Excise refund on wrong classification prevails over protest requirement once appellate classification attains finality.

Final appellate reclassification under central excise entitled the assessee to refund of excess duty collected on an erroneous classification, because Section 11B(3) governed the refund claim once the lower sub-heading classification attained finality. The absence of a payment under protest did not defeat the statutory refund right, as Rule 173B(3) was only procedural and could not override the refund mandate. A show cause notice based on the rejected earlier classification was therefore untenable. The excess duty for the relevant period was refundable, and the Department was required to process the refund with consequential reliefs.

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Issues: (i) whether excess central excise duty paid on the product after the classification order was modified in appeal was refundable under Section 11B(3); (ii) whether refund could be denied on the ground that the duty was not paid under protest under Rule 173B(3), and whether the show cause notice demanding duty on the earlier classification could stand.

Issue (i): whether excess central excise duty paid on the product after the classification order was modified in appeal was refundable under Section 11B(3).

Analysis: The appellate classification order had attained finality and held the product classifiable under the lower sub-heading, with the result that duty had been collected on an erroneous footing. Once Section 11B(3) applied, the Department was bound to refund the excess duty paid for the period covered by the petitioner's claim, and the refund could not be defeated by limitation or unjust enrichment.

Conclusion: The refund of excess duty was held payable to the assessee for the relevant period.

Issue (ii): whether refund could be denied on the ground that the duty was not paid under protest under Rule 173B(3), and whether the show cause notice demanding duty on the earlier classification could stand.

Analysis: Rule 173B(3) was read as a procedural provision that could not be used to cut down the statutory mandate of Section 11B(3). The absence of protest did not furnish a defence to the refund claim once the classification had been finally altered in appeal. The show cause notice proceeded on the same rejected classification basis and was therefore untenable.

Conclusion: The refund could not be denied for want of protest, and the show cause notice was invalid.

Final Conclusion: The assessee succeeded in obtaining refund of the excess duty collected on the wrong classification, and the Department was directed to process and pay the refund with consequential reliefs.

Ratio Decidendi: When an appellate classification order attains finality and establishes that duty was collected on an erroneous classification, the statutory refund provision prevails over procedural objections such as absence of protest, and excess duty must be refunded under the governing excise refund provision.

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