Pre-deposit and provisional assessment refunds remain payable, with interest, once the demand is set aside and final assessment favours the assessee.

Money deposited as a pre-deposit under an interim stay order retains that character until lawfully adjusted, and if the underlying demand is set aside it remains refundable to the assessee. Amounts paid during provisional assessment are adjusted on final assessment under Rule 9B(5), and refunds arising from that process are not governed by Sections 11A and 11B of the Central Excise Act, 1944 or by unjust enrichment in the same manner as ordinary refund claims. Where refund is due, interest is also payable on the refundable amounts at the notified rate under Section 11BB.

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Issues: (i) whether the amount of Rs. 15 lakhs deposited as pre-deposit pursuant to the interim order continued to retain that character and was refundable after the underlying demand was set aside; (ii) whether the amount of Rs. 3,35,026 paid during provisional assessment was refundable without being hit by Sections 11A and 11B of the Central Excise Act, 1944 and the bar of unjust enrichment; (iii) whether the appellant was entitled to interest on the refundable amounts.

Issue (i): whether the amount of Rs. 15 lakhs deposited as pre-deposit pursuant to the interim order continued to retain that character and was refundable after the underlying demand was set aside;

Analysis: The amount was deposited only in compliance with the appellate stay order. Its character as pre-deposit was not altered merely because the adjudicating authority later attempted to treat it as payment towards duty, especially when the order on which that treatment was based was itself set aside in appeal and the assessee ultimately succeeded in the challenge to the demand.

Conclusion: The amount retained the character of pre-deposit and was refundable to the assessee.

Issue (ii): whether the amount of Rs. 3,35,026 paid during provisional assessment was refundable without being hit by Sections 11A and 11B of the Central Excise Act, 1944 and the bar of unjust enrichment;

Analysis: Amounts paid during provisional assessment are adjusted on final assessment under Rule 9B(5) of the Central Excise Rules, 1944. Recoveries or refunds arising from such adjustment are not governed by Sections 11A and 11B of the Central Excise Act, 1944. The amount in question was admittedly paid provisionally, and the final determination having gone in favour of the assessee, the consequent refund could not be denied on the ground of limitation under those sections or on a plea of unjust enrichment.

Conclusion: The provisional payment was refundable in full to the assessee.

Issue (iii): whether the appellant was entitled to interest on the refundable amounts;

Analysis: The refund claim included interest on the pre-deposit and on the excess provisional payment from the dates specified in the claim. The relief was treated as a consequence of the assessee's entitlement to refund, and the rate of interest was linked to the notified rate contemplated under Section 11BB of the Central Excise Act, 1944.

Conclusion: The assessee was entitled to interest on the refundable amounts as claimed.

Final Conclusion: The refund rejection was unsustainable, and the assessee succeeded in obtaining refund of the entire amount together with consequential interest.

Ratio Decidendi: Money deposited as pre-deposit retains that character until lawfully adjusted after the dispute is finally resolved, and duty paid under provisional assessment gives rise to refund on final assessment without attracting the limitation and unjust-enrichment constraints applicable to ordinary refund claims.

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