Refund of supervision charges for outside storage follows binding circular withdrawal, with notional interest payable on the refunded amount.

A binding circular clarified that, for storage of non-duty paid excisable goods outside the factory premises, physical supervision by Central Excise officers was not envisaged and recovery of merchant overtime charges was no longer warranted. On that basis, levy and collection of supervision charges could not be sustained, and amounts collected without authority had to be refunded. The document further states that interest is payable on the refunded sum, assessed on a notional basis at 3% per annum to balance equities.

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Issues: Whether the assessee was entitled to refund of supervision charges collected for outside storage of non-duty paid excisable goods, and whether interest was payable on the refunded amount.

Analysis: The governing circular clarified that, for storage of goods outside the factory premises, physical supervision by Central Excise officers was not envisaged and recovery of merchant overtime charges was no longer warranted. The circular also modified the earlier instructions to that extent, while leaving room only for such other revenue safeguards as the jurisdictional Commissioner might impose. In view of this express administrative clarification, the levy and collection of supervision charges could not be sustained. Since the amount had been collected without authority, refund followed as a matter of consequence. The Court further held that interest was payable on the refunded amount, though on a notional basis at 3% per annum, to balance equities.

Conclusion: The assessee was entitled to refund of the supervision charges, and the respondents were liable to pay interest on the refunded sum at 3% per annum.

Ratio Decidendi: Where a binding circular expressly withdraws the basis for recovery of supervision charges on outside storage of non-duty paid goods, such charges cannot be retained by the department and must be refunded with appropriate interest.

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