Unjust enrichment governs compounded levy duty refunds, but evidence may rebut the presumption that duty was passed on.

Refund of excess duty paid under the compounded levy scheme is subject to the doctrine of unjust enrichment because duty paid under Section 3A of the Central Excise Act, 1944 attracts that bar. The assessee's reliance on other decisions was distinguished on different facts, but the Chartered Accountant's certificate was treated as relevant evidence to rebut the presumption that the duty burden had been passed on. The refund claim was therefore sustained on merits, while the assessee was allowed to place evidence before the adjudicating authority to show that the incidence of duty had not been passed on to customers.

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Issues: Whether refund of excess duty paid under the compounded levy scheme was hit by unjust enrichment and whether the assessee should be allowed to adduce evidence to show that the duty burden had not been passed on.

Analysis: The duty had been paid on the basis of the annual capacity of production provisionally fixed by the Commissioner and the excess refund claim arose after re-determination of capacity. The governing Larger Bench view held that duty paid under Section 3A of the Central Excise Act, 1944 under the compounded levy scheme attracts the doctrine of unjust enrichment. The authorities relied on by the assessee were distinguished as arising in materially different factual contexts, while the appellant's Chartered Accountant certificate was noted as evidence relevant to rebut the presumption of passing on of duty. In the interest of justice, that evidence required examination by the adjudicating authority.

Conclusion: The doctrine of unjust enrichment applies to the refund claim, so the orders were sustained on merits, but the assessee was given an opportunity to establish before the adjudicating authority that the duty incidence had not been passed on.

Ratio Decidendi: Refund of duty paid under the compounded levy scheme is subject to unjust enrichment, but the assessee may rebut that bar by producing evidence that the incidence of duty was not passed on to customers.

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