Per Justice U.L. Bhat:-

The appellant is a limited company manufacturing ascerbic acid I.P., mannitol B.P. and sorbitol. These were exempted from duty till 1.3.86. These become chargeable to duty on or after 3.4.86. On 3.4.86, Government of India issued a Notification exempting bulk drugs and chemicals coming under Chapters 28 and 29 of the Customs Tariff from payment of Excise Duty subject to certain conditions (see Notification 234/86-CE). The appellant was paying the duty under protest during the period from 3.4.86 to 26.4.86. On 27.5.86 the appellant applied for refund of Rs. 6,80,417.92 paid for the period. On21stJuly, 1986, the Assistant Collector ordered refund subject to the deduction of Rs. 1,02,062.68. On 7.11.86, the Assistant Collector concerned issued notice to the appellant stating that refund was wrongly granted and required the appellant to show cause why the refund amount should not be recovered under Section 11A of Central Excise and Salt Act, 1944. This was based on letter dated 16.10.86 written by the appellant to the Assistant Collector informing the latter that some of its customers would claim benefit under mod vat scheme for which he had taken the refund