Unjust enrichment does not bar refund of wrongly reversed CENVAT credit where the burden stayed within the same assessee.

Refund of wrongly reversed CENVAT credit was held not to be barred by unjust enrichment where the credit-related duty burden had not been passed to an outside buyer and remained within the same assessee's own unit. The refundable claim was therefore maintainable on that ground. However, the amount attributable to interest arising from the delayed reversal of the erroneous credit was not refundable, because that liability should have been discharged when the credit was first reversed. The refund was thus admissible only after deduction of the related interest component.

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Issues: (i) whether refund of the amount paid on reversal of wrongly availed CENVAT credit was barred by the doctrine of unjust enrichment, and (ii) whether the refund was liable to be reduced by the interest attributable to the wrong credit reversal.

Issue (i): whether refund of the amount paid on reversal of wrongly availed CENVAT credit was barred by the doctrine of unjust enrichment.

Analysis: The amount sought to be refunded arose from credit wrongly taken on capital goods and later reversed when the mistake was noticed. The capital goods were transferred to the appellant's own unit, so the duty burden was not passed on to an outside buyer. In such a situation, the doctrine of unjust enrichment does not apply because the burden, if any, remained within the same business entity.

Conclusion: The bar of unjust enrichment was not attracted, and the refund could not be denied on that ground.

Issue (ii): whether the refund was liable to be reduced by the interest attributable to the wrong credit reversal.

Analysis: The interest component arose from the delayed correction of the wrongly availed credit. Since the appellant ought to have discharged the interest when the credit was first reversed, that liability could not be included in the refundable amount.

Conclusion: The refund was admissible, but the interest liability arising from the wrong credit reversal had to be deducted.

Final Conclusion: The appeal succeeded to the extent that refund was held admissible, though the refundable sum was to be adjusted by the interest liability connected with the erroneous credit reversal.

Ratio Decidendi: Refund cannot be denied on unjust enrichment where the duty burden has not been passed to another person and remains within the same assessee's own unit.

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