Refund of protest payment treated as deposit, with Section 11B and unjust enrichment held inapplicable on the facts.

A payment made under protest during investigation, which was never appropriated as duty after the demand was dropped, was treated as a deposit and not as duty, so Section 11B of the Central Excise Act, 1944 did not apply and the refund was not barred on limitation. The Tribunal also accepted evidence that the incidence had not been passed on, including reversal of credit and treatment of the amount as recoverable from the Government, so the doctrine of unjust enrichment was not attracted. Refund was therefore held maintainable on both grounds.

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Issues: (i) whether the amount paid under protest during investigation, which was never appropriated as duty after the demand was dropped, was governed by Section 11B of the Central Excise Act, 1944; (ii) whether the refund claim was barred by unjust enrichment.

Issue (i): whether the amount paid under protest during investigation, which was never appropriated as duty after the demand was dropped, was governed by Section 11B of the Central Excise Act, 1944

Analysis: The amount was deposited under protest against differential value during investigation, but the show-cause notice demanding duty was dropped and the amount was never appropriated as duty. The Tribunal distinguished cases dealing with refund of duty or finalised provisional assessments, and relied on the principle that where a payment is treated only as a deposit and not as duty, the statutory refund restriction under Section 11B does not apply.

Conclusion: Section 11B was held inapplicable and the refund could not be denied on limitation on that basis.

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

Analysis: The Tribunal accepted the documentary evidence showing that the sister concerns had not taken credit on the supplementary invoices, that the credit had been reversed, and that the amount was shown as recoverable from the Government. On these facts, the incidence of duty was found not to have been passed on, so the equitable bar of unjust enrichment was not attracted.

Conclusion: The refund claim was held not to be hit by unjust enrichment.

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

Ratio Decidendi: A payment made under protest that is not appropriated as duty, and where the incidence is shown not to have been passed on, is not barred by Section 11B or the doctrine of unjust enrichment.

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