Refund claims for duty paid under mistake of law require merits review, including passing on of duty burden, not limitation alone

A refund claim alleging excise duty paid under mistake of law should not be rejected solely on limitation where the claim is made within a reasonable time after discovery of the mistake. The authority must then examine entitlement on merits, including whether the duty burden was passed on and whether refund is permissible under the amended statutory scheme. Where limitation is the only basis for rejection, and the levy is said to have been collected without authority of law, a factual inquiry is required before refusing relief.

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Issues: Whether a refund claim based on duty paid under mistake of law could be rejected as time-barred under the limitation provision, and whether the matter required remand for consideration on merits including passing on of duty burden.

Analysis: The petitioners asserted that excise duty had been paid under a mistake of law and that the refund claims were made after discovery of the mistake. The rejection rested only on limitation. In such a situation, the limitation rule could not be applied to defeat a claim where the levy was alleged to have been collected without authority of law, at least when the claim was made within a reasonable time after realisation of the mistake. The question whether the burden of duty had been passed on and whether refund was otherwise permissible under the amended statutory scheme required factual examination by the authority.

Conclusion: The rejection of the refund claims solely on limitation was unsustainable. The matter was remitted to the Assistant Collector to decide the refund claim on merits, including the question of passing on of duty and entitlement under the amended Act.

Ratio Decidendi: A refund claim alleging payment of duty under mistake of law cannot be rejected merely on limitation where the claim is made within a reasonable time after discovery of the mistake; the authority must examine entitlement on merits, including whether the duty burden was passed on.

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