2007 (11) TMI 237 - HC - Central Excise

Refund rejected on ground of limitation - petitioner paid the duty for the disputed period only under protest, as such the period of limitation prescribed would not apply as per the second proviso to Section 11B - petitioner has informed Asst. Comm. the details of cost of production of LAB, & informed that the incidence of duty has not been passed - hence contention of revenue that aspect of unjust enrichment has not been considered by single judge is not acceptable refund allowed

Summary

Issues Involved:
1. Unjust enrichment due to refund.
2. Payment of excise duty under protest.
3. Limitation period for refund claim.

Issue-wise Detailed Analysis:

1. Unjust Enrichment:
The Assistant Commissioner of Central Excise sought clarifications regarding the cost of production of Linear Alkyl Benzene (LAB) to determine if the incidence of duty had been passed on to the customers. The petitioner clarified that the incidence of duty had not been passed on. The Assistant Commissioner initially denied the refund for March 1994 due to the limitation period, but did not dispute the explanation regarding unjust enrichment. The appellate authorities and the learned single Judge did not find any issue with the petitioner's claim on unjust enrichment. The court rejected the Department's contention that the learned single Judge failed to consider unjust enrichment, affirming that the explanation provided by the petitioner was accepted by all relevant authorities.

2. Payment Under Protest:
The second proviso to Section 11B(1) of the Central Excise Act states that the six-month limitation does not apply if the duty is paid under protest. The Assistant Commissioner and the Commissioner did not find sufficient evidence that the duty was paid under protest as per Rule 233B. However, the petitioner's repeated representations and the government's acknowledgment of the difficulties faced by the petitioner indicated that the duty was paid under protest. The court referenced the Supreme Court's interpretation that substantial written protest suffices, even if the formal procedure under Rule 233B is not strictly followed. The court concluded that the petitioner's payments were indeed made under protest, thus attracting the second proviso to Section 11B.

3. Limitation Period:
The learned single Judge held that the limitation period should be reckoned from the date of the ad hoc exemption order (10.11.1994). Although the Department argued that the refund claim for March 1994 was barred by the six-month limitation period, the court determined that since the duty was paid under protest, the limitation period did not apply. Consequently, the court did not need to further consider the limitation issue, as the claim was valid under the second proviso to Section 11B.

Conclusion:
The court dismissed the writ appeal, affirming that the petitioner was entitled to the refund for March 1994. The points of unjust enrichment and payment under protest were resolved in favor of the petitioner, and the limitation period was deemed inapplicable due to the protest. The court emphasized the importance of justice and the proper interpretation of legal provisions to ensure fairness.