Unlawful excise collections and protest endorsements: refund limitation cannot defeat recovery, with interest payable on refund.

Refund of excise duty collected without authority of law is treated differently from an ordinary duty refund, so the usual limitation period does not defeat the claim. Continuous endorsement of payment under protest on gate passes and related documents may be sufficient, and the protest procedure is applied in a substantive, not technical, manner. Where the amount was retained as a revenue deposit despite lacking legal authority, retention is unjustified and refund with interest is warranted. The commentary therefore treats protest-backed payments and unlawful collections as recoverable without being defeated by rigid procedural objections.

---

---

Issues: (i) Whether the refund claim was barred by limitation under the excise refund provisions despite the duty having been collected without authority of law. (ii) Whether endorsement of payment "under protest" on gate passes was sufficient compliance, and whether the procedural requirement for protest under Rule 233B was mandatory. (iii) Whether the assessee was entitled to refund with interest and whether retention of the amount by the Department was legally sustainable.

Issue (i): Whether the refund claim was barred by limitation under the excise refund provisions despite the duty having been collected without authority of law.

Analysis: The amount was collected only because the Department compelled payment on the footing that the activity was dutiable, although the underlying activity was later held not to amount to manufacture. A levy collected without authority of law stands on a different footing from an ordinary duty payment. When the amount retained by the State is not legally due, the ordinary limitation applicable to refund of duty does not defeat the claim.

Conclusion: The refund claim was not barred by limitation and rejection on the ground of delay was unsustainable.

Issue (ii): Whether endorsement of payment "under protest" on gate passes was sufficient compliance, and whether the procedural requirement for protest under Rule 233B was mandatory.

Analysis: The record showed continuous endorsement of protest on gate passes and allied documents during the relevant period. The protest was made in the context of a statutory body following a uniform practice across its units. The procedural requirement governing protest was treated as directory, not as a rigid condition that could defeat substantive relief. A narrow or pedantic insistence on a particular format was rejected.

Conclusion: The endorsements were sufficient to establish payment under protest and the refund could not be denied for non-compliance with the prescribed form.

Issue (iii): Whether the assessee was entitled to refund with interest and whether retention of the amount by the Department was legally sustainable.

Analysis: Once the collection was found to be without authority of law, the State could not retain the amount. Retention of a revenue deposit collected under mistake of law was held to be unjustified and inconsistent with the constitutional mandate that tax be levied and collected only by authority of law. On that footing, interest was also warranted on the refunded amount.

Conclusion: The assessee was entitled to refund with interest at 12% per annum.

Final Conclusion: The impugned order was set aside, the refund claim was sustained, and the Department was directed to release the refund together with interest.

Ratio Decidendi: A payment collected without authority of law and maintained as a revenue deposit cannot be defeated by refund limitation when the assessee has paid under protest, and the protest procedure is to be applied in a substantive and not technical manner.

---