Refund of illegally collected excise duty cannot be limited by three-year delay when the levy itself lacked authority of law

Excise duty collected by including post-manufacture expenses and charges in the assessable value of aluminium tubes was treated as a levy without authority of law. Applying Article 265 and the principle governing refunds for money paid under mistake of law, the Court stated that restitution could not be restricted by a three-year period merely because the assessee discovered the mistake later. It also held that completed assessments did not legitimise retention of an illegal levy. The refund claim for the full period was therefore maintainable and was allowed in full.

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Issues: Whether excise duty recovered without authority of law could be ordered to be refunded for the full period claimed, notwithstanding the lapse of more than three years from the date of knowledge of the mistake.

Analysis: The duty had been collected by including post-manufacture expenses and charges in the assessable value of extruded aluminium tubes. The levy was held to be unauthorised in earlier decisions of the same Court, and the Court treated the collection as illegal and without jurisdiction. Referring to the governing principle under Article 265 of the Constitution of India and the Supreme Court's exposition on refunds arising from mistake of law, the Court held that once the recovery itself was without authority of law, the refund could not be confined by a three-year limitation merely because the assessee learnt of the mistake later. The Court also rejected the contention that completed assessments barred relief, since an illegal collection cannot be retained on that basis.

Conclusion: The refund claim for the entire period was maintainable and was allowed in full in favour of the assessee.

Ratio Decidendi: Money recovered as tax or duty without authority of law is refundable in writ jurisdiction, and such restitution is not defeated merely because the claim is made beyond three years from payment or from discovery of the mistake.

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