Refund of duty paid under protest allowed where demand was raised without show cause notice and mandatory procedure was bypassed.

A refund of duty paid under protest was held admissible because the differential duty had been demanded without issuing a show cause notice or following the mandatory recovery procedure. The Tribunal applied the settled requirement that tax demands must be preceded by notice and an opportunity of hearing, and held that a demand raised in breach of natural justice and the statutory scheme cannot be sustained. Amounts recovered without authority of law were therefore refundable, and rejection of the refund was found unsustainable. The appeal was allowed in favour of the assessee with refund interest as prescribed by law.

---

---

Issues: Whether the refund claim for the amount of duty paid under protest was allowable when no show cause notice had been issued for the differential duty and the demand was raised without following the statutory procedure.

Analysis: The refund claim arose from a payment made under protest after the department insisted on recovery of differential duty without issuing a show cause notice. The Tribunal held that the demand itself was contrary to the statutory scheme governing recovery of duty, because notice and opportunity of hearing are mandatory before any tax demand can be confirmed. It relied on settled law that a demand raised without compliance with the mandatory notice requirement and the principles of natural justice cannot be sustained, and that amounts recovered without authority of law are refundable. On that basis, the rejection of refund was found unsustainable.

Conclusion: The refund claim was held to be admissible, and the appeal was allowed in favour of the assessee with a direction to refund the amount along with interest as prescribed by law.

---