Refund interest under Section 11BB turns on whether bank guarantee recovery is duty or penalty, requiring fresh examination.

Section 11BB interest on a refund depends on whether the amount recovered is legally characterised as duty or as penalty. Where the department realises sums by encashment of bank guarantees, the authority must first determine the true nature of the recovery before applying the interest provision. Because the appellate authority had not examined that characterisation, the existing interest order could not be sustained and the matter required fresh consideration on the revenue's objection.

---

---

Issues: Whether interest under section 11BB was payable on the refunded amount where the sum had been realised by encashment of bank guarantees and the revenue contended that the amount was towards penalty and not duty.

Analysis: Section 11BB applies specifically to refund of duty amount. The appellate authority had not examined whether the amount encashed by the department was in the nature of duty refund or penalty recovery. As the applicability of the interest provision depended on that characterisation, the matter required reconsideration on the revenue's objection.

Conclusion: The interest order could not be sustained as it stood and the matter was remanded for fresh consideration.

---