Sugar cess on imported raw sugar was found unsustainable, and payment under protest preserved the refund claim.

Payment of sugar cess under protest was treated as sufficient notice disputing the assessment, so the refund claim was not barred merely because reassessment of the Bills of Entry had not been sought. The cess itself was held to be leviable only on sugar manufactured by sugar factories in India, not on imported raw sugar; it was not to be treated as excise duty for import purposes. On that basis, cess collected on imported raw sugar was found unsustainable and refundable, and the departmental appeal failed while the refund order was sustained.

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Issues: (i) Whether the refund claim was barred because no reassessment of the Bills of Entry had been sought, despite payment of cess under protest; (ii) Whether sugar cess was leviable on imported raw sugar and was refundable when collected as part of additional duty of customs.

Issue (i): Whether the refund claim was barred because no reassessment of the Bills of Entry had been sought, despite payment of cess under protest.

Analysis: Payment under protest was treated as notice to the department that the assessee disputed the levy and sought correction of the assessment. Where duty is paid under protest, the assessment cannot be treated as finally accepted in the same manner as an unqualified payment, and the department was required to deal with the protest and take appropriate steps instead of rejecting refund on the ground of absence of reassessment by the assessee.

Conclusion: The objection based on absence of reassessment was rejected and the refund claim was not barred on that ground.

Issue (ii): Whether sugar cess was leviable on imported raw sugar and was refundable when collected as part of additional duty of customs.

Analysis: Sugar cess was held to be a levy on sugar manufactured by sugar factories in India and not a levy on imported raw sugar. The reasoning adopted the view that the cess is not to be treated as duty of excise for the purpose of importing raw sugar, and the Board clarification was relied upon as binding on the department. On that basis, cess collected on imported raw sugar was held to be unsustainable.

Conclusion: Sugar cess was not leviable on the imported raw sugar, and the assessee was entitled to refund.

Final Conclusion: The departmental appeal failed, and the order granting refund was sustained.

Ratio Decidendi: Where cess is levied only on domestically manufactured goods and not on imported raw material, collection of that cess on import is unsustainable; moreover, payment under protest prevents rejection of refund solely for want of reassessment by the importer.

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