/75230-75233/2024-DB authorities are bound to respect and follow the same; hence, such provisional refund sanctioned to the appellant on the basis of the orders passed by the Hon’ble High Court and Hon’ble Supreme Court of India cannot be said to be erroneous in nature. Therefore, it is his contention that the impugned order confirming interest liability upon the appellant on the pretext that refund granted to the Appellant vide Refund Orders have been allowed erroneously, is wholly unsustainable. Hence, it is contended that the demand for payment of interest is not sustainable in law and the same is liable to be set aside. 3.3. Further, the appellant submits that vide the impugned order, the Ld. Commissioner (Appeals) has observed that provisional refund paid to the appellant was as per the directions of the Hon’ble Supreme Court and Hon’ble High Court, against submission of surety bond. Thus, it has been held that the appellant is contractually bound to pay back the inadmissible provisional amount; further, that once the refund is recoverable, the interest is automatically payable. In respect of the above, the appellant submits that any recovery of the refund or interest can only take under the provisions of the Central Excise Act.; a bond cannot go beyond the mandate of the Excise Act to recover what is not provided for in law. It is their argument that even if the Department intended to invoke the bond for recovery of the amount of provisional refund or interest therein, it is pre- requisite on the part of the department to first raise the demand thereof under appropriate provision of law before invoking the bond; no amount can be recovered under the bond executed, which is de hors the provisions/ mandate of the Excise Act. In this regard, the appellant placed reliance on the judgment Page 11 of 28 Appeal No(s).: E/75230-75233/2024-DB of the Tribunal at Mumbai in the case of Sterile Optical Technologies Ltd. v. Commissioner of C.Ex., Aurangabad [2011 (270) E.L.T. 266 (Tri. – Mumbai)], wherein it was held as under: “A conjoint reading of condition No. 2 and condition No. 14(3) of the B-17 Bond would indicate that an amount of customs duty (with interest) leviable from the appellant could be demanded through a show- cause notice under Section 28 of the Customs Act and, in the event of default, could be recovered in the manner laid down in sub-section (1) of Section 142 of the Act. In our view, therefore, the department should have issued a show-cause notice to the appellant under Section 28(1) of the Customs Act demanding customs duty on the raw materials in question as per condition No. 2 of the B-17 Bond. In that event, the Commissioner of Customs would have determined the correct amount of duty under sub-section (2) of Section 28 and demanded the same from the appellant. If the appellant does not honour the demand, the remedy for the Revenue is under Section 142(1) of the Act. In this case, there is no demand of duty under Section 28 of the Customs Act. What is fatal to the Revenue is not the non-mention of Section 28 in the show-cause notice but the absence of the essential ingredients of the said Section in the notice. The demand of duty without invoking Section 28 of the Act, i.e., without alleging the necessary ingredients thereof, is not sustainable.” 3.3.1. Thus, the appellant submits that the action of department in seeking recovery of interest, for which there is no statutory mandate under the Central Excise Act, 1944, is legally untenable and as a consequence, the order passed for recovery of interest is not sustainable. 3.4. It is the appellant’s further submission that in the case of the appellant’s another unit enjoying the same area based exemption benefit, Ld. Deputy Commissioner vide refund order No. 468/DR/SH- Page 12 of 28 Appeal No(s).: E/75230-75233/2024-DB HC/ACG-11/2016 dated 03.02.2016 has categorically held that interest is not applicable in cases where the refund was granted in terms of the interim order of the Hon’ble Supreme Court; it was specifically held that the claim of interest on the basis of the interim order of the Hon’ble Supreme Court is not justified and moreover this refund is not covered under Notifications 32/99 and 20/07. Thus, it has been held therein that interest on delayed provisional refund is not applicable and hence the appellant is not entitled for any interest on such delayed provisional refund. In this regard, it is the appellant’s stand that applying the same analogy by which the Department denied interest on delayed sanction of interim refund, it is estopped from demanding interest on recovery of the said interim refund. Hence, it is submitted that the impugned orders, directing for recovery of interest on provisional refund sanctioned to the appellant are ex- facie erroneous and thus, liable to be set aside. 