Restitution of recovered excise amounts during pending appeal can justify refund despite a broad section 11B(2) objection.

Refund of amounts recovered during the pendency of an appeal or stay proceeding may be ordered where restitution is warranted on the facts, and a broad reliance on section 11B(2) of the Central Excise Act, 1944 will not defeat that entitlement. The Tribunal exercised its procedural power to secure compliance with its earlier orders and to prevent unlawful retention of the recovered amount. On the facts noted, the assessee was found entitled to restoration of the sum, and the objection based on section 11B(2) was rejected.

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Issues: Whether the Tribunal should direct refund of the amount recovered from the assessee during the pendency of the appeal, and whether such refund was barred by section 11B(2) of the Central Excise Act, 1944.

Analysis: The amount had been recovered while the stay application and appeal were pending, and the Tribunal found no satisfactory explanation for the recovery or for the failure to pursue appropriate legal remedies in time. It treated the amount as one recovered in the course of pending proceedings and considered that the assessee's entitlement to restitution could not be defeated by a broad invocation of section 11B(2). On the facts, the Tribunal exercised its power under rule 41 of the CEGAT (Procedure) Rules, 1982 to secure implementation of its earlier orders and to protect the assessee against unlawful retention of the amount.

Conclusion: The refund was directed in favour of the assessee, and the plea based on section 11B(2) was rejected.

Ratio Decidendi: Amounts recovered during the pendency of an appeal or stay proceeding, when directed to be restored by the appellate forum, are refundable and cannot be withheld by a mechanical reliance on section 11B(2) where restitution is warranted on the facts.

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