Show-cause notice and adjudication are required before duty recovery; mere appropriation intimation cannot bar refund claim.

Refund of the amount appropriated from an ad hoc deposit was admissible because recovery of duty under Section 11A of the Central Excise Act requires a show-cause notice and adjudication before any demand for not levied, short-levied or short-paid duty can be enforced. No notice or adjudication order existed for the disputed component of value, so the appropriation letter could not be treated as a lawful demand order. The assessee was therefore not bound to separately appeal against a mere intimation of appropriation, especially where the deposit had been made ad hoc and under protest rather than against any adjudicated liability.

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Issues: Whether refund of the amount appropriated from the assessee's ad hoc deposit was admissible when no show-cause notice or adjudication order had been issued demanding duty on the relevant component of value, and whether the appropriation letter could be treated as an appealable order requiring separate challenge.

Analysis: Section 11A of the Central Excise Act requires a show-cause notice and adjudication before duty not levied, not paid, short-levied, or short-paid can be recovered. The record did not show any such notice or any adjudication order confirming demand on account of the disputed charges. On that basis, the appropriation of part of the deposit could not be treated as a lawful demand order, and the assessee was not required to pursue an appeal against a mere intimation of appropriation. The deposit had been made ad hoc and under protest, not against any specific adjudicated liability.

Conclusion: The refund claim was held to be admissible and the objection based on non-challenge to the appropriation letter failed.

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