3.5. The appellant further raised the ground that the demand for recovery of interest has been charged upon the appellant arbitrarily, without following due process of law i.e. without issuance of show cause notice under Section 11A of the Central Excise Act. It is a settled position of law that no proceeding for recovery of demand can be initiated, circumventing the recovery mechanism as laid down in the concerned statute inasmuch as the same tantamount to violation of principles of natural justice. Reliance herein is placed on the following decisions: Ranbaxy Laboratories v. Commissioner of Central Excise, Indore [2017 (7) TMI 323-CESTAT New Delhi]; Narsingh Ispat Ltd. v. Union of India & Ors. [2022 (3) TMI 1047-Jharkhand High Court] Page 13 of 28 Appeal No(s).: E/75230-75233/2024-DB 3.5.1. Furthermore, it is also their submission on this score that it is a settled principle of law that issuance of Show Cause Notice is a pre-requisite before recovery of any demand; reliance herein is placed by them on the decision of Dharampal Satyapal Ltd. v. Dy. Commissioner of Central Excise, Gauhati [2015 (320) ELT 3 (SC)]. 3.5.2. Thus, the appellant submits that present demands for recovery of interest, without issuance of Show Cause Notice and providing reasonable opportunity to the appellant to present its case, tantamount to violation of principles of natural justice. Furthermore, it is also submitted by them that in the absence of charging section under which the impugned order has been charged, the impugned order is rendered non-speaking and thus, the same is liable to be set aside. In support of their contention, the appellant relies upon the decision in the case of Aurangabad Electrical Ltd. v. Commissioner of C.Ex., Pune-I [2018 (363) ELT 943 (Tri-Mumbai)]. 3.6. Without prejudice to the above, the appellant further states that in the present proceedings, the Department has sought to recover interest on provisional refund amounting to Rs. 24,00,07,627/-, which was sanctioned to the Appellant pursuant to interim order of the Hon’ble Supreme Court and order of the Hon’ble Gauhati High Court. In this regard, the appellant makes the submission that the right to apply for special value addition rate was available to the appellant since the introduction of the concerned Notification i.e. 27.03.2008; this contention finds strength from the decision of Hon’ble Supreme Court in the case of Union of India v. VVF Ltd. & Ors. Page 14 of 28 Appeal No(s).: E/75230-75233/2024-DB (supra), which has the effect of reinstating/ restoring the subsequent notification being No. 17/2008 dated 27.03.2008 and similar notifications, which were earlier struck down by various High Courts; that in the present case, it is an undisputed fact that the appellant had opted for fixation of special rates as per Para 2D of the Notification No. 20/2008-CE dated 27.03.2008 within prescribed time period. Details of value addition applications filed by the appellant and date of sanctioning of such rate are mentioned in the Table C below: TABLE-C Unit (1) Period Date of filing of VAR Application Date of fixation of VAR Amount Sanctioned under VAR Delay (in years) Unit A 2008-09 30.09.2008 29.12.2021 56,81,189/- 13 2010-11 29.09.2010 29.12.2021 66,23,749/- 11 2013-14 27.09.2013 06.12.2021 43,93,118/- 8 2014-15 26.09.2014 06.12.2021 53,36,758/- 7 2015-16 29.09.2015 06.12.2021 1,26,93,392/- 6 2016-17 29.09.2016 06.12.2021 1,98,14,249/- 5 2017-18 26.09.2017 06.12.2021 46,08,052/- 4 Unit B 2008-09 30.09.2009 28.12.2021 3,61,70,505/- 12 2010-11 29.09.2010 28.12.2021 83,30,244/- 11 Unit C 2011-12 28.09.2011 30.12.2021 2,42,39,814/- 10 Unit D 2008-09 30.09.2008 29.12.2021 1,34,20,881/- 13 23,49,11,056/- 3.6.1. Referring to the table above, the appellant stressed that it becomes clear that the appellant had duly applied for special rate fixation for each year as per the statutory timelines; however, it was only on Page 15 of 28 Appeal No(s).: E/75230-75233/2024-DB account of the stay of such amended notification and consequent orders of the Hon’ble High Court, striking down the said notification, that the value addition applications were also kept pending. It is submitted that had the value additions applications rates been decided promptly, there would not have been any question of granting interim refund per se. Thus, it is submitted by the appellant that they were rightly eligible for refund amounting Rs. 23,49,11,056/- which is much prior to the payment of provisional 50% refund by the Department; therefore no interest is leviable on such provisional refund amount. In any case, it is submitted that recovery proceeding in terms of the said decision of the Hon’ble Supreme Court in the case of Union of India v. VVF Ltd. & Ors. (supra), was subject to the outcome of fixation of special value addition rates, if any. Reliance herein is placed by the appellant on the decision of SC Johnson Products Pvt. Ltd. v. UOI [2020-VIL-353-GAU-CE]. 