Refund on duty paid under protest upheld on merits, with remand limited to unjust enrichment scrutiny.

Refund of duty paid under protest on clearances under Rule 96E was held admissible on merits because rejection based on a presumed exemption claim by another unit had no evidentiary basis. Even if the processed yarn had been cleared without duty by that unit, recovery could not be pursued against the Chennai unit when its own clearances under Rule 96E were in accordance with law. The refund was therefore sustainable on merits, but payment remained subject to the original authority examining the bar of unjust enrichment before release.

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Issues: Whether the refund claim arising from duty paid under protest on clearances under Rule 96E was admissible on merits and whether the matter had to be remanded for consideration of unjust enrichment.

Analysis: The refund was rejected by the lower authorities on a presumptive basis that the other unit could have availed exemption under Notification No. 46/86-C.E., but there was no evidence that such benefit had in fact been claimed. Even on the assumption that the processed yarn was cleared without duty by the other unit, recovery could not be pursued against the Chennai unit when its clearances under Rule 96E were found to be in accordance with law. The refund claim was therefore sustainable on merits, but the original authority still had to examine the bar of unjust enrichment before payment.

Conclusion: The refund claim was allowed on merits and the matter was remanded to the original authority only for the limited purpose of examining unjust enrichment.

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