Refund under excise law cannot be reduced by charging duty on the refunded amount after the original levy is set aside.

Where a refund becomes admissible after a favourable classification decision, the assessable value cannot be re-determined merely to levy excise duty on the refund amount itself and thereby reduce the refund. The text notes that the dispute was limited to the Revenue's attempt to reopen the computation after the earlier levy had been set aside. It further records that, under Section 4 of the Central Excise Act, 1944, there was no basis to charge duty on the refunded sum arising from an erroneous prior recovery. The assessee was therefore entitled to the full refund.

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Issues: Whether, after refund is sanctioned to the assessee following a favourable classification decision, the assessable value can be re-determined so as to reduce the refund amount by charging excise duty on the refund itself.

Analysis: The refund was undisputedly admissible to the assessee. The dispute was confined to the Revenue's attempt to reopen the computation by treating the refund amount as liable to duty, thereby reducing the refund. The cited precedent held that there is no provision under Section 4 of the Central Excise Act, 1944 authorising levy of duty on the amount refunded when the earlier recovery itself was made under erroneous orders and those orders had been set aside.

Conclusion: The assessable value could not be re-determined for the purpose of levying duty on the refund amount, and the assessee was entitled to the full refund.

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