Retrospective excise exemption and mistake-discovery limitation made the refund claim maintainable.

A retrospective exemption notification covered woollen fabrics produced on handloom and processed with the aid of power, so the goods were not chargeable to excise duty from the retrospectively effective date. Duty paid despite the exemption was treated as payment made under a mistake, discovered when the notification was published. The refund claim was maintainable because it was filed within three years from the date of discovery of the mistake, and consequential relief followed.

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Issues: Whether refund of excise duty was payable in respect of woollen fabrics produced on handloom and processed with the aid of power, in view of a retrospective exemption notification, and whether the refund claim was within limitation from the date of discovery of the mistake.

Analysis: The exemption notification expressly covered the goods and was deemed to have come into force two years before its publication, with the result that the goods were not chargeable to duty from the retrospective effective date. Since duty had been paid despite the exemption, the payment was treated as a mistake discovered on the date of publication of the notification. Refund was held admissible where the claim was made within three years from the date of discovery of the mistake.

Conclusion: The refund claim was held maintainable and the assessee was entitled to consequential relief.

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