Provisional assessment refunds: bank guarantee encashment need not follow Section 11B refund procedure, and unjust enrichment does not apply.

Amounts recovered by encashment of a bank guarantee during provisional assessment are to be adjusted on finalisation of assessment under Rule 9(B)(5) of the Central Excise Rules, 1944, and do not amount to a refund claim requiring an application in the prescribed form under Section 11B of the Central Excise Act, 1944. Where the assessee succeeds in appeal and the duty finally assessed is lower than the duty provisionally paid, refund is to be granted on a simple request. The doctrine of unjust enrichment was held inapplicable to this provisional assessment regime, and coercive recovery by encashment during the pendency of the appeal was contrary to Board instructions.

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Issues: Whether the amount recovered by encashment of bank guarantee during provisional assessment had to be refunded on finalization of assessment without insisting on a refund application under Section 11B of the Central Excise Act, 1944, and whether the bar of unjust enrichment applied.

Analysis: The assessments were provisional and the bond and bank guarantee were furnished in that context under Rule 9(B)(5) of the Central Excise Rules, 1944. That rule provided for adjustment of duty on finalization of assessment and entitled the assessee to refund where the duty finally assessed was lower than the duty provisionally paid. The amount recovered through encashment of the bank guarantee was not a payment attracting the refund procedure under Section 11B. On the facts, the department ought to have granted refund suo motu on a simple request once the assessee succeeded in appeal. The encashment during pendency of the appeal was also contrary to the Board's instructions against coercive recovery at that stage. The doctrine of unjust enrichment did not apply to the relevant provisional assessment regime in the present case.

Conclusion: The assessee was entitled to refund without filing a claim in the prescribed form under Section 11B, and the appeal was allowed with consequential relief.

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