Court allows refund of duty paid under protest, exempts from limitation period

The High Court allowed the appeal, holding that the duty amount deposited under protest was refundable to the appellant. The Court ruled that the one-year limitation under Section 11B did not apply as the payment was made under protest, citing the exemption provided in the second proviso to Section 11B(1). The Court emphasized that when duty is paid under protest, the limitation period does not apply, especially when paid under court orders pending an appeal or writ petition. The appellant was entitled to a refund of the principal amount, with the possibility of interest beyond the refund application date in 2009.

---

---

Issues:
1. Refund claim rejection under Section 11B of the Central Excise Act, 1944.
2. Time limitation for filing refund application.
3. Application of the second proviso to Section 11B(1) regarding duty paid under protest.

Issue 1: Refund claim rejection under Section 11B of the Central Excise Act, 1944:
The appeal was filed against the Custom, Excise and Service Tax Appellate Tribunal's order rejecting the appellant's refund claim for a duty amount deposited under protest. The Tribunal invoked Section 11B of the Act, which deals with refund claims. The Tribunal found that the refund application was made beyond the time limit prescribed by this section, leading to the rejection of the claim.

Issue 2: Time limitation for filing refund application:
The disputed period for the demand in question was from 16.11.1997 to 01.06.1998. The appellant deposited the disputed duty amount under protest on 12.04.2004 during the pendency of a writ petition. The writ petition was allowed on 11.03.2005. However, the appellant filed the refund application in 2009, four years after the deposit. The Tribunal considered this delay and rejected the claim based on the limitation period of one year from the relevant date, as per Section 11B.

Issue 3: Application of the second proviso to Section 11B(1) regarding duty paid under protest:
The appellant argued that the duty amount was deposited under protest, which, according to the second proviso to Section 11B(1), would waive the limitation period. Citing the judgment in Mafatlal Industries Ltd. Vs. Union of India, the appellant contended that the payment under protest exempts the claim from the one-year limitation. The Supreme Court's ruling in the mentioned case clarified that when duty is paid under protest, the limitation period does not apply, especially when the duty is paid under court orders pending an appeal or writ petition.

In conclusion, the High Court allowed the appeal to the extent that the duty amount deposited under protest was liable to be refunded to the appellant. The Court held that the limitation of one year under Section 11B did not apply in this case due to the payment being made under protest. The principal amount was to be refunded, excluding interest for the period until the appellant applied for the refund in 2009. Interest beyond that date could be granted.

---