Refund of investigation deposits upheld where protest was contemporaneous, limitation was met, and unjust enrichment was not proved.

Amounts deposited during investigation, supported by contemporaneous protest letters, were treated as payments under protest even though the challans did not formally record protest. The refund claim was held within limitation because it was filed after the adjudication order dropping the demand and was computed from receipt of that order. The doctrine of unjust enrichment did not bar refund where the assessee produced evidence, including a chartered accountant's certificate and declaration, showing that the burden had not been passed on to customers. The refund was therefore sustained.

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Issues: (i) whether amounts deposited during investigation, supported by protest letters but not marked on challans, were to be treated as payment under protest for the purpose of refund; (ii) whether the refund claim was barred by limitation under Section 11B of the Central Excise Act, 1944 as made applicable to service tax; and (iii) whether the doctrine of unjust enrichment barred refund of the amount deposited.

Issue (i): whether amounts deposited during investigation, supported by protest letters but not marked on challans, were to be treated as payment under protest for the purpose of refund.

Analysis: The amount was deposited during ongoing investigation before adjudication, and the contemporaneous letters addressed to the investigating authority recorded that the deposits were made under protest. The absence of the formal protest procedure on challans did not alter the character of a payment made under compulsion during investigation.

Conclusion: The deposits were rightly treated as amounts made under protest, and the Revenue's objection on this ground failed.

Issue (ii): whether the refund claim was barred by limitation under Section 11B of the Central Excise Act, 1944 as made applicable to service tax.

Analysis: Refund was claimed after the adjudication order dropping the demand, and the period was computed from receipt of that order. Since the demand itself had been set aside and the deposits were made during investigation without final determination of liability, the claim was held to be within the statutory period.

Conclusion: The refund claim was not time-barred.

Issue (iii): whether the doctrine of unjust enrichment barred refund of the amount deposited.

Analysis: The assessee produced material showing that the burden had not been passed on to any customer, including a chartered accountant's certificate and a supporting declaration. On the facts, the amount retained by the Department could not be justified on the ground of unjust enrichment.

Conclusion: The bar of unjust enrichment did not apply.

Final Conclusion: The refund order was sustained, and the Revenue's challenge to the grant of refund failed in entirety.

Ratio Decidendi: An amount deposited during investigation, when supported by contemporaneous protest and not shown to have been passed on, retains the character of a refundable deposit and the refund cannot be denied on the ground of limitation or unjust enrichment merely because the formal protest procedure was not followed.

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