Refund of excise duty on exempt goods was allowed, with writ jurisdiction supporting restitution and interest.

Refund of excise duty recovered on exempt goods was not barred by Rule 11 or Rule 173-J because the levy itself was not exigible; the claim was treated as money collected under mistake and therefore not defeated by excise-rule limitation. In writ jurisdiction under Article 226, the Court accepted that money recovered without authority of law should be restored on equitable principles. The petitioner was therefore entitled to refund of the entire amount, with 6% interest, because the Department's retention was unjustified.

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Issues: (i) Whether the refund claim for excise duty was barred by Rule 11 and Rule 173-J of the Central Excise Rules, 1944, or was governed by the Limitation Act, 1963. (ii) Whether, in exercise of writ jurisdiction under Article 226 of the Constitution of India, the petitioner was entitled to refund of duty collected on exempt goods with interest.

Issue (i): Whether the refund claim for excise duty was barred by Rule 11 and Rule 173-J of the Central Excise Rules, 1944, or was governed by the Limitation Act, 1963.

Analysis: The goods manufactured by the petitioner were covered by exemption notifications, so the duty recovered was not exigible under the governing excise law. In such a case, the statutory limitation for refund under Rule 11 read with Rule 173-J did not control the claim. The claim arose from money collected under a mistake and was therefore not defeated merely because it was not pursued within the excise-rule time limit.

Conclusion: The refund claim was not barred by Rule 11 or Rule 173-J, and the claim was maintainable.

Issue (ii): Whether, in exercise of writ jurisdiction under Article 226 of the Constitution of India, the petitioner was entitled to refund of duty collected on exempt goods with interest.

Analysis: Where public authorities recover money without authority of law, equitable considerations support restitution through writ jurisdiction. The Court relied on the principle that money wrongfully recovered by the State or its instrumentalities ought to be returned, and that relief can include suitable interest where justice so requires. On the facts, the petitioner's payment was bona fide and the Department's retention of the amount was unjust.

Conclusion: The petitioner was entitled to refund of the entire amount with 6% interest.

Final Conclusion: The petition succeeded, and the excise duty recovered on exempt goods was directed to be refunded with interest, on the basis that the statutory limitation provisions did not defeat a claim for money collected without authority of law.

Ratio Decidendi: Refund of duty recovered without authority of law is not defeated by excise-rule limitation where the levy itself was not exigible, and writ jurisdiction may be used to order restitution on equitable principles.

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