Court grants 12% interest on deposits, rejects 24% claim.

The Court held that the petitioner was entitled to interest at 12% per annum on the deposits made, based on the High Court's order and principles of restitution and equity. The show cause notice and the Board's decision were quashed, and the respondents were directed to pay interest at 12% per annum on the refunded amounts of deposits. However, the claim for further interest at 24% per annum on the amount of interest was rejected, with the Court advising the petitioner to pursue ordinary civil remedies for this claim.

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Issues Involved:
1. Entitlement to Interest on Deposits
2. Validity of Show Cause Notice and Board's Decision
3. Claim for Interest on Interest

Issue-wise Detailed Analysis:

1. Entitlement to Interest on Deposits:
The petitioner, a proprietorship firm, challenged the classification of its product under the Central Excise Tariff Act, 1985, leading to a series of legal proceedings. The High Court, in its order dated 28-07-1988, directed the petitioner to deposit Rs. 30 lakhs and file an appeal, with an undertaking from both parties regarding the payment of interest at 12% per annum. The petitioner finally succeeded in its challenge, as the Assistant Collector, vide order dated 12-07-1995, classified the product under a sub-heading with a nil rate of duty. The Court held that the petitioner was entitled to interest at 12% per annum on the deposits made, based on the High Court's order and principles of restitution and equity. The respondents had interpreted the High Court's order to apply to all amounts deposited in similar proceedings, thereby making the petitioner eligible for interest on the entire amount deposited.

2. Validity of Show Cause Notice and Board's Decision:
The Assistant Commissioner issued a show cause notice dated 10-03-1997, questioning the petitioner's claim for interest, which the petitioner responded to. The Board, in its letter dated 03-10-2002, rejected the petitioner's request for interest. The Court quashed the show cause notice and the Board's decision, directing the respondents to pay interest at 12% per annum on the refunded amounts of deposits.

3. Claim for Interest on Interest:
The petitioner also sought further interest at 24% per annum on the amount of interest. The Court, however, rejected this claim, noting that there was no statutory provision for such interest under the Central Excise Act at the relevant time. The claim for interest on interest was not raised in earlier representations and was first made in the present petition. The Court held that the delay from 1997 to 2011 could not be attributed to the respondents, and thus, they were not liable to pay interest on interest. The petitioner was advised to pursue ordinary civil remedies for this claim.

Conclusion:
The petition was partly allowed. The Court directed the respondents to pay interest at 12% per annum on the refunded amounts of deposits within eight weeks but rejected the claim for further interest at 24% per annum on the amount of interest.

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