Legal principle

Refund-limitation provisions like Section 11B of the Central Excise Act (and, by analogy, Section 27 of the Customs Act) apply only to 'duty'—amounts paid under a mistake of law or collected without authority of law must be refunded irrespective of that limitation, since no tax can be levied or collected, or retained, except by authority of law (Article 265).

Court decision

The Gauhati High Court (M. Zothankhuma and Anjan Moni Kalita, JJ.) dismissed the department's appeals and held that the limitation in Section 11B of the Central Excise Act is not applicable to the EC and SHEC paid under a mistake of law; Section 11B, which refers only to refund of duty of excise, cannot bar refund of amounts collected without authority of law. The mere mention of Section 11B in the refund claims does not bar refund, since Section 11B is not attracted, and the department is bound to refund the EC and SHEC; the unjust enrichment issue had attained finality.

Facts

Oil India Limited and ONGC, engaged in exploration and production of petroleum crude classifiable under CTH 2709 of the Central Excise Tariff Act, 1985 (chargeable to nil rate of excise duty), paid Education Cess (EC) and Secondary and Higher Education Cess (SHEC) on their Oil Industry Development (OID) Cess to the department under the mistaken belief that it was required, though such EC/SHEC need not be paid if the OID Cess had been paid to the Ministry of Oil and Natural Gas. On discovering the mistake they claimed refund under Section 11B of the Central Excise Act, 1944, which the department denied. The Assistant Commissioner (Adjudicating Authority) rejected the claim; the Commissioner (Appeals) by order dated 31.03.2015 allowed refund only for claims made within the one-year period under Section 11B, while finding the burden of EC/SHEC had not been passed on to consumers. CESTAT, Kolkata (Final Order No. 75892/2025 dated 16.04.2025) held the Section 11B time limit inapplicable to payments made under a mistake of law, and the department appealed to the Gauhati High Court in two common-issue appeals.

Key provisions

• Section 27, Customs Act, 1962 — Claim of refund duty