Unjust enrichment in captive consumption refunds turns on whether duty incidence was passed on and must be proved on evidence.

The doctrine of unjust enrichment can apply to refund claims arising from duty paid on intermediate goods captively consumed in manufacture if the assessee has passed on the duty incidence to buyers. Whether the incidence was actually passed on is a question of fact that must be determined from evidence. Because the authorities rejected the refund claim without examining that factual issue, the matter had to be reconsidered by the adjudicating authority after allowing the assessee to adduce evidence on passing or non-passing of duty incidence.

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Issues: Whether the doctrine of unjust enrichment applies to a refund claim arising from duty paid on intermediate goods captively consumed in the manufacture of final products, and whether the refund claim could be rejected without examining whether the incidence of duty had been passed on.

Analysis: The Tribunal noted that the principle of unjust enrichment can apply even in cases of captively consumed goods if the assessee has passed on the incidence of duty to consumers. It further held that whether such incidence has been passed on is essentially a question of fact to be determined on the basis of evidence. Since the authorities below had not examined that factual aspect before rejecting the refund claim, the issue could not be finally resolved at the appellate stage.

Conclusion: The refund matter was required to be reconsidered by the adjudicating authority after giving the assessee an opportunity to adduce evidence on the passing or non-passing of duty incidence; the appeal was therefore allowed by way of remand.

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