Payment under protest for appellate compliance defeats refund limitation where the assessee keeps challenging the liability.

Duty and penalty paid pursuant to an appellate order were treated as payment under protest where the assessee continued to challenge the liability in further appeal. The Tribunal held that the payment was not voluntary, so a separate protest under Rule 233B was unnecessary. On that basis, the limitation period for refund claims under Section 11B could not be invoked against the assessee, and the refund claim was held maintainable and not time-barred.

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Issues: Whether the refund claim of duty and penalty paid pursuant to an appellate order was barred by limitation under Section 11B, or whether such payment was to be treated as payment under protest so as to fall outside the limitation period.

Analysis: The amounts were not paid voluntarily. The assessee had initially availed Modvat credit, the order was modified in appeal, and the assessee complied with that appellate order by making the debit entry and paying the penalty while continuing to contest the liability in further appeal. The Tribunal had thereafter allowed the assessee's appeal and reversed the appellate order. In these circumstances, the payment made pursuant to the appellate order was treated as having been made under protest. Consequently, the requirement of lodging a separate protest under Rule 233B did not arise, and the limitation prescribed for refund claims under Section 11B could not be invoked against the assessee.

Conclusion: The refund claim was not time-barred and was rightly held to be maintainable in favour of the assessee.

Ratio Decidendi: Where duty or related sums are paid pursuant to an appellate order while the assessee is pursuing further challenge to the liability, such payment is treated as payment under protest, and the refund limitation under Section 11B does not apply.

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