Refund of investigation payments cannot be denied on limitation when excess remains after settling admitted duty liability.

An amount paid during investigation towards duty on captive consumption was treated as a payment under protest, since it was not shown to have been appropriated against any enforceable liability beyond the demand in the show cause notice. The Court held that the remaining excess could not be denied merely because no separate refund claim was filed within one year under the refund provision. After settlement of the admitted liability, the balance had to be appropriated against that liability and refunded with interest, so the refusal to refund on limitation grounds was set aside.

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Issues: Whether the amount paid during investigation could be treated as an excess payment liable to adjustment or refund, and whether the Settlement Commission was justified in refusing refund on the ground of limitation.

Analysis: The amount paid by the assessee during investigation was made towards duty liability on captive consumption of intermediate products and was not shown to have been appropriated against any other enforceable tax liability beyond the demand proposed in the show cause notice. The Court held that such payment, made pending adjudication of the dispute, was in substance a payment under protest and could not be retained merely because the assessee did not file a separate refund claim within one year under the refund provision. The Settlement Commission had already settled the admitted liability and granted waiver of interest and penalty, so the excess amount remaining after appropriation against the admitted demand could not lawfully be withheld on a technical limitation objection.

Conclusion: The refusal to refund the excess amount was set aside. The respondents were directed to appropriate the settled duty liability from the excess payment and refund the balance with interest in favour of the assessee.

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