3.6.2. Thus, the appellant submits that they had received provisional refund amounting to Rs. 24,00,07,627/- and as per the fixation of special value addition rates, they were entitled to receive refund amounting to Rs. 23,49,11,056/-; that such refund, which the appellant was entitled to receive pursuant to fixation of special value rates, were offset against the provisional refund by the Ld. Assistant Commissioner vide orders dated 14.07.2022 and 15.07.2022; hence, effectively, the Appellant had received net excess refund of Rs. 50,96,571/- only (i.e. Rs. 24,00,07,627 - Rs. 23,49,11,056/-), which was also immediately re-paid by the appellant vide challan 21.03.2023. Hence, it is their contention that the present demand of interest on entire provisional refund amounting to Rs. 24,00,07,627/- is grossly Page 16 of 28 Appeal No(s).: E/75230-75233/2024-DB erroneous inasmuch the Appellant had received excess refund of Rs. 50,96,571/- only, which stands re-paid by the Appellant. 3.7. Without prejudice, the appellant further submits that the Department is also liable to pay interest to the Appellant on the amount of Rs. 23,49,11,056/- which ought to have been sanctioned by the department to the Appellant in the respective years to which it pertained, viz. 2008-09 to 2017-18; however, the same has been belatedly paid; thus, the interest payable by the Appellant should be net-off with interest receivable by it from the Department, which has been withheld for far longer period vis-à-vis the provisional refund received by the appellant. 3.8. In view of the above submissions, the Ld. Counsel for the appellant prayed for setting aside the demand for recovery of interest confirmed in the impugned order and for allowing their appeals. 4. On the other hand, the Ld. Authorized Representative of the Revenue appearing before us has reiterated the findings in the impugned order. He also inter alia made the following submissions in support of his contentions: - (i) As regards the submission of the appellant that interest is not applicable in the present case as there is no substantive provision for charging interest w.e.f. 08.04.2011, it is submitted that the appellant's contention is without merit, as Section 11A (1) of the Central Excise Act, 1944 provides for recovery of duty not levied, not paid, short-levied, short-paid, or erroneously refunded, in cases not involving fraud, suppression, or wilful misstatement. Under Page 17 of 28 Appeal No(s).: E/75230-75233/2024-DB Section 11A(1)(a), the Central Excise Officer may, within the prescribed time, issue notice to the person chargeable with such duty, including in cases of erroneous refund. Section 11A(1)(b) further stipulates that such person may, before service of notice, pay the duty along with interest under Section 11AA; Determination of duty of excise where duty not levied, not paid, short-levied, short-paid, or erroneously refunded administrated by Section 11A(10). (ii) Read together, these provisions make it clear that Section 11AA applies not only to non- /short-levy, non-/short-payment, but also to erroneous refunds. The term \"duty \"in Section 11AA, by its linkage to Section 11A, is an all- encompassing expression covering non-levy, short-levy, non-payment, short-payment, and erroneous refund. The omission of the specific expression \"erroneously refunded\" after 08.04.2011 does not narrow the scope; it merely consolidates the terminology, with \"duty\" serving as the inclusive term for all defaults. (iii) The purpose of statutory interpretation is to understand the meaning of the text. And for understanding the meaning of the text, it has to be read in context. This is the cardinal principle of statutory interpretation. (iv) The Appellant argues that as Section 11AA does not talk about erroneous refund, there can't be any levy of interest on erroneously refunded amount. However, he contends that according to Section 11A(10) the adjudicating authority shall determine the duty of excise due from the Page 18 of 28 Appeal No(s).: E/75230-75233/2024-DB person to whom show cause notice has been issued under Section 11A(1). It needs to be noted that Section 11A(10) does not talk about determination of erroneously refunded amount, whereas Section 11A(1) provides for issuing show cause notice for recovery of erroneous refund. If we accept the Appellant's argument that absence of