Pre-deposit during investigation refunded where final liability was lower and unjust enrichment did not apply

An amount deposited during investigation and treated as a pre-deposit, rather than duty payment, was held refundable when the final liability of duty, penalty and interest was lower than the sum already deposited. Because no passing on of the duty burden was shown, the doctrine of unjust enrichment and Section 11B did not apply. The excess amount could not be retained by the department or credited to the Consumer Welfare Fund and was payable back to the assessee.

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Issues: Whether the amount deposited during investigation, later found to exceed the ultimate duty, penalty and interest liability, could be retained by crediting it to the Consumer Welfare Fund, and whether the doctrine of unjust enrichment and Section 11B applied to such deposit.

Analysis: The deposit was made during the course of investigation and was treated as a pre-deposit rather than a payment of duty. The subsequent adjudication and appellate proceedings reduced the liability below the amount already deposited. In such circumstances, the excess could not be treated as duty retained by the department or transferred to the Consumer Welfare Fund. The reasoning followed the settled view that deposits made during investigation, where no duty burden is shown to have been passed on, are not hit by unjust enrichment.

Conclusion: The doctrine of unjust enrichment did not apply to the deposit, and the excess amount was refundable to the assessee rather than being credited to the Consumer Welfare Fund.

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