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Issues: (i) Whether the refund claim was admissible after the assessee had accepted the duty demand and debited the amount from the PLA. (ii) Whether the assessee was entitled to restoration of the wrongly utilised Modvat credit in RG-23A Part II and whether Section 11B barred the claim on unjust enrichment grounds.
Issue (i): Whether the refund claim was admissible after the assessee had accepted the duty demand and debited the amount from the PLA.
Analysis: The duty demand, even if issued beyond six months, had been accepted by the assessee without protest and the amount was paid by debit to the PLA. The assessee could have challenged the demand on limitation, but having submitted to it, the later refund claim could not be sustained on that ground. The real question was whether duty could validly have been paid through Modvat credit for an undeclared final product, and the record showed that the product had not been declared in the relevant declaration at the material time.
Conclusion: The refund claim was not admissible and the order rejecting refund was restored, in favour of Revenue.
Issue (ii): Whether the assessee was entitled to restoration of the wrongly utilised Modvat credit in RG-23A Part II and whether Section 11B barred the claim on unjust enrichment grounds.
Analysis: The amount earlier debited through RG-23A Part II, having been made good through payment from the PLA, had to be restored to the credit account if not already restored. Such restoration was permissible under the Modvat scheme under Rules 57A, 57F and 57G. The plea of unjust enrichment under Section 11B did not arise because no refund was held admissible.
Conclusion: Restoration of the credit account was permissible, but the refund claim itself remained rejected and Section 11B did not bar any admissible refund, in favour of Revenue.
Final Conclusion: The appeal succeeded, the order-in-appeal was set aside, and the original rejection of refund was restored, while leaving open the assessee's entitlement to restore the wrongly reversed credit in the Modvat account.
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