Retrospective excise exemption allows consequential refund of input duty, without unjust enrichment bar or Section 11B restriction.

A retrospective excise exemption restoring Notification No. 225/86-C.E. from 1-3-1986 made duty paid on inputs during the intervening period refundable as consequential relief. The article notes that the refund and set-off claim was sustainable because the retrospective exemption statute operated to revive the benefit for the relevant period. It further states that such a consequential refund is not barred by unjust enrichment, and Section 11B of the Central Excise Act, 1944 does not defeat the claim. The stated principle is that refund flowing directly from a retrospective statutory exemption is available notwithstanding unjust enrichment objections.

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Issues: (i) Whether the manufacturer was entitled to set-off and refund of duty paid on inputs for the interregnum period by virtue of the retrospective exemption legislation and the reintroduced notification; (ii) Whether the refund claim was barred by unjust enrichment and Section 11B of the Central Excise Act, 1944.

Issue (i): Whether the manufacturer was entitled to set-off and refund of duty paid on inputs for the interregnum period by virtue of the retrospective exemption legislation and the reintroduced notification.

Analysis: The benefit under Notification No. 225/86-C.E. was held to operate retrospectively from 1-3-1986 by reason of Section 2 of the Central Duties of Excise (Retrospective Exemption) Act, 1986. On that basis, the duty paid on inputs used during the relevant period became refundable as a consequential relief.

Conclusion: The claim for set-off and refund was sustainable and the assessee succeeded on this issue.

Issue (ii): Whether the refund claim was barred by unjust enrichment and Section 11B of the Central Excise Act, 1944.

Analysis: The refund arose directly from the retrospective statutory exemption, and the Tribunal relied on precedent holding that such a consequential refund is not defeated by the doctrine of unjust enrichment. On that footing, Section 11B was held inapplicable to the claim.

Conclusion: The bar of unjust enrichment did not apply and the assessee succeeded on this issue as well.

Final Conclusion: The order rejecting refund was unsustainable, and the assessee was entitled to the claimed relief on the retrospective exemption basis.

Ratio Decidendi: Where a retrospective exemption statute restores the benefit of an excise notification from an earlier date, refund of duty paid for the intervening period is a consequential statutory relief and is not defeated by the doctrine of unjust enrichment or Section 11B of the Central Excise Act, 1944.

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