Refund of excise duty paid under protest and proforma credit rights treated as independent under the duty credit scheme.

Refund of excise duty paid under protest was treated as payable to the person who remitted duty not legally due, even though the buyer had already taken proforma credit under a separate statutory mechanism. The majority reasoned that such credit did not defeat the payer's refund claim, and that the proviso to Rule 56A(2) covered situations where duty liability was later varied or cancelled, including total cancellation of the demand. A concurring line was not recorded. The dissent took the view that refund could not extend to the amount already passed on through proforma credit, so only any uncredited balance could be returned.

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Issues: Whether refund of excise duty paid under protest could be denied on the ground that the buyers of the goods had already availed proforma credit of the duty amount.

Analysis: The refund claim arose after the excise authority had held that the goods were not liable to duty. The duty had been paid under protest, and the only objection to refund was that the purchasers had obtained proforma credit. The majority held that refund belongs to the person who paid duty not legally payable, and the fact that a third party obtained credit under a separate statutory mechanism could not defeat the payer's right to refund. It was further held that the third proviso to Rule 56A(2) contemplated adjustment or cash recovery where duty varied subsequently for any reason, and that total cancellation of the duty demand fell within that expression.

Conclusion: The refund claim was maintainable and the rejection order was unsustainable; the appeal was allowed with consequential relief.

Concurring Opinion: None.

Dissenting Opinion: Shri H.R. Syiem held that refund could not be granted to the extent the duty had already been passed on through proforma credit, because there was no remaining excess in the revenue's hands to refund. On that view, only the uncredited portion could be refunded and the rest of the claim deserved rejection.

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