Punjab and Haryana High Court Directs Union of India to Pay Interest on Excise Refund Delayed Since 1995
In a significant judgment, the Punjab and Haryana High Court has ruled in favor of Haryana Vidyut Parsaran Nigam Ltd., a state government public sector undertaking, entitling it to interest on the delayed refund of excise duty. The division bench comprising Justices Jagmohan Bansal and Amarinder Singh Grewal delivered the judgment on February 16, 2026, directing the Union of India to pay interest as per the applicable rate on the excise duty refund that was delayed beyond the statutory period.
The case revolves around the excise duty paid under protest by Haryana Vidyut Parsaran Nigam Ltd. for the fabrication of steel structure towers. The petitioner deposited Rs. 5,25,750 and Rs. 25,58,800 for different periods during 1987-1989. The Commissioner (Appeals) had allowed the appeals filed by the petitioner against the demands, but despite favorable orders, the refund was delayed due to the respondent's appeals and procedural requirements.
The court observed that the petitioner had consistently sought a refund through multiple applications dating back to 1989. However, the refund was only sanctioned on December 29, 2000, after the adjudication of the respondent's appeals. The court emphasized that as per Section 11BB of the Central Excise Act, 1944, the petitioner was entitled to interest on the refund after the expiry of three months from the introduction of the Finance Bill, 1995.
The court further directed that the interest should be calculated at the rate notified by the government and prevailing during the relevant period. The judgment underscores the importance of timely refunds and the entitlement to interest in cases of undue delay, reinforcing the statutory rights of taxpayers.
Bottom Line:
Interest on delayed refund of excise duty - Petitioner entitled to interest on refund after expiry of three months from the date of introduction of Finance Bill, 1995, as per Section 11BB of the Central Excise Act, 1944 - Respondents directed to pay interest at the applicable rate as notified by the Government.
Statutory provision(s): Central Excise Act, 1944, Section 11BB
