Unjust enrichment bars excise refund where duty was passed on to buyers, despite later credit notes

Refund of excise duty paid under protest and during provisional assessment was denied where the duty burden had already been passed on to buyers. The Tribunal applied the later Supreme Court principle that unjust enrichment can bar refund regardless of Section 11B of the Central Excise Act, 1944, and held that the claimant must prove that the incidence was not passed on and that restitution is warranted. Credit notes issued after clearance did not displace the evidence of passing on the duty, so the refund claim was rejected as hit by unjust enrichment.

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Issues: Whether refund of excise duty paid during provisional assessment and under protest was barred by unjust enrichment where the duty burden had been passed on to buyers but credit notes were subsequently issued.

Analysis: The refund claim arose from the finalisation of classification and assessment of the goods, but the assessee had paid duty under protest and had also collected the duty element from customers. The assessee relied on the theory that amounts paid during provisional assessment were deposits and that Section 11B of the Central Excise Act, 1944 did not apply. The Tribunal held that the later Supreme Court position made clear that unjust enrichment can be invoked irrespective of Section 11B and that, before a refund is granted, the claimant must show that the burden was not passed on and that restitution is justified. Credit notes issued after clearance did not establish that the incidence of duty had not been passed on, and the assessee could not rely on prior authorities on provisional assessment in the face of the later controlling principle.

Conclusion: The refund was barred by unjust enrichment and the claim was rightly rejected.

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