Unjust enrichment under Central Excise refund turns on whether duty incidence was actually passed on at clearance.

Section 12B of the Central Excise Act, 1944 was held to apply only to duty actually assessed and paid at the time of clearance, not to a later debit in the personal ledger account made after the enhanced rate came to notice. The later debit was not part of the original duty burden collected from customers, and the presumption of passing on incidence could not be invoked without positive evidence. In the absence of proof that the assessee recovered the additional burden or that debit-note practice was established, refund could not be denied on unjust enrichment grounds.

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Issues: Whether the presumption under Section 12B of the Central Excise Act, 1944 applied to duty debited in the personal ledger account after clearance of the goods, so as to deny refund on the ground of unjust enrichment.

Analysis: The duty on clearance had been assessed and paid only at the lower rate prevailing at the time of removal of the goods. The subsequent debit in the personal ledger account arose after the enhanced rate came to notice and was not part of the duty burden assessed and collected at clearance. In such circumstances, the statutory presumption of passing on the incidence of duty could operate only in respect of the duty actually assessed and paid at the time of clearance, and not in respect of the later debit unless supported by positive evidence. There was no evidence that the assessee recovered the later duty burden from customers or that the trade practice of raising debit notes was established on record.

Conclusion: The presumption under Section 12B did not apply to the later debited amount, and the refund could not be denied on the ground of unjust enrichment. The appeal succeeded in favour of the assessee.

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