Refund limitation on reversal of Modvat credit runs from the appellate order where debit was made during pending litigation.

A debit made while an appeal against disallowance of Modvat credit was pending was treated as a payment under protest, because it arose from a contested adjudication order. Once the appellate authority set aside the disallowance and restored the credit, the right to seek refund or re-credit accrued from that appellate order. On that basis, the refund application filed soon after was within time, Section 11B did not bar the claim, and Section 233B was held inapplicable on the facts.

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Issues: Whether the refund claim arising from reversal of Modvat credit was barred by limitation under Section 11B, and whether the debit made during pendency of the appeal was to be treated as a deposit under protest.

Analysis: The debit entry was made while the challenge to disallowance of Modvat credit was still pending before the appellate authority. A payment or debit made during litigation and in pursuance of a contested adjudication order is to be treated as made under protest. Once the appellate authority set aside the disallowance and allowed the credit, the right to seek re-credit or refund arose from the date of that order. The refund application filed shortly thereafter was therefore within time. Section 11B did not bar the claim, and Section 233B was held inapplicable on these facts.

Conclusion: The refund claim was not time-barred and was maintainable; the assessee succeeded.

Ratio Decidendi: A debit or payment made during the pendency of an appeal against an adverse adjudication order is treated as made under protest, and limitation for refund runs from the appellate order that finally restores the assessee's entitlement.

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