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AI Drafter ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) whether the refund claim was barred by limitation despite payment of duty being treated as payment under protest; (ii) whether the refund was barred by the doctrine of unjust enrichment.
Issue (i): Whether the refund claim was barred by limitation despite payment of duty being treated as payment under protest.
Analysis: The duty demand had been contested before the Tribunal and the duty was paid during the pendency of that challenge. Such payment was treated as payment under protest. The requirement under Rule 233B of the erstwhile Central Excise Rules, 1944 was held to be directory and not mandatory. The endorsements on invoices also supported the claim that the duty had been paid under protest.
Conclusion: The refund claim was not barred by limitation, in favour of the assessee.
Issue (ii): Whether the refund was barred by the doctrine of unjust enrichment.
Analysis: The authorities relied on separate reflection of duty in invoices and split pricing to infer passing on of duty. The appellants established that the price was composite and inclusive of duty, and customer letters showed that no excise duty had been paid by the buyers. On that basis, the incidence of duty was held not to have been passed on.
Conclusion: The refund was not hit by unjust enrichment, in favour of the assessee.
Final Conclusion: The impugned order was set aside and the refund appeal succeeded with consequential relief.
Ratio Decidendi: A duty payment made while challenging the levy in appeal may be treated as payment under protest, and refund is not barred where the claimant establishes that the incidence of duty was not passed on to buyers.
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