Refund limitation under Central Excise Rules rejected where duty was paid under protest and levy was not legally exigible

Refund of central excise duty on pre-budget stock was held not to be barred by limitation where the duty was paid under protest and the claim was made promptly after the levy was clarified as inapplicable. The Tribunal noted that the version of Rule 11 in force at the material time did not contain the later prohibition against such refund claims, so there was no statutory bar under Rule 11 read with Rule 173-J. Applying earlier decisions, it treated the levy as not legally exigible and held that substantial justice favoured refund. The Revenue's challenge failed and the refund claim succeeded.

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Issues: Whether the respondents' refund claim was barred by limitation under Rule 11 of the Central Excise Rules, 1944 read with Rule 173-J of the Central Excise Rules, 1944, and whether payment of duty under protest excluded the limitation bar in the circumstances of pre-budget stock cleared after levy commenced.

Analysis: The refund related to duty paid on fertilizers manufactured before the levy came into force and cleared later. The Tribunal noted that the applicable version of Rule 11 at the material time did not contain a provision equivalent to the later sub-rule prohibiting refund claims, and therefore there was no statutory prohibition against refund. The respondents had paid the duty under protest and sought refund promptly after the High Court decision clarified non-liability. The reasoning adopted was consistent with earlier decisions holding that Rule 11 did not apply to such claims and that substantial justice should prevail where the levy itself was not legally exigible.

Conclusion: The refund claim was not barred by limitation and was entitled to succeed; the appeal by Revenue failed.

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