Refund interest on secured excise duty amount stayed after tribunal found a prima facie case against payment.

Interest on a refund claim under Section 11BB of the Central Excise Act was contested where the disputed amount had been secured by bank guarantee. The Tribunal recorded the Department's case that, because the guarantee operated only as security for excise duty and the amount was ultimately refunded, interest was not payable on the refund. Finding a prima facie case for interim relief, it stayed the operation of the impugned order granting interest, subject to the condition regarding any amount already paid.

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Issues: Whether interest on the refund claim under Section 11BB of the Central Excise Act, 1944 was payable where the amount had been secured by a bank guarantee and whether the impugned order allowing such interest should be stayed.

Analysis: The Tribunal noted the Department's contention that where the bank guarantee was furnished only as security for payment of excise duty and the amount was ultimately refunded, no interest could be charged. On that basis, it found a prima facie case in favour of the Department for interim relief.

Outcome: The operation of the impugned order granting interest was stayed, subject to the stated condition regarding any amount already paid.

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