Unjust enrichment does not bar refund of bank guarantee encashment treated as security, not duty payment.

Amounts recovered by encashment of bank guarantees furnished during provisional assessment were treated as security, not as duty payment, so the doctrine of unjust enrichment under Section 11B did not apply. On finalisation of assessment, where excess duty was found to have been paid, refund of the encashed guarantee amount was therefore not barred as a duty refund. The Revenue's reliance on unjust enrichment was rejected because the dispute concerned return of security realised through bank guarantee encashment, not refund of excise duty actually paid. The refund claim was upheld.

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Issues: Whether the doctrine of unjust enrichment under Section 11B of the Central Excise Act applies to refund of amounts realised by the department through encashment of bank guarantees furnished in support of provisional assessments.

Analysis: The amounts in question were not paid as duty but were recovered by the department by encashing bank guarantees given as security along with B-13 bonds during provisional assessment. On finalisation of assessment, excess duty was found to have been paid, and refund of the encashed bank guarantee amounts was claimed. The Court followed the settled position that furnishing or encashment of a bank guarantee is not equivalent to payment of excise duty, and therefore such amounts do not constitute duty refunds attracting the bar of unjust enrichment under Section 11B. The reliance placed by the Revenue on the doctrine of unjust enrichment was held to be misplaced because the dispute concerned return of security realised through bank guarantee encashment, not refund of duty actually paid.

Conclusion: Section 11B and the doctrine of unjust enrichment were held inapplicable to the refund of amounts recovered by encashment of bank guarantees, and the assessee's refund claim was upheld.

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