Duty paid under protest loses Section 27(1) exemption after protest order issued, limitation governed by Section 27(1B)(b)

The CESTAT Chennai held that when duty is paid under protest, the doctrine of merger applies once the protest is vacated by an order from the proper officer. The second proviso to Section 27(1) of the Customs Act 1962, which exempts protest payments from the one-year limitation, ceases to apply after the protest order is issued. Subsequently, Section 27(1B)(b) governs the limitation period, computed from the date of the order. The tribunal found the lower authority's reasoning sound and upheld the impugned order, disposing of the appeal.

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Issues Involved:
1. Whether the refund claim filed on the basis of the CESTAT order is hit by the limitation of time despite the importer having registered a 'Protest' at the time of making a deposit towards duty.
2. Whether the refund claim is subject to unjust enrichment.

Summary:

Issue 1: Limitation of Time for Refund Claim
The appellant filed a refund claim 20 months after the CESTAT order dated 04/11/2013, which was initially paid under protest. The original authority and the Commissioner (Appeals) rejected the refund claim on the grounds of time-bar. The appellant argued that the limitation period does not apply when duty is paid under protest as per Section 27 of the Customs Act, 1962. The Tribunal noted that Section 27(1B) specifies a one-year limitation from the date of the court/tribunal order, but the second proviso to Section 27(1) excludes this limitation when duty is paid under protest.

The Tribunal referred to the Supreme Court's decision in Mafatlal Industries Ltd. and other relevant judgments, concluding that the filing of an appeal is construed as payment under protest. However, once an order finalizing the dispute is passed, the protest is vacated, and the limitation of one year under Section 27(1B) applies. The Tribunal held that the refund claim filed after 20 months was time-barred, as the protest was vacated by the Tribunal's final order.

Issue 2: Unjust Enrichment
The appellant contended that the amount paid was merely a deposit and not subject to unjust enrichment. They submitted a Chartered Accountant's certificate stating that the incidence of duty had not been passed to any person. The Tribunal did not specifically address unjust enrichment in detail, focusing primarily on the time-bar issue.

Conclusion:
The Tribunal upheld the lower authority's decision, rejecting the appeal on the grounds that the refund claim was time-barred under Section 27(1B)(b) of the Customs Act, 1962. The appeal was disposed of accordingly.

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