Continuous contest of duty liability was deemed payment under protest, permitting refund beyond limitation.

The appellant purchased steel angles, channels, flats, MS rods and joists, cut them to size, drilled holes, and used them in erecting electric poles.

The Department treated these activities as “manufacture” and the appellant paid central excise duty, although it consistently disputed its liability.

The Tribunal ultimately held that the activities did not amount to manufacture and remanded the refund proceedings for determination of limitation; that decision was accepted and attained finality.

The appellant filed refund claims for duty paid during various periods.

Refund of ₹1,21,500 for 1 March 1975 to 19 January 1978 was sanctioned because letters of protest were available, but refund of ₹3,83,67,782 for 20 January 1978 to 7 January 1991 was rejected as time-barred due to the absence of a letter of protest or other contemporaneous records showing payment under protest.

The Commissioner (Appeals) upheld the rejection.

The appellant’s earlier writ proceedings and appeal ultimately resulted in the Supreme Court restoring the matter to the Commissioner (Appeals) for decision on merits.

Whether the appellant’s refund claim for the period 20 January 1978 to 7 January 1991 was barred by limitation under Section 11B of the Central Excise Act, 1944 because no formal letter of protest or endorsed documents were produced?

Whether, in the peculiar facts of the case, the duty paid during the disputed period could be treated as having been paid under protest despite the absence of the original protest letters or endorsed RT-12 returns, invoices, or challans?

Whether the fact that no excise duty was legally payable eliminated the applicability of the limitation prescribed under Section 11B?

Section 11B of the Central Excise Act, 1944 governs claims for refund of excise duty and prescribes a limitation period, subject to the statutory exception applicable where duty has been paid under protest.

Rule 233B of the Central Excise Rules, 1944 prescribed the procedure for payment under protest, including delivery of a protest letter to the proper officer, acknowledgement by that officer, endorsement of “duty paid under protest” on relevant documents, and the consequence under Rule 233B(8) that non-compliance would ordinarily result in the payment being deemed to have been made without protest.

The Tribunal also referred to Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive), Collector of Central Excise, Kanpur v. Flock (India) Pvt. Ltd., and ITC Ltd. v. Collector of Central Excise, Kolkata-IV for the principle that refund proceedings ordinarily cannot be used to alter a final assessment; however, in the present case, the issue of non-dutiability had already attained finality in favour of the appellant.

The Tribunal rejected the appellant’s argument that limitation under Section 11B could not apply merely because the activity was ultimately held not to amount to manufacture.

It held that a claim for return of an amount paid as excise duty, though not legally payable, remains a refund claim governed by Section 11B.

However, while Rule 233B ordinarily requires documentary proof of payment under protest, the Tribunal considered the exceptional factual circumstances: the appellant had consistently disputed excise liability throughout the relevant, preceding, and succeeding periods; protest letters for the periods immediately before and after the disputed period had been accepted; the case was several decades old; and the appellant had plausibly explained its inability to retrieve the intervening records.

Since there was no indication that the appellant accepted duty liability only during the disputed period, the Tribunal inferred that the payments made during that period were also under protest.

Accordingly, the limitation bar did not apply.

The rejection of the refund claim on limitation grounds was therefore unsustainable.

The impugned order of the Commissioner (Appeals) was set aside, the appeal was allowed, and the appellant was directed to be refunded the duty paid during the disputed period.