Protested investigation deposits treated as pre-deposits remain refundable once the demand is set aside, without section 11B limitation bar.

An amount deposited under protest during investigation, when later treated as a pre-deposit in appeal proceedings, is refundable once the demand order is set aside. The limitation bar under section 11B of the Central Excise Act, 1944 does not apply on these facts because the payment arose from the same dispute and was not an ordinary refund claim. Rule 233B of the Central Excise Rules, 1944 did not defeat the claim. The operative principle is that a protested investigation deposit converted into a pre-deposit retains that character and becomes refundable after the demand fails.

---

---

Issues: Whether the refund of the amount deposited during investigation was barred by limitation under section 11B of the Central Excise Act, 1944, and whether such amount, having been treated as a pre-deposit in the appeal proceedings, was refundable after the demand order was set aside.

Analysis: The amount of Rs. 20 lakhs had been paid during investigation under protest and without prejudice to the right to contest the dispute. The appellate proceedings had treated that amount as a pre-deposit for the purpose of section 35F of the Central Excise Act, 1944, and the subsequent order confirming duty and penalties had been set aside with consequential relief. In such circumstances, the amount retained the character of a pre-deposit and became refundable once the demand failed. The limitation objection under section 11B was rejected because the payment was made under protest and the surrounding facts showed that the refund arose from the very dispute initiated by the investigation. Rule 233B of the Central Excise Rules, 1944 did not defeat the claim on these facts.

Conclusion: The refund claim was not time-barred and the assessee was entitled to refund of the deposited amount.

Ratio Decidendi: An amount deposited under protest during investigation, when treated as a pre-deposit in appellate proceedings, is refundable after the demand is set aside, and such refund is not barred by limitation under section 11B of the Central Excise Act, 1944.

---