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Issues involved:
Claim for refund of bank guarantee amount, applicability of Section 11B of the Act, entitlement to interest under Section 11BB. Analysis: 1. Claim for refund of bank guarantee amount: The appeal was filed against the order disallowing the refund amount of a bank guarantee of Rs. 42.50 lakhs. The appellants had furnished the bank guarantee along with a Bond in Form 13 as their assessments were made provisional under Rule 9B. The Department encashed the bank guarantee to recover the duty demand, but the order of the Commissioner was set aside by the Tribunal. The appellants then claimed a refund, which was rejected as time-barred by the Deputy Commissioner and affirmed by the Commissioner (Appeals). 2. Applicability of Section 11B of the Act: The Tribunal held that the right to claim the refund of the bank guarantee amount accrued to the appellants from the date of passing of the order by the Tribunal, not from the date of encashment. The authorities' view that time should be computed from the date of encashment was deemed erroneous and contrary to settled law. The Tribunal referred to the Grasim Industries case and a Board's Circular, stating that bank guarantees should be returned to the assessee when the matter goes in their favor, as in this case. 3. Entitlement to interest under Section 11BB: Since the provisions of Section 11B of the Act were held not to be applicable in a case of bank guarantee furnished in provisional assessment proceedings, the appellants were not entitled to interest under Section 11BB, as the bank guarantee was considered security, not a duty deposited in advance. In conclusion, the impugned order of the Commissioner (Appeals) was set aside, and the appeal of the appellants was allowed with consequential relief. The authorities were directed to release the money to the appellants within four weeks from the date of receipt of the order. The appeal was disposed of accordingly.
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