High Court denies Union of India's excise duty refund application from bank guarantee. Bank guarantee not considered payment.

The High Court rejected the Union of India's application for a refund of excise duty encashed from a bank guarantee under Section 35H(1) of the Central Excise Act, 1944. The court ruled that a bank guarantee does not constitute payment of excise duty and is not eligible for a refund under Section 11B. The department was instructed to repay the encashed amount to the assessee following the precedent set in the Oswal Agro Mills case by the Apex Court.

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The High Court rejected the application under Section 35H(1) of the Central Excise Act, 1944 by the Union of India regarding the refund of excise duty encashed from a bank guarantee. The court held that the bank guarantee is not equivalent to payment of excise duty and therefore does not qualify for a refund under Section 11B. The department was directed to repay the encashed amount to the assessee based on the decision of the Apex Court in the Oswal Agro Mills case.

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