Unjust enrichment does not bar refund when final product prices are fixed independently on ruling market prices.

Refund of duty on captively consumed copper cathode cuts was held not to be barred by unjust enrichment because the duty incidence was not passed on to buyers. The principle applies to captive consumption, but its operation depends on whether the burden has in fact been recovered. Where final product prices are fixed independently on ruling LME prices, the duty paid on the intermediate goods does not affect the sale price, so the refund claim remains maintainable. The lower appellate authority failed to address the material submission on LME-based pricing, and the refund had been credited to the Cenvat account on that basis.

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Issues: Whether the refund of duty on captively consumed copper cathode cuts was hit by unjust enrichment when the final product prices were determined on the basis of ruling LME prices.

Analysis: The principle of unjust enrichment applies even to captive consumption and to capital goods, but that principle turns on whether the duty burden has in fact been passed on. Where the prices of the final products are fixed on the basis of ruling LME prices, the duty paid on the intermediate captively consumed goods does not influence the sale price of the final products, and the burden of duty cannot be said to have been recovered from buyers. On the facts, the lower appellate authority did not deal with the material submission that pricing was based on LME prices, and the record showed that the refund had been granted by credit to the Cenvat account on that basis.

Conclusion: The refund was not barred by unjust enrichment, and the order denying the benefit could not be sustained.

Ratio Decidendi: Unjust enrichment will not defeat a refund claim where the duty incidence on captively consumed inputs is not passed on because the final product price is independently fixed on a market basis unrelated to input cost.

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