Refund of duty collected without authority of law can survive limitation and unjust enrichment objections, with compensatory interest payable.

Duty collected on goods covered by exemption notifications was treated as without authority of law and therefore refundable by restitution. The refund claim was held not barred by limitation, because an unlawful levy could not be defeated by the special limitation relied on by the Department and the claim was made shortly after the petitioner gained definite knowledge that no duty was payable. The plea of unjust enrichment was rejected, as passing on the burden did not justify retention of money collected without legal authority. Interest was held payable at 12% per annum as compensation for retention of the refunded sums.

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Issues: (i) whether excise duty collected on the petitioner's acid oil and soap stock was recoverable despite the exemption notifications; (ii) whether the refund claim was barred by limitation under the Central Excise law or the general law; (iii) whether the plea of unjust enrichment could defeat the refund claim; and (iv) whether interest was payable on the refunded amount.

Issue (i): whether excise duty collected on the petitioner's acid oil and soap stock was recoverable despite the exemption notifications.

Analysis: The goods manufactured in the petitioner's oil mill and solvent extraction plant fell within the exemption granted by the relevant notifications. The collection of duty contrary to that exemption was without authority of law and therefore offended the constitutional prohibition against levy or collection except by authority of law. Once the levy itself was illegal, the petitioner was entitled to consequential restitution.

Conclusion: The duty collected on the exempt goods was refundable.

Issue (ii): whether the refund claim was barred by limitation under the Central Excise law or the general law.

Analysis: A claim founded on an unlawful levy could not be defeated by the special limitation relied on by the Department. Even on the footing that a limitation period applied, the material date was when the competent authority communicated the applicability of the exemption and the petitioner acquired definite knowledge that no duty was payable. The claim made shortly thereafter was within time.

Conclusion: The refund claim was not barred by limitation.

Issue (iii): whether the plea of unjust enrichment could defeat the refund claim.

Analysis: The fact that the incidence of duty may have been passed on to purchasers did not authorise the State to retain money collected without legal authority. The Court treated the right to restitution as arising from the illegality of the levy itself and declined to deny relief on the ground that the burden may have been shifted.

Conclusion: The plea of unjust enrichment did not bar refund.

Issue (iv): whether interest was payable on the refunded amount.

Analysis: Since the respondents retained money collected without authority of law, interest was treated as compensation for the use of another's money during the period of retention.

Conclusion: Interest at 12% per annum was payable on the refunded sums.

Final Conclusion: The petitioner succeeded in securing restitution of duty collected without authority of law, and the Department was directed to return the amounts with interest.

Ratio Decidendi: Money collected as tax or duty without authority of law is refundable in writ jurisdiction, and such refund cannot be defeated merely by statutory limitation or by the plea that the burden was passed on to consumers, unless the statute expressly provides otherwise.

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