Payment under protest can preserve a refund claim and defeat limitation where duty liability is expressly disputed.

A communication objecting to excise duty on packing charges and reserving the payer's position was treated as a protest, so the limitation bar under Rule 11 of the Central Excise Rules, 1944 did not apply to the refund claim. On that basis, the refund of duty paid on packing charges was maintainable on merits, and interest was also awarded from the date of refusal of refund. The reasoning confirms that an express reservation of rights and challenge to liability can preserve refund rights and prevent the claim from being defeated by limitation.

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Issues: (i) Whether the letter dated 11-6-1974 amounted to a protest so that the limitation under Rule 11 of the Central Excise Rules, 1944 did not apply to the refund claim; (ii) whether the appellant was entitled to refund of the excise duty paid on the packing charges, with interest.

Issue (i): Whether the letter dated 11-6-1974 amounted to a protest so that the limitation under Rule 11 of the Central Excise Rules, 1944 did not apply to the refund claim.

Analysis: The letter raised objections to the levy on packing charges and asserted that duty on such charges was not leviable. It reserved the appellant's position by stating that if the department still treated the duty as leviable, the suggested rates of packing charges would be adopted. The contents showed that the liability was not accepted unconditionally.

Conclusion: The letter was held to be in the nature of protest, and the bar of limitation under Rule 11 did not apply.

Issue (ii): Whether the appellant was entitled to refund of the excise duty paid on the packing charges, with interest.

Analysis: Since the payment was treated as having been made under protest, the refund claim could not fail on limitation. The Court also noted that the departmental authorities should have followed the view earlier taken by the Central Government in a similar matter, where packing cost for superfine cement was not added to assessable value. In the circumstances, the refund claim was maintainable on merits as well.

Conclusion: The appellant was held entitled to refund of the amount, together with interest at 6% from the date of refusal of refund.

Final Conclusion: The appeal succeeded, the adverse orders were set aside, and the refund claim was upheld with consequential interest and costs.

Ratio Decidendi: A communication objecting to duty and reserving the payer's position can constitute payment under protest, and in such a case the limitation bar for refund does not apply.

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