2002 (1) TMI 1129 - AT - Central Excise

Issues Involved:
1. Time bar on refund claim.
2. Validity of protest letter under Rule 233B.
3. Applicability of the exemption under Notification No. 217/86.
4. Unjust enrichment.

Issue-wise Detailed Analysis:

1. Time Bar on Refund Claim:
The appellant claimed a refund of Rs. 29,80,997/- out of a total claim of Rs. 36,90,335/- for excess Central Excise duty and CESS paid on sub-standard craft paper used captively. The Assistant Commissioner sanctioned Rs. 7,05,812.57, holding the rest of the claim as time-barred. The refund application was received on 14-2-1992, and the Assistant Commissioner computed the six-month period from this date, allowing the refund for the duty paid on 14-8-91 but rejecting the rest as time-barred.

2. Validity of Protest Letter Under Rule 233B:
The appellant argued that they paid duty under protest, as evidenced by their letter dated 9-7-85. The authorities, however, contended that the protest was related to the valuation of sub-standard craft paper and not to the captive consumption claim or the benefit of Notification No. 217/86. The Commissioner (Appeals) upheld the Assistant Commissioner's view, stating that the protest letter was not valid for the current claim.

3. Applicability of the Exemption Under Notification No. 217/86:
The appellant paid duty on sub-standard craft paper without availing of the benefit of Notification No. 217/86 during the period from 7-3-87 to 17-1-92. They later filed a classification list on 12-2-92 to claim the exemption, which was approved. The authorities allowed the refund for the period within six months prior to the filing date but rejected the claim for the earlier period.

4. Unjust Enrichment:
The matter was remanded to the original authority to examine whether the refund claim is hit by unjust enrichment. The appellants were to be heard, and if they could provide evidence that the duty element was not passed on to the consumer, the refund would be granted.

Judgment Analysis:

Majority View:
The majority held that the payment of duty was based on provisional assessment under Rule 9B of Central Excise Rules, and thus, the time bar provision under Section 11B would not apply. They relied on the Apex Court judgments in the cases of Mafatlal Industries and MP Electricity Board, which established that a protest need not be specific to be valid under Rule 233B. The case was remanded to the original authority to consider the aspect of unjust enrichment, allowing the appellants to present evidence that the duty element was not passed on to the consumer.

Dissenting View:
The dissenting member argued that the protest letter dated 9-7-85 was specifically related to the valuation of sub-standard craft paper and not to the applicability of Notification No. 217/86. He upheld the view that the refund claim was time-barred as there was no valid protest under Rule 233B regarding the exemption notification. He also distinguished the present case from the Apex Court judgments cited by the appellants, stating that those cases were not applicable to the facts of this case.

Conclusion:
The appeal was disposed of with the majority view that the payment of duty was provisional, and the time bar under Section 11B did not apply. The case was remanded to the original authority to examine the issue of unjust enrichment.

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