Tax refund paid under later-reversed order: taxpayer must repay on restitution duty, limitation objection rejected; recovery upheld.

On the issue whether the Revenue was barred by limitation from recovering a refund granted pursuant to a Tribunal order later reversed by the SC, the SC held that restitution is a legal obligation flowing from reversal of the underlying adjudication. Since the refund was made only to comply with the Tribunal's order and that order was subsequently set aside, the assessee was bound in law to repay the refunded amount; the Tribunal's limitation-based approach was misconceived, particularly in view of the assessee's undertaking to restitute. The civil appeals were allowed, and recovery of the refund was upheld.

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Issues Involved: Appeal against Customs, Excise and Gold (Control) Appellate Tribunal's order regarding classification of block board under Tariff Entry 4410.90, refund of duty paid, limitation period for recovery of refund, obligation of assessee to make restitution.

Classification Issue: The assessee classified block board under Tariff Entry 4410.90 with 'nil' rate of duty, but the Assistant Commissioner classified it under Tariff Entry 4408.90 attracting excise duty. Tribunal upheld the assessee's contention, leading to a refund by the Revenue. However, Supreme Court reversed the Tribunal's order, requiring the assessee to repay the refunded duty amounts within a specified time frame.

Limitation Period for Recovery: The Revenue demanded repayment of the refunded duty amounts beyond six months, contending that the claim was not barred by limitation. The Tribunal, relying on Section 11A of the Act, held that recovery of alleged erroneous refund must be within six months from the date of refund. Consequently, the demand for return of refunds was deemed unjustified and set aside.

Restitution Obligation: The Supreme Court emphasized that the assessee was obligated to make restitution of the refunded amounts to the Revenue following the reversal of the Tribunal's order. Despite the Tribunal's decision, the Court held that the assessee was legally bound to restitute the refunded sums to the Revenue, especially considering the undertaking given by the assessee.

Judgment: The Supreme Court allowed the civil appeals, directing the assessee to repay the refunded amounts within twelve weeks, along with interest at twelve percent per annum from a specified date. Additionally, the assessee was ordered to bear the costs of the appeals, highlighting the legal obligation of the assessee to make restitution in such circumstances.

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