Unjust enrichment does not bar refund on provisional assessment finalization, and recovery needs prior challenge to the refund order.

Refunds arising from finalization of provisional assessments are not barred by unjust enrichment where the excess duty has not been passed on to buyers and remains with the assessee; on those facts, the refund is admissible. Recovery of a sanctioned refund cannot be pursued by show cause notice alone when the underlying refund orders have not first been challenged through the prescribed statutory mechanism. The proper course is to set aside the refund orders before seeking recovery. The assessee was therefore entitled to the refunds, and the proposed recovery could not stand.

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Issues: (i) Whether refund arising on finalization of provisional assessments was barred by unjust enrichment; (ii) Whether a show cause notice could be issued to recover the alleged erroneous refund without first challenging the refund orders.

Issue (i): Whether refund arising on finalization of provisional assessments was barred by unjust enrichment.

Analysis: The refund represented the difference between duty paid on the higher stock transfer price at the factory gate and the duty payable on the lower normal transaction value at the depots. Since the duty burden ultimately passed on to buyers was lower than the duty borne at the time of clearance from the factory, the excess duty remained with the assessee and was not passed on to customers. In such a situation, the doctrine of unjust enrichment did not apply.

Conclusion: The bar of unjust enrichment was not applicable, and the refund was admissible.

Issue (ii): Whether a show cause notice could be issued to recover the alleged erroneous refund without first challenging the refund orders.

Analysis: Refunds granted on finalization of provisional assessments could not be recovered merely by issuing a show cause notice when the refund orders themselves had not been challenged in accordance with the statutory mechanism. The proper course was to assail the refund orders within the prescribed framework before seeking recovery of the amounts granted.

Conclusion: The show cause notice for recovery of the alleged erroneous refund was not sustainable.

Final Conclusion: The assessee was entitled to the refunds, the doctrine of unjust enrichment did not defeat the claim, and the impugned demand for recovery could not stand.

Ratio Decidendi: Refunds arising from finalization of provisional assessments are not hit by unjust enrichment where the duty incidence has not been passed on, and recovery of a sanctioned refund cannot be pursued without first setting aside the refund order under the prescribed statutory remedy.

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