Interest on delayed excise refund upheld where refund liability had already crystallised and payment was wrongfully withheld.

Interest was payable on a belated excise duty refund because the refund entitlement had already been finally determined and the delay in payment was undisputed. The Court held that a fresh challenge to the refund or interest direction was unnecessary once liability had crystallised, and that interest could follow on equitable principles where money was wrongfully withheld. It also applied the statutory framework for delayed refunds, awarding 6% per annum from 06.08.1985 to 26.08.1995 under the Interest Act and, thereafter, interest under Section 11BB of the Central Excise Act, 1944 until 07.09.2009.

---

---

Issues: Whether the appellant was entitled to interest on the belated refund of excise duty, and for what period and rate such interest was payable.

Analysis: The refund claim had already been determined in the appellant's favour and the relevant refund orders had attained finality. The delay in payment was not disputed, and the Court held that the absence of a fresh challenge to the refund/interest directions did not defeat the claim for interest. It further held that interest could be awarded on equitable principles where money was wrongfully withheld, and that the claim was supported by the earlier written demand and the statutory framework governing delayed refunds. The Court distinguished the authorities relied on by the revenue on the footing that, on the facts, the entitlement to refund and the liability to pay interest had already been crystallised.

Conclusion: The appellant was held entitled to interest on the delayed refund, at 6% per annum for the period from 06.08.1985 to 26.08.1995 under the Interest Act and under Section 11BB of the Central Excise Act, 1944 from 26.08.1995 to 07.09.2009, and the revenue was directed to pay the same.

Final Conclusion: The judgment conclusively grants the assessee interest on the delayed refund and displaces the order of the writ court, with the refund liability carrying interest for the entire relevant period.

Ratio Decidendi: Where refund of duty has become final and payment is withheld beyond the legally relevant period, interest is payable on the delayed refund on equitable and statutory principles, particularly when the liability to refund has already been crystallised.

---