Mistake of law refund claims cannot be rejected solely on limitation; merits must be examined first.

Refund of excise duty paid under a mistake of law could not be refused solely as time-barred under Section 11-B of the Central Excises and Salt Act, 1944. The Court noted that money paid under a mistake of law may be governed by Section 72 of the Indian Contract Act, 1872, and limitation runs from discovery of the mistake. Because the claim had been rejected only on limitation without examining whether duty was payable for the relevant period, the impugned orders were quashed and the refund claim was remanded for fresh decision on merits.

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Issues: Whether the refund claim for excise duty paid under a mistake of law could be rejected as time-barred under Section 11-B of the Central Excises and Salt Act, 1944, and whether the impugned orders rejecting the claim were liable to be quashed and the matter remanded for fresh decision on merits.

Analysis: The authorities had rejected the refund claim only on the ground of limitation under Section 11-B, although it was not disputed that no duty was payable for the relevant period. The Court noted the legal position that money paid under a mistake of law may attract the principles governing mistake under Section 72 of the Indian Contract Act, 1872, and that limitation would run from discovery of the mistake. In view of this legal framework, the claim could not be refused merely by invoking the statutory bar without examining it on merits in the light of the governing Supreme Court decisions.

Conclusion: The impugned orders were quashed and the refund claim was remanded to the Central Board of Excise and Customs for fresh consideration on merits, and the claim was directed not to be rejected solely on the ground of limitation under Section 11-B of the Central Excises and Salt Act, 1944.

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