Limitation for recovery of erroneous refund upheld; Section 35E cannot defeat the six-month limit governing duty recovery.

Erroneously refunded duty is recoverable only if proceedings are initiated within the applicable six-month limitation, and Section 35E cannot be used to bypass the limitation governing recovery. The Tribunal held that the department's challenge to the refund was served on the assessee within six months from the date of refund, so the recovery action was within time. The objection that a separate notice under Section 11A was required did not succeed on these facts, and the limitation plea failed. Recovery of the refund was therefore sustained, and the Revenue's position was upheld.

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Issues: Whether the department could sustain proceedings to recover an allegedly erroneous refund when the application under Section 35E(4) was served within six months, and whether the absence of a separate notice under Section 11A barred recovery.

Analysis: The refund had been sanctioned by the Assistant Collector, and the department sought reversal through proceedings under Section 35E(4). The Tribunal held that recovery of an erroneously refunded amount is governed by the limitation principle recognised under Section 11A, and that proceedings under Section 35E cannot be used to bypass that limitation. On the facts, the application challenging the refund was served on the assessee within six months from the date of refund, so the proceedings were within time. The Tribunal therefore found no merit in the plea that the demand was barred by limitation.

Conclusion: The limitation objection failed, and the recovery proceedings were held to be valid in favour of the Revenue.

Final Conclusion: The appeal was rejected and the order sustaining recovery of the refund was upheld.

Ratio Decidendi: Erroneously refunded duty can be recovered only through proceedings initiated within the applicable six-month limitation, and Section 35E cannot be invoked to defeat the limitation applicable to recovery of duty.

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