Refund under protest and unjust enrichment principles applied where duty was paid during pending Modvat credit litigation.

Duty paid during pending appellate proceedings contesting Modvat credit was treated as paid under protest for refund purposes, so the claim was not barred by limitation merely because the protest letter was filed after payment. The refund also was not defeated by unjust enrichment because it concerned reversal of input credit on rubber plugs, not duty recovered on final goods sold to buyers. On that basis, the refund was held admissible and the assessee succeeded on both limitation and unjust enrichment.

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Issues: (i) whether the refund claim was barred by limitation in the absence of a valid protest under Rule 233B; and (ii) whether the claim was hit by unjust enrichment.

Issue (i): whether the refund claim was barred by limitation in the absence of a valid protest under Rule 233B.

Analysis: The refund arose from duty paid while the admissibility of Modvat credit on rubber plugs was under challenge through appellate proceedings. The payment was made during the pendency of those proceedings and the dispute ultimately ended in favour of the assessee. In such circumstances, the payment was treated as having been made under protest, and the claim could not be rejected as time barred merely because the protest letter was delivered after payment.

Conclusion: The refund claim was not barred by limitation and was not liable to be rejected on the ground of absence of protest.

Issue (ii): whether the claim was hit by unjust enrichment.

Analysis: The amount claimed represented reversal of Modvat credit relating to input duty and not duty recovered on the final product cleared by the assessee. Since the claim concerned credit admissibility on inputs and not duty passed on to buyers of the goods, the burden-shifting principle underlying unjust enrichment did not apply.

Conclusion: The doctrine of unjust enrichment did not apply to the refund claim.

Final Conclusion: The refund was held admissible, and the assessee succeeded on both limitation and unjust enrichment.

Ratio Decidendi: When duty is paid during bona fide appellate proceedings contesting liability, the payment is to be treated as made under protest for refund purposes, and unjust enrichment does not apply where the refund relates to reversal of input credit rather than duty on cleared goods.

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