the expression \"erroneous refund\" in Section 11AA deprives the revenue to levy interest on erroneously refunded amount, then the absence of the same expression in Section 11A(10) deprives the revenue to adjudicate a show cause notice for recovery of erroneous refund. It means although there is power to issue show cause notice for recovery of erroneous refund, no power is there to adjudicate it. This is absurd. This absurdity arises because the appellant has interpreted the text without considering the context. (v) Thus the expressions \"duty\" or \"duty of excise\" used in Section 11A or 11AA must include \"erroneous refund\". Any other reading will produce absurd consequences. (vi) Accordingly, the appellant's contention is without merit, as the statutory framework under Section 11AA clearly envisages levy of interest on amounts erroneously refunded as well. 5. Heard both sides and perused the appeal records. 6. In these cases, the Department has sought to recover interest on the provisional refund sanctioned amounting to Rs. 24,00,07,627/-. We observe that Page 19 of 28 Appeal No(s).: E/75230-75233/2024-DB the said provisional refund was sanctioned to the appellant pursuant to interim order of the Hon’ble Gauhati High Court, which has been affirmed by the Hon’ble Apex Court. Thus, we agree with the submission of the appellant that the provisional refunds sanctioned consequent to the Orders passed by the Hon’ble High Court and Supreme Court cannot be called as ‘erroneous refund’. 6.1. We find that in view of the interim order of the Hon’ble High Court, the appellant was sanctioned 50% of the disputed amount as provisional refunds. We also find that subsequently, the issue with respect to amendment of area based exemption notification was decided by the Hon’ble Apex Court vide the common order in the matter of Union of India v. VVF Ltd. & Another [2020-VIL-14-SC-CE], wherein the validity of Notification No. 20/2008 was upheld and it was clarified that the pending refund applications would be decided in terms of the amended notification, which stands reinstated by the Hon’ble Supreme Court. 6.2. Pursuant to the Hon’ble Supreme Court’s order (supra), the applicant preferred a writ petition before the Hon’ble Gauhati High Court seeking stay on recovery of the refund granted, pending adjudication of special value addition rates. The Hon’ble Gauhati High Court vide its order dated 20.10.2020 directed the department to decide on pending special value addition rate applications and not to proceed with recovery. Accordingly, Ld. Principal Commissioner determined appellant’s application for special value addition rates. In this regard, it is pertinent to note that that the right to apply for special value addition rate was available to the appellant since the Page 20 of 28 Appeal No(s).: E/75230-75233/2024-DB introduction of the concerned Notification i.e. 27.03.2008. 6.3. In the present case, it is an undisputed fact that the appellant had opted for fixation of special rates as per Para 2D of the Notification No. 20/2008-CE dated 27.03.2008 within the prescribed time period. The Hon’ble Gauhati High Court vide its order dated 20.10.2020 directed the Department to decide on pending special value addition rate applications and not to proceed with recovery and accordingly, the Ld. Principal Commissioner determined appellant’s application for special value addition rates. Thus, we observe that refund liable to be sanctioned to the appellant has to be taken in accordance with the special rate fixed subsequently. 6.4. In this regard, we find that consequent to fixation of special rate vide the aforementioned order, the Ld. Assistant Commissioner vide orders dated 14.07.2022 and 15.07.2022 sanctioned refund as per fixation of special value addition rates. The said refund sanctioned to the appellant pursuant to fixation of value addition rate was adjusted against outstanding dues of the appellant, on account of sanction of provisional refunds as per the orders of the Hon’ble High Court of Gauhati and the Hon’ble Apex Court. It is relevant to observe that after adjustment, the excess refund sanctioned to the appellants was Rs. 50,96,571/- only. Thus, it is clear that if at all any interest is payable on the excess refund sanctioned to the appellant, the same should have been demanded only on the net-excess refund paid after adjustment. However, we observe that the lower authorities have upheld the demand of recovery of the entire provisional refund sanctioned as per the orders of the Page 21 of 28 Appeal No(s).: E/75230-75233/2024-DB Hon’ble High Court of Gauhati and the Hon’ble Apex Court. Thus, under these facts and circumstances, we are of the view that the order of the lower authorities demanding recovery of interest on the entire amount of provisional refund sanctioned, is legally not tenable. 