Excise refund limitation: duty collected without authority of law is governed by discovery of mistake, not the refund rule.

Refund of excise duty collected without authority of law was held not to be governed by the six-month limitation under Rule 11 of the Central Excise Rules, 1944, because the claim was not for duty paid in accordance with law and later becoming refundable. The Court applied the general law governing money paid under mistake of law, under which limitation runs from discovery of the mistake or from when the payer acquires knowledge of it. On the facts, the assessee's knowledge was fixed by the Government of India's revision order dated 14-12-1977, so the refund claim made in October 1978 was within time and not barred.

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Issues: Whether the assessee's refund claim for excise duty paid on goods 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 time-barred.

Analysis: The application for refund was made in October 1978, when Rule 11 alone was in force and Section 11B had not yet come into operation. The Court held that the dispute was not one of refund of duty paid in accordance with law and later becoming refundable, but of duty collected without authority because the goods were claimed to be exempt under the notifications. In such a case, the six-month limitation in Rule 11 does not govern the claim. The Court applied the settled principle that where money is paid under a mistake of law or recovered without authority of law, the period of limitation is governed by the general law and runs from the date when the mistake is discovered or comes to the payer's knowledge. On the facts, the controversy remained unresolved until the Government of India's revision order dated 14-12-1977, which fixed the assessee's knowledge of the mistake.

Conclusion: The refund claim was not barred by Rule 11 and was within limitation under the general law. The answer was in favour of the assessee.

Final Conclusion: Duty collected without sanction of law cannot be retained on the footing of the excise refund limitation rule; the assessee was entitled to pursue refund within the period counted from discovery of the mistake.

Ratio Decidendi: A limitation provision governing refund of duty paid under the Act does not apply where the duty itself was collected without authority of law or under a mistake of law, and in such cases limitation runs from discovery of the mistake under the general law.

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