Refund finality bars restitution where no recovery claim was ever made and the refund had long since attained closure.

Restitution could not be ordered for an amount already paid in excess of duty, refunded long before, where the department had never asserted any claim to retain or recover that excess either before the High Court or later. On those facts, the refund claim had attained finality on payment and was not a pending matter capable of reopening through restitution. The Supreme Court noted that Mafatlal Industries did not assist the revenue on this factual matrix. The direction to restore the refunded amount, with interest, was therefore unsustainable and was set aside.

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Issues: Whether the High Court could direct restitution of the amount of Rs. 39,15,236.89 paid to the assessee and already refunded in 1987, together with interest, on the footing that the payment had been made pursuant to an interim order.

Analysis: The amount in question had been paid to the assessee in excess of the duty computed at 12 1/2%/13% and had been refunded long before. No claim to retain or recover that excess amount had ever been made by the department, either before the High Court or thereafter. On these facts, the refund claim relating to that amount had attained finality upon payment itself and could not be treated as a pending matter capable of being reopened by way of restitution. The decision in Mafatlal Industries did not assist the revenue on these facts.

Conclusion: The direction for restitution of the refunded amount and interest thereon was not sustainable and was set aside.

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