Rule 233B protest procedure is directory; refund under protest may still succeed where unjust enrichment is not proved.

Rule 233B of the Central Excise Rules, 1944 was treated as directory rather than mandatory, so a refund claim for duty paid under protest was not defeated by alleged procedural non-compliance or limitation. The Tribunal also held that unjust enrichment was not established merely because the contract price was stated to be inclusive of duty and taxes, where the assessee had consistently disputed excisability and the incidence of duty was not shown to have been passed on to buyers. The refund was therefore not liable to credit to the Consumer Welfare Fund and was payable to the assessee.

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Issues: (i) Whether non-compliance with Rule 233B of the Central Excise Rules, 1944 rendered the refund claim time-barred or otherwise invalid; (ii) Whether the refund was hit by unjust enrichment and could be credited to the Consumer Welfare Fund instead of being paid to the assessee.

Issue (i): Whether non-compliance with Rule 233B of the Central Excise Rules, 1944 rendered the refund claim time-barred or otherwise invalid.

Analysis: The duty had been paid under protest, and the only objection raised by the Revenue was that the prescribed protest procedure was not followed strictly. The Tribunal applied its earlier ruling that the procedure under Rule 233B is directory and not mandatory. On that basis, absence of strict compliance with the rule did not defeat the claim or make it time-barred.

Conclusion: The objection based on Rule 233B failed and the Revenue's challenge on limitation was rejected.

Issue (ii): Whether the refund was hit by unjust enrichment and could be credited to the Consumer Welfare Fund instead of being paid to the assessee.

Analysis: The contracts fixed the sale price as inclusive of excise duty and taxes, but the assessee had consistently maintained that the goods were not excisable and had paid duty only under protest. The Tribunal followed the principle that where the contract price is inclusive of duty and taxes, that clause does not by itself establish passing on of excess duty, particularly when the assessee contests excisability from the outset and the price structure does not change. In those circumstances, the incidence of duty was not held to have been passed on to customers.

Conclusion: The refund was not hit by unjust enrichment, credit to the Consumer Welfare Fund was disallowed, and the refund was directed to be paid to the assessee.

Final Conclusion: The Revenue's appeal was rejected, while the assessee's appeal succeeded with consequential refund relief.

Ratio Decidendi: The procedure for recording protest under Rule 233B is directory, not mandatory, and a refund of duty paid under protest is not barred by unjust enrichment merely because the contract price is stated to be inclusive of duty and taxes, if the incidence of duty is not shown to have been passed on.

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