Statutory interest on delayed excise refunds remains payable despite a pending appeal unless the refund order is stayed.

Statutory interest on a delayed excise refund becomes payable under section 11BB once the refund is not granted within the prescribed period after the refund application, and the explanation treats a refund order passed by the Appellate Tribunal or court as an order under section 11B(2) for this purpose. Mere pendency of the Revenue's appeal does not suspend compliance with the refund order, and in the absence of a stay, withholding interest or issuing recovery proceedings for the refunded amount is not legally permissible. The applicant was therefore entitled to interest on the refunded sum, and payment was directed forthwith.

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Issues: Entitlement to interest on refund under section 11BB of the Central Excise Act, 1944 despite pendency of the Revenue's appeal and absence of any stay.

Analysis: The refund had already been ordered and granted consequent to the Tribunal's earlier decision. Section 11BB provides for interest where duty ordered to be refunded is not refunded within three months from the date of receipt of the refund application, and its explanation deems a refund order passed by the Appellate Tribunal or court to be an order under section 11B(2) for the purpose of interest. The mere filing of an appeal by the Revenue did not suspend the obligation to comply with the Tribunal's order. In the absence of any stay, withholding the statutory interest and issuing a show cause notice for recovery of the refunded amount was held to be legally impermissible.

Conclusion: The applicant was entitled to interest on the refunded amount under section 11BB, and the Revenue was directed to pay it forthwith within a week.

Ratio Decidendi: Statutory interest on delayed refund becomes payable once the refund is not made within the prescribed period, and pendency of an appeal by the Revenue does not justify non-compliance with the refund order unless its operation is stayed.

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