7. Regarding the interest liability, if any, payable on the excess refund sanctioned to the appellant, we take note of the fact that the demand for recovery of interest has been charged upon the appellant without issuance of any Show Cause Notice under Section 11A of the Central Excise Act. In this regard, we agree with the submission of the appellant that issuance of Show Cause Notice is a pre-requisite before recovery of any demand. In support of our view, we refer to the decision of the Hon’ble Apex Court in the case of Dharampal Satyapal Ltd. v. Dy. Commissioner of Central Excise, Gauhati [2015 (320) ELT 3 (SC)]. The relevant observations of the Hon’ble Apex Court in the said judgement are as under: - “16. As a pure principle of law, we find substance and force in the aforesaid submission of Mr. Sorabjee. No doubt, the Department was seeking to recover the amount paid by virtue of Section 154 of the Act of 2003 which was enacted retrospectively and the constitutional validity of the said Section had already been upheld by this Court in R.C. Tobacco (supra) at the time of issuance of notice for recovery. Further, no doubt, the effect of the said amendment retrospectively was to take away the benefit which was granted earlier. However, the question is whether before passing such an order of recovery, whether it was necessary to comply with the requirement of show-cause notice? The appellant wanted to contend that Section 11A of the Excise Act was applicable, which requires this procedure to be followed. Even if that provision is not applicable, it is fundamental that before taking any adverse action against a person, requirement of principles of natural justice is to be fulfilled. This Court in Collector of Central Excise, Patna & Ors. v. I.T.C. Limited & Anr. - (1995) 2 SCC 38 = 1994 (71) E.L.T. 324 (S.C.) has held that show-cause and Page 22 of 28 Appeal No(s).: E/75230-75233/2024-DB personal hearing is necessary before saddling an assessee with additional demand. It is also trite that when a statute is silent, with no positive words in the Act or Rules spelling out need to hear the party whose rights or interests are likely to be affected, requirement to follow fair procedure before taking a decision must be read into statute, unless the statute provides otherwise. 17. What is the genesis behind this requirement? Why it is necessary that before an adverse action is taken against a person he is to be given notice about the proposed action and be heard in the matter? Why is it treated as inseparable and inextricable part of the doctrine of principles of natural justice? 18. Natural justice is an expression of English Common Law. Natural justice is not a single theory - it is a family of views. In one sense administering justice itself is treated as natural virtue and, therefore, a part of natural justice. It is also called ‘naturalist’ approach to the phrase ‘natural justice’ and is related to ‘moral naturalism’. Moral naturalism captures the essence of commonsense morality - that good and evil, right and wrong, are the real features of the natural world that human reason can comprehend. In this sense, it may comprehend virtue ethics and virtue jurisprudence in relation to justice as all these are attributes of natural justice. We are not addressing ourselves with this connotation of natural justice here. …………. 28. In the case of East India Commercial Company Ltd., Calcutta & Anr. v. The Collector of Customs, Calcutta - AIR 1962 SC 1893 = 1983 (13) E.L.T. 1342 (S.C.), this Court held that whether the statute provides for notice or not, it is incumbent upon the quasi-judicial authority to issue a notice to the concerned persons disclosing the circumstances under which proceedings are sought to be initiated against them, failing which the conclusion would be that principle of natural justice are violated. To the same effect are the following judgments: (a) U.O.I. & Ors. v. Madhumilan Syntex Pvt. Ltd. & Anr. - (1988) 3 SCC 348 = 1988 (35) E.L.T. 349 (S.C.) (b) Morarji Goculdas B & W Co. Ltd. & Anr. v. U.O.I. & Ors. - (1995) Supp 3 SCC 588 = 1996 (83) E.L.T. 259 (S.C.) (c) Metal Forgings & Anr. v. U.O.I. & Ors. - (2003) 2 SCC 36 = 2002 (146) E.L.T. 241 (S.C.) Page 23 of 28 Appeal No(s).: E/75230-75233/2024-DB (d) U.O.I. & Ors. v. Tata Yodogawa Ltd. & Anr. - 1988 (38) E.L.T. 739 (S.C.) = 1988 (19) ECR 569 (S.C.) 29. Therefore, we are inclined to hold that there was a requirement of issuance of show-cause notice by the Deputy Commissioner before passing the order of recovery, irrespective of the fact whether Section 11A of the