Refund of pre-deposit on disputed duty payment cannot be denied on unjust enrichment where the assessee succeeded on merits.

Duty paid under protest on rejected and returned inputs, and expressly treated as a pre-deposit, retained the character of a deposit where the substantive dispute had already been decided in the assessee's favour. On those facts, the amount was refundable, and denial on the ground of unjust enrichment failed because the later payment could not be presumed to have been passed on merely from its accounting treatment. The ruling also notes that deposits made pending dispute become refundable on success without requiring a fresh refund claim in the ordinary duty sense.

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Issues: Whether duty paid under protest on rejected and returned inputs, treated as a pre-deposit after the assessee succeeded on the merits, was refundable or barred by unjust enrichment.

Analysis: The duty was paid only because the department required payment on the premise that duty-free inputs were not used for the intended purpose. The record showed that the assessee had specifically described the payment as made under protest and as a pre-deposit, and the substantive dispute had already been decided in its favour. On those facts, the amount retained its character as a deposit made during the dispute and not as a final duty payment. The authorities' reliance on unjust enrichment failed because the later payment, made after clearance and in the course of litigation, could not be treated as having been passed on to customers merely from its accounting treatment. The cited precedents also recognised that deposits made pending dispute become refundable on success, without insisting upon a fresh refund claim in the ordinary duty sense.

Conclusion: The refund could not be denied on the ground of unjust enrichment, and the assessee was entitled to return of the amount paid as pre-deposit.

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