Refund of excise duty cannot be denied on a technical defect when duty paid was identical and the claim was bona fide.

Where the duty paid on the second supply was identical to the duty initially paid, the Bombay HC held that a bona fide assessee should not be denied substantive relief because the refund claim was made under the wrong provision or faced a limitation objection. The Court rejected a technical approach, holding that the amount already refunded could be treated as refund of the duty paid on the second supply. Recovery from the assessee on that basis was therefore impermissible, and the refunded amount was to be adjusted in equity to prevent unjust recovery.

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Issues: Whether the refund already granted to the assessee could be treated as refund of excise duty paid on the second supply and whether any recovery could be made on a technical objection that the claim was made under the wrong provision and beyond limitation.

Analysis: The duty paid on the second supply was found to be the same as the duty initially paid, and the assessee had acted bona fide. Although the revenue had succeeded before the Tribunal on the footing that no duty was payable on the second supply and that the refund claim was not maintainable under Rule 173L and was time-barred under Section 11B, the Court held that a too technical view was not warranted where the assessee had in substance paid duty and sought appropriate relief. The Court directed that the amount already refunded be treated as refund of the duty paid on the second supply.

Conclusion: The refund already made was to be adjusted as excise duty paid on the second supply, and no recovery was permissible from the assessee on that count.

Final Conclusion: The writ petition was partly allowed by granting equitable adjustment of the refunded amount and denying recovery from the assessee.

Ratio Decidendi: Where the duty amount is identical and the assessee has acted bona fide, a technical defect in the refund provision invoked should not defeat substantive relief, and the refund may be adjusted in equity to prevent unjust recovery.

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