Unjust enrichment does not bar refund of excess customs duty on captive-use capital goods used in manufacture.

Refund of excess customs duty on imported capital goods used captively in the factory was held not to be barred by unjust enrichment. The analysis distinguished capital goods that are used in manufacture from raw materials that are consumed, noting that the doctrine had been applied to the latter but not to non-consumed capital goods. As the imported ink jet printing machine was used in the factory and the relevant customs notification benefit had already been accepted, the refund could not be denied on unjust enrichment grounds and was allowed.

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Issues: Whether the refund of excess customs duty paid on imported capital goods used in the factory for captive use was barred by the doctrine of unjust enrichment.

Analysis: The refund arose from excess duty paid on import of an ink jet printing machine, and the benefit of the relevant customs notifications had already been accepted. The only dispute was whether the refund was hit by unjust enrichment. The Tribunal held that the doctrine had been applied in cases of raw materials consumed in manufacture, but capital goods used in the factory and not consumed stand on a different footing. Following the settled view that unjust enrichment does not apply to such non-consumed capital goods used for manufacture of the final product, the refund could not be denied on that ground.

Conclusion: The doctrine of unjust enrichment was held inapplicable, and the refund was allowed in favour of the assessee.

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