2001 (10) TMI 1166 - AT - Central Excise

Deposits made during investigation deemed under protest, not time-barred for refund

Jayanta Glass Indus. (P.) Ltd. Versus Commissioner of Central Excise, Calcutta-III

The Tribunal held that deposits made during investigation, when subsequent show cause notices are dropped, should be considered as made under protest and ... - Issues involved: Refund of duty deposited during investigation, time bar, unjust enrichment.Refund of duty deposited during investigation: The appellant's factory was searched by officers who seized records for alleged duty evasion. The appellant deposited a total of Rs. 9,19,286 under various letters during post-seizure investigations. The first amount of Rs. 5,00,000 was deposited on 2.9.96 with a request to hold it in suspense subject to duty adjustment. Additional amounts were deposited on 3.9.96, 6.9.96, and 23.9.96. Subsequently, a show cause notice was issued proposing a duty demand of Rs. 13,00,000. The proceedings were dropped by the Commissioner, and the appellant sought a refund of the deposited amount, which was denied by the Assistant Commissioner on grounds of time bar and unjust enrichment. The appellant contended that the deposits were not duty but mere deposits, as there was no duty confirmation against them at the time. The Tribunal held that deposits made during investigation, when subsequent show cause notices are dropped, should be considered as made under protest and not time-barred for refund.Time bar: The Revenue argued that the appellant's letters indicated the deposits were considered as duty, thus time-barred for refund under Section 11B. However, the Tribunal found that the deposits were made as suspense accounts and not towards any duty, especially since there was no duty confirmation against the appellant during that period. Citing precedents, the Tribunal ruled that such deposits made during investigation should be treated as made under protest and not subject to time limitations for refund.Unjust enrichment: The Tribunal also referenced a case where duty deposited during appellate remedy pursuit was considered as duty paid under protest, not subject to the six-month limitation. Additionally, the Tribunal highlighted a High Court ruling that deposits made during adjudication proceedings should be regarded as deposits, not duty. The doctrine of unjust enrichment was deemed inapplicable to such deposits, especially when adjudication proceedings favored the appellant. Consequently, the Tribunal set aside the Assistant Commissioner's decision and allowed the appeal, granting consequential relief to the appellants.