Act is attracted in the instant case or not.” 7.1. In this regard, it is also a settled position of law that no proceeding for recovery of demand can be initiated, circumventing the recovery mechanism as laid down in the concerned statute, as held in the following decisions: - (i) Ranbaxy Laboratories v. Commissioner of Central Excise, Indore [2017 (7) TMI 323-CESTAT New Delhi]; (ii) Narsingh Ispat Ltd. v. Union of India & Ors. [2022 (3) TMI 1047-Jharkhand High Court] 7.2. In view of the above, it is evident that the present demand for recovery of interest, without issuance of Show Cause Notice and providing reasonable opportunity to the appellant to present its case, tantamounts to violation of principles of natural justice. Accordingly, we hold that the demand confirmed for recovery of interest in the impugned order is liable to be set aside on this ground itself. 8. Regarding the legal provisions invoked for recovery of interest, we take note of the appellant’s submission that prior to introduction of Section 11AA of the Central Excise Act, 1944, w.e.f. 08.04.2011, Section 11AB was the governing provision for levy of interest. In terms of Section 11AB of the Act, interest was leviable on such amount which has been Page 24 of 28 Appeal No(s).: E/75230-75233/2024-DB ‘erroneously refunded’ to the assessee. However, from 08.04.2011, the phrase ‘erroneously refunded’ has been consciously dropped from Section 11AA of the Excise Act. For ready reference the relevant provisions of Section 11AB existing prior to 08.04.2011 and Section 11AA of the Central Excise Act, 1944, which has been substituted to recover interest, are reproduced below: Section 11AB, as it existed up to 08.04.2011, reads as under: “Section 11AB. Interest on delayed payment of duty. (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis -statement or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, the person liable to pay duty as determined under sub-section (2) of section 11A shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent and not exceeding thirty per cent per annum, as is for the time being fixed by the Board, from the first day of the month succeeding the month in which the duty ought to have been paid under this Act or the rules made thereunder or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2) of section 11A, till the date of payment of such duty. (2) For the removal of doubts, it is hereby declared that the provisions of sub-section (1) shall not apply to cases where the duty became payable before the date on which the Finance (No. 2) Bill, 1996 receives the assent of the President.” Page 25 of 28 Appeal No(s).: E/75230-75233/2024-DB Section 11AA introduced w.e.f. 08.04.2011 reads as under: “Section 11AA. Interest on delayed payment of duty.- (1) Notwithstanding anything contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder, the person, who is liable to pay duty, shall, in addition to the duty, be liable to pay interest at the rate specified in sub- section (2), whether such payment is made voluntarily or after determination of the amount of duty under section 11A. (2) Interest, at such rate not below ten per cent. and not exceeding thirty-six per cent. per annum, as the Central Government may, by notification in the Official Gazette, fix, shall be paid in terms of section 11A after the due date by the person liable to pay duty and such interest shall be calculated from the date on which such duty becomes due up to the date of actual payment of the amount due. (3) Notwithstanding anything contained in sub- section (1), no interest shall be payable where - (a) the duty becomes payable consequent to the issue of an order, instruction or direction by the Board under section 37B; and (b) such amount of duty is voluntarily paid in full, within forty-five days from the date of issue of such order, instruction or direction, without reserving any right to appeal against the said payment at any subsequent stage of such payment.” 8.1. From the provisions extracted above, we observe that Section 11AB of the Central Excise Act, which existed up to 08.04.2011, contained a specific provision to levy interest on the amount ‘erroneously refunded’ to the assessee. However, such specific provision does not find a place in the newly introduced Section 11AA to recover interest on the ‘erroneously refunded’ amount. It is evident that as per Section 11AA ibid., any person who is liable to pay duty, shall, in addition to the duty, be liable to pay interest at the rate specified in sub-section (2). Page 26 of 28 Appeal No(s).: E/75230-75233/2024-DB 8.2. As regards the submission of the appellant that interest is not applicable in the present case as there is no substantive