Duty Paid Under Protest Requires Fair Hearing Before Final Refund Rejection and Reconsideration of Capacity Determination

Duty paid under protest and a pending protest letter required consideration before final rejection of the refund claim. Rule 233B of the Central Excise Rules, 1944 and Section 11B of the Central Excise Act, 1944 were treated as providing a statutory remedy where duty was paid under protest, including exclusion of the normal limitation. Natural justice required a fair hearing on the protest and the final determination of annual production capacity before any adverse final decision on refund. The matter was therefore remitted for reconsideration by the Commissioner after granting the assessee an opportunity of being heard.

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Issues: Whether the assessee, having paid duty under protest and having a pending protest letter, was entitled to a post-decisional hearing on the final determination of annual production capacity and reconsideration of the refund claim.

Analysis: Rule 233B of the Central Excise Rules, 1944 provided a statutory remedy in relation to duty paid under protest, and Section 11B of the Central Excise Act, 1944 excluded the normal limitation where duty was paid under protest. In these circumstances, the assessee could not be left without a hearing merely because the final determination had attained finality without an appeal being pursued. The pending protest required consideration, and natural justice demanded that the grievance be heard before the refund issue was finally rejected. The matter therefore required reconsideration by the Commissioner after granting a fair opportunity.

Conclusion: The assessee was entitled to a post-decisional hearing, and the impugned order was set aside with a direction to reconsider the final determination of production capacity and the refund claim.

Final Conclusion: The dispute was sent back for fresh adjudication by the Commissioner after hearing the assessee on both the protest and the final capacity determination.

Ratio Decidendi: Where duty is paid under protest and the statute provides a redressal mechanism, the assessee must be afforded a fair hearing before adverse final determination and denial of refund.

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