Refund of excise duty on non-excisable goods governed by Limitation Act, not Rule 11, where payment was made under mistake.

Refund of excise duty paid on goods later found to be outside the excise levy is not governed by Rule 11 of the Central Excise Rules, 1944, because that rule applies only where duty is otherwise leviable under excise law. The payment is treated as money collected under mistake, so limitation is tested under the Limitation Act, 1963, particularly Section 17(1)(c), with time running from discovery of the mistake. On that basis, the refund claim was considered within limitation and support was drawn from the relevant circulars.

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Issues: Whether the refund claim for excise duty paid on goods later held to be outside the purview of excise was governed by Rule 11 of the Central Excise Rules, 1944 or by the Limitation Act, 1963, and whether the claim was within limitation.

Analysis: The claim related to duty paid on Urea Formaldehyde Resin for a period when the goods were found to be not excisable at all. On that basis, Rule 11 of the Central Excise Rules, 1944 was held inapplicable, since that rule governs refunds where duty is otherwise leviable under the excise law. The refund was therefore treated as one arising from money collected under mistake, attracting the period of limitation under Section 17(1)(c) of the Limitation Act, 1963. The relevant circulars also supported the position that where payment was made under mistake and the goods were outside the excise levy, limitation runs from the date of discovery of the mistake and the claim is to be tested under the Limitation Act.

Conclusion: The refund claim was held to be governed by the Limitation Act and to be within time; the issue was decided in favour of the assessee.

Ratio Decidendi: Refund of duty paid on goods outside the excise levy is not governed by Rule 11 of the Central Excise Rules, 1944 but by the Limitation Act, 1963, and limitation runs from the relevant date applicable to money paid under mistake.

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