Refund limitation turns on mistake of law and knowledge date, not old excise rule 11 or later statutory refund provision

Refund of duty paid on articles made from polyurethane foam scrap was treated as outside section 11B because the application was filed before that provision came into force. The discussion distinguishes rule 11 of the Central Excise Rules, 1944 from refund claims based on duty collected without authority of law or under mistake of law: rule 11 applies only where duty was lawfully paid and later becomes refundable. For mistaken or unauthorised collection, the general three-year limitation runs from discovery of the mistake or from when the assessee gained knowledge of it. On the stated facts, the refund claim filed after the Government of India accepted exemption was within time.

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Issues: Whether the refund claim for duty paid on articles manufactured from scrap or waste of polyurethane foam was governed by rule 11 of the Central Excise Rules, 1944 or section 11B of the Central Excises and Salt Act, 1944, and whether the claim was barred by limitation.

Analysis: The refund application was made before section 11B came into force, so that provision had no application. The dispute was whether old rule 11 governed the claim. The Court held that rule 11 applies only where duty has been paid in accordance with law and later becomes refundable; it does not govern a case where duty is collected without authority of law or under a mistake of law. In such a case, the relevant period is the general law period of three years from the date when the mistake is discovered or comes to the assessee's knowledge. On the facts, the legal position became clear only when the Government of India allowed the revision petition on 14 December 1977 and accepted that the goods were exempt. The refund application filed on 26 October 1978 was therefore within time.

Conclusion: The claim was not barred by limitation, rule 11 and section 11B did not govern the refund, and the assessee was entitled to refund.

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