Unjust enrichment does not bar refund of duty pre-deposit when customers did not avail corresponding Modvat credit.

Refund of a duty pre-deposit cannot be withheld on the ground of unjust enrichment where the evidence shows that the customers did not avail the corresponding Modvat credit under the Rule 57E certificates. The record indicated that the authorities had received reports that credit was not taken in respect of several certificates, and the remaining customers stated that they were outside the Central Excise net and had not taken credit. On that basis, the duty burden was not passed on through availed credit, so the refund of the amount deposited during the appeal was permissible with consequential relief.

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Issues: Whether refund of the duty deposited during pendency of the appeal could be denied on the ground of unjust enrichment when the customers had not availed Modvat credit under Rule 57E certificates.

Analysis: The refund arose from a duty amount deposited during the pendency of the appeal and the assessee succeeded on the basic issue relating to Notification No. 223/88. The record showed that, out of the Rule 57E certificates issued, the authorities had received reports that Modvat credit was not availed in respect of several certificates, while the remaining customers stated that they were not under the Central Excise net and had not taken credit. On that basis, the customers had not in fact availed the duty credit represented by the certificates.

Conclusion: The bar of unjust enrichment was not applicable, and the refund of the pre-deposit could not be withheld.

Final Conclusion: The assessee was entitled to refund of the duty deposited during the appeal with consequential relief.

Ratio Decidendi: Refund of a duty pre-deposit cannot be denied on unjust enrichment where the evidence shows that the customers have not availed the corresponding credit.

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