Refund of deposit under protest: Section 11B and unjust enrichment did not bar refund where duty was never appropriated.

An amount paid under protest during investigation and never appropriated as duty retains the character of a deposit, so the refund mechanism under Section 11B of the Central Excise Act, 1944 does not apply and the claim cannot be rejected as time-barred on that basis. The doctrine of unjust enrichment also does not bar refund where the evidence shows that the incidence was not passed on, including reversal of credit by the recipient units and supporting departmental and balance sheet material. The refund was therefore held admissible, and the rejection was set aside with consequential relief.

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Issues: (i) Whether Section 11B of the Central Excise Act, 1944 applied to an amount deposited under protest which was not appropriated as duty. (ii) Whether the refund claim was barred by unjust enrichment.

Issue (i): Whether Section 11B of the Central Excise Act, 1944 applied to an amount deposited under protest which was not appropriated as duty.

Analysis: The amount was deposited during investigation on differential value, but the show-cause notice demanding duty was dropped and the amount was never appropriated as duty by adjudication. On that footing, the payment retained the character of a deposit and not duty. In such circumstances, the refund machinery under Section 11B, which governs refund of duty, was held inapplicable.

Conclusion: Section 11B did not apply, and the refund claim could not be rejected as time-barred on that basis.

Issue (ii): Whether the refund claim was barred by unjust enrichment.

Analysis: The invoices issued to the sister concern were declared void for credit purposes, the recipient units reversed the credit, and certificates from the departmental officer as well as the balance sheet evidence showed that the incidence had not been passed on. Since the deposited amount was not appropriated as duty and the evidence showed that no downstream credit or burden was retained, the doctrine of unjust enrichment was not attracted.

Conclusion: The claim was not hit by unjust enrichment and was maintainable.

Final Conclusion: The refund was held admissible on both limitation and unjust enrichment grounds, and the impugned rejection was set aside with consequential relief.

Ratio Decidendi: An amount paid under protest during investigation, which is never appropriated as duty, is a deposit rather than duty, so the statutory refund bar under Section 11B and the doctrine of unjust enrichment do not apply unless the revenue shows that the incidence has in fact been passed on.

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