Unjust enrichment bars excise refund on captively used capital goods unless the claimant proves duty was not built into product cost.

The doctrine of unjust enrichment applies to refund claims for excise duty paid on captively used capital goods, because duty incidence may be embedded in the cost of manufacture rather than passed on directly. A claimant seeking refund must therefore prove that the duty element on such capital goods was not absorbed in the costing of the final product. If the cost was included in product cost, the refund is barred. The Tribunal's contrary view was set aside, and refund could be granted only on proof before the assessing authority that the duty burden had not entered the product costing.

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Issues: Whether the doctrine of unjust enrichment applies to refund of excise duty paid on capital goods used captively, and whether the assessee must show that the cost of such capital goods was not included in the costing of the final product.

Analysis: The principle of unjust enrichment, as explained in the earlier authority on excise refunds, is not confined to cases of actual passing on of duty in a direct form; it also operates where the incidence of duty has been built into the cost of manufacture. Since the cost of production may include both raw materials and capital goods as components of fixed and variable cost, capital goods used in the manufacturing process can also form part of the product cost. Accordingly, a refund claimant seeking to avoid the bar of unjust enrichment must establish that the duty element on the capital goods was not absorbed in the costing of the goods.

Conclusion: The doctrine of unjust enrichment applies to refund claims relating to captively used capital goods, and the assessee is entitled to refund only if it proves that the cost of the capital goods was not included in the product cost.

Final Conclusion: The Tribunal's contrary view was set aside, and the refund claim could succeed only upon proof before the assessing authority that the duty burden had not entered the costing of the final product.

Ratio Decidendi: In refund matters under excise law, unjust enrichment applies even to captively used capital goods if their duty element has been included in the cost of production, and the claimant bears the burden of proving otherwise.

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