A suit for refund of excess Excise Duty paid due to a mistake of law is governed by Article 96 of the Limitation Act, 1908, and is not barred if filed within three years from the date of knowledge of the mistake.

A.B.N.Sinha, J.

1. This appeal by the plaintiff arises out of a suit for recovery of Rs. 15,296 paid by the plaintiff to the defendant. Union of India, on account of excess Excise Duty on soap in respect of the year 1966-57.

2. Briefly stated, the case of the plaintiff is that though by satisfaction No. S.R.O./ 500, dated the 1st March. 1956 (Ext. D), the Central Government in exercise of the powers conferred on them by rule 8 of the Central Excise Rules, 1944, had exempted the first one hundred twenty-five tons of soap of all kinds cleared for home consumption by any manufacturer on or after the 1st day of April from any duty, the plaintiff had no knowledge of the said exemption, and it, therefore, paid Excise Duty even on the first one hundred twenty-five tons of washing soap cleared for consumption during the financial year 1966-67. When the plaintiff came to know of the aforesaid exemption on the 8th January, 1958, it applied for refund of Rs. 15,296, the sum of money which had been paid by the plaintiff to the defendant as Excise Duty by mistake, to the Assistant Collector, Central Excise, Patna. The plaintiffs application for refund of the aforesaid amount was rejected by the Assistant Collector. Central Excise, Patna, and its appeal to the Central Excise Collector, Patna, and the revision application before the Joint Secretary. Ministry of Finance, having also failed, the plaintiff was compelled to institute the suit for recovery of Rs. 18,296, as aforesaid, after due service of notice under Section 80 of the Code of Civil Procedure.

3. The suit was resisted by the defendant on the grounds, inter alia, that the allegation of the plaintiff that it did not know of the notification exempting first 125 tons of soap was wrong, that the plaintiff was a very big concern and produces many commodities chargeable to the Central Excise Duty and maintains a regular office and that the plaintiff had full knowledge of the exemption and was fully aware of the same when it paid the Excise Duty, it was further pleaded on behalf of the defendant that Sec. 40(1) of the Central Excises and Salt Act, 1944 (hereinafter referred to us "the Act" was a bar to the maintainability of the suit and that, in any event, the cause of action for the suit, as stated in paragraph 12 of the plaint being the adverse order passed against the plaintiff by the Joint Secretary, Ministry of Finance, on the 27th October, 1959, the suit was covered by Sec. 40(2) of the Act; and, it having been instituted after an expiry of six months from the date of the said order, that is from the 27th October, 1959, it was barred under the special law of limitation provided therein. The claim for refund of the Excise Duty was also resisted on the ground that it had not been made within three months from the date of payment as required by Rule 11 of the Central Excise Rules 1944.

4. The trial Court has held that the suit was not barred under Sec. 40(1) of the Act, that notice under Section 80 of the Code of Civil Procedure had been duly served on the defendant that there was no defect in the frame of the suit and that Rule 11 of the Central Excise Rules had no application to a suit of any such legal proceeding. It has however, found that the suit was barred by limitation under Sec. 40(2) of the Act and that the plaintiff had knowledge of the exemption in February, 1956, and it could not be said that he had paid the duty under any mistake, because the payment for which reliefs were sought were all made after February, 1956. In its view, therefore, Article 96 of the Indian Limitation Act, 1908, which was meant for cases where relief was sought on the ground for mistake, was not applicable to the facts of the present case. In substance, the plaintiffs suit has failed on ground of limitation.

5. The learned Advocate-General, who appeared for the plaintiff-appellant, has urged, firstly, that the finding of the trial Court that the plaintiff had knowledge of the exemption in