Refund limitation under protest payment rejected; refund and delayed-interest relief granted after final litigation outcome.

Refund of duty paid during pending litigation was treated as payment under protest, so the limitation period under Section 11B of the Central Excise Act did not apply. The authority also could not partly deny the refund on a ground not stated in the show cause notice, because the proposed rejection was confined to limitation. As the refund application was filed after the final judicial outcome in favour of the assessee, the deposit was treated as money lying with the Government and interest became payable after three months from the refund application date under Section 11BB read with Section 83 of the Finance Act. Refund was admissible and interest on delayed refund followed.

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Issues: Whether the refund claim was barred by limitation and whether the authority could restrict or partly deny refund on a ground beyond the show cause notice.

Analysis: The refund arose from duty paid during the pendency of litigation, and such payment was treated as having been made under protest. In that situation, the limitation under Section 11B of the Central Excise Act, 1944 did not apply. The authority could not introduce a new basis to partly disallow the refund when the show cause notice proposed rejection only on limitation. Since the refund application was made after the final judicial outcome in favour of the assessee, the amount deposited was treated as a deposit with the Government and interest followed after expiry of three months from the date of refund application under Section 11BB of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.

Conclusion: The refund was held admissible and the assessee was held entitled to interest on delayed refund.

Final Conclusion: The appeal succeeded, the refund denial was set aside, and consequential relief including interest was granted.

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