Refund of advance levy payments allowed where the duty liability was withdrawn and the retained amount became a refundable deposit.

Advance amounts paid under a compounded levy scheme ceased to have the character of duty once the underlying duty on unprocessed cotton fabrics and the special procedure rules were withdrawn, and to that extent became refundable as deposits. The claim was not governed by Rule 11 limitation because it was not a refund of duty already paid, but a return of money retained after the levy had been abolished. The saving clause in the deleting notification protected prior acts and did not extinguish the refund right that arose on withdrawal of the levy and rules. The refund claim was therefore maintainable and consequential relief followed.

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Issues: Whether the appellants were entitled to refund of the proportionate advance compounded levy paid for the period after the duty on unprocessed cotton fabrics was withdrawn and the special procedure rules were deleted, and whether such refund was barred by limitation or by the saving clause in the deleting notification.

Analysis: The advance payment made under the compounded levy scheme could not be treated as duty for the period after the levy itself had been withdrawn. To that extent, the amount retained by the Government was only a deposit, and refund of a deposit did not depend on a specific enabling rule under the Central Excise Rules, 1944. The limitation under Rule 11 did not apply because the claim was within six months of exemption and, in any event, the claim was not for refund of duty already paid but for return of money that had ceased to have the character of duty after the levy was abolished. The saving clause in Notification No. 146/77-C.E. protected prior acts and actions; it did not defeat the appellants' right to refund which arose on the date the levy and corresponding rules were withdrawn.

Conclusion: The refund claim was maintainable and was not barred by Rule 11 or by the saving clause; the appellants succeeded.

Final Conclusion: The appeal was allowed with consequential relief, and the advance amount relatable to the period after withdrawal of the duty liability was required to be refunded to the appellants.

Ratio Decidendi: Amounts paid in advance under a levy scheme cease to be duty and become refundable as deposits to the extent the underlying duty liability is subsequently withdrawn; such refund is not defeated by a limitation provision applicable only to duty refunds or by a saving clause preserving past acts.

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