Bank guarantee encashment is not duty payment, so refund under excise law requires actual payment to the revenue.

A bank guarantee furnished under court order towards disputed excise duty is only a security arrangement and does not amount to payment of duty to the revenue. As refund under Section 11B of the Central Excise Act requires actual payment of duty to the excise authorities, the encashed guarantee amount could not be treated as duty paid for refund proceedings. Because the Supreme Court had already settled the position, no referable question of law survived under Section 35H(1). The encashed amount was therefore repayable to the assessee, and the reference application was rejected.

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Issues: Whether excise duty secured and encashed through a bank guarantee can be treated as duty paid so as to attract refund proceedings under Section 11B of the Central Excise Act, 1944, and whether any referable question of law arose for reference under Section 35H(1) of the Central Excise Act, 1944.

Analysis: A bank guarantee furnished pursuant to a court order towards disputed excise duty is only a security arrangement and does not amount to payment of duty to the revenue. A claim for refund under Section 11B presupposes that the duty amount has actually been paid over to the excise authorities. Since the encashed bank guarantee did not represent payment of duty, the refund mechanism under Section 11B was held inapplicable. In view of the settled position already affirmed by the Supreme Court, no referable question of law survived for consideration.

Conclusion: The encashed bank guarantee amount was repayable to the assessee, and the reference application was rejected.

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