provision for charging interest w.e.f. 08.04.2011, we find that the appellant's contention is without merit, as Section 11A (1) of the Central Excise Act, 1944 provides for recovery of duty not levied, not paid, short-levied, short-paid, or erroneously refunded, in cases not involving fraud, suppression, or wilful misstatement. Under Section 11A(1)(a), the Central Excise Officer may, within the prescribed time, issue notice to the person chargeable with such duty, including in cases of erroneous refund. Section 11A(1)(b) further stipulates that such person may, before service of notice, pay the duty along with interest under Section 11AA; Determination of duty of excise where duty not levied, not paid, short-levied, short-paid, or erroneously refunded administrated by Section 11A(10). We observe that if we read all these provisions together, it is clear that Section 11AA applies not only to non-/short-levy, non-/short- payment, but also to erroneous refunds. The term \"duty\" in Section 11AA, by its linkage to Section 11A, is an all-encompassing expression covering non-levy, short-levy, non-payment, short-payment, and erroneous refund. Thus, we observe that the omission of the specific expression \"erroneously refunded\" after 08.04.2011 does not narrow the scope, it merely consolidates the terminology, with \"duty\" serving as the inclusive term for all defaults. Thus, we hold that interest is payable under Section 11AA in respect of the refund, if any, paid ‘erroneously’. 9. Further, from the impugned order, we observe that the Ld. Commissioner (Appeals) has observed that provisional refund paid to the Appellant was as per the directions of the Hon’ble Supreme Court and Hon’ble Page 27 of 28 Appeal No(s).: E/75230-75233/2024-DB High Court, against submission of surety bond and hence, the appellant is contractually bound to pay back the inadmissible refund provisionally paid to them. In this regard, we find that effectively, the appellant had received net excess refund of Rs. 50,96,571/- only (i.e. Rs. 24,00,07,627 - Rs. 23,49,11,056/-), which was re-paid by them vide challan 21.03.2023. Thus, it is observed that even as per the surety bond executed by them, the appellant has paid the net excess refund amount received by them. Regarding, recovery of interest on this excess amount repaid by the appellant, it is a fact that there is no provision in the Surety Bond executed by the appellant to recover interest on the excess refund re- paid by them. Further, we find that any recovery of the refund or interest can only take under the provisions of the Central Excise Act. A surety bond cannot go beyond the mandate of the Excise Act to recover what is not provided for in law. Even if the Department intended to invoke the surety bond for recovery of the amount of provisional refund or interest therein, it is pre-requisite on the part of the department to first raise the demand thereof under appropriate provision of law before invoking the surety bond. Accordingly, we hold that the demand of interest by invoking the provisions of the Surety Bond executed by the appellant is legally not tenable. 10. Regarding the interest liability on the excess refund of Rs.50,96,571/- sanctioned to the appellants, we observe that interest is payable on this amount only if this amount is sanctioned to the appellant ‘erroneously’. However, we find that the provisional refund was sanctioned to the appellant as per the directions of the Hon’ble Supreme Court and Hon’ble High Court, which cannot be called as ‘erroneous’. Page 28 of 28 Appeal No(s).: E/75230-75233/2024-DB Further, we find that the appellant has re-paid the excess amount of refund received by them vide challan 21.03.2023. 10.1. Thus, we hold that the present demand of interest on entire the entire amount of provisional refund amounting to Rs. 24,00,07,627/- is not sustainable and hence we set aside the same. Regarding the interest liability on the net excess refund of Rs. 50,96,571/- received by the appellant, we find that the excess refund received by the appellant stand re-paid by them on 21.03.2023 and there is no interest liable to be paid by the appellant on this amount, as the excess amount paid to the appellant was not ‘erroneous’. It was only a provisional refund paid as per the direction of the Hon’ble High Court. Accordingly, we hold that no interest is liable to be paid by the appellant on this excess amount of Rs.50,96,571/- repaid by the appellant. 11. In the result, the appeals filed by the appellant is allowed, with consequential relief, if any, as per law. (Order pronounced in the open court on 20.08.2025) (ASHOK JINDAL) MEMBER (JUDICIAL) (K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd Sd/- Sd/- "