Refund cannot be withheld without a stay order, and a pending appeal alone is insufficient under the applicable circular.

Refund could not be withheld merely because an appeal had been filed, as the applicable Board circular permitted withholding only where a stay order had been obtained. The stay application was therefore treated as misconceived and infructuous. The reasoning also noted that the circular referred to orders of the Commissioner (Appeals), whereas the impugned order had been passed by the Commissioner of Central Excise, so the circular did not justify keeping the refund in abeyance. The stay application was dismissed and the refund was not to be withheld on the basis of the pending appeal alone.

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Issues: Whether the Revenue's stay application against the order dropping the demand was maintainable and whether refund could be withheld in the absence of a stay order.

Analysis: The stay application was found to be misconceived and infructuous. The applicable Board circular was read as permitting withholding of refund only where a stay order had been obtained, and the reasoning emphasised that the circular referred to orders of the Commissioner (Appeals), whereas the impugned order had been passed by the Commissioner of Central Excise. On that basis, there was no ground to keep the refund in abeyance merely because an appeal had been filed.

Conclusion: The stay application was dismissed, and the refund was not to be withheld on the basis of the pending appeal alone.

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