Refund of duty paid under mistake of law: limitation runs from knowledge of the mistake, and unlawful levy is refundable.

A refund claim for countervailing duty paid under a mistake of law was held to be governed by limitation under Section 27(1) of the Customs Act, with time running from when the mistake became known. The court treated knowledge as arising when the legal position was clarified by the Gujarat High Court in March 1972, and found a writ filed within three years from that date to be in time. Because the levy on electrolytic aluminium rods was without authority of law, the duty was refundable by restitution.

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Issues: Whether the appellant's claim for refund of countervailing duty, paid under a mistake of law, was barred by limitation under Section 27(1) of the Customs Act, 1962, and whether duty collected without authority of law was refundable.

Analysis: The duty had been collected on electrolytic aluminium rods even though they were not liable to countervailing duty under Section 2A of the Indian Tariff Act, 1934. The appellant's knowledge of the mistake was held to arise when the Gujarat High Court declared the position in March 1972, and the writ petition filed within three years from that date was treated as within limitation. The earlier public notice was not shown to have been effectively brought to the appellant's knowledge in Bombay, and the court accepted that an importer would not ordinarily continue paying duty known to be non-payable. Once the levy was found to be without authority of law, restitution followed.

Conclusion: The refund claim was not barred by limitation and the appellant was entitled to refund of the duty collected without authority of law.

Final Conclusion: The appeal succeeded, the dismissal by the learned single Judge was set aside, and the Department was directed to refund the countervailing duty after necessary calculation.

Ratio Decidendi: In a claim for refund of duty paid under a mistake of law, limitation runs from the date when the mistake becomes known, and sums collected without authority of law must be restored by way of restitution.

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