Unjust enrichment in duty refund claims fails where the assessee proves the tax burden was not passed on to the buyer.

Refund of excess duty is not barred by unjust enrichment where the assessee shows that the duty burden was not passed on to the buyer. Here, the contract allowed price adjustment on notice, and the buyer reduced the price and issued debit notes to the assessee. On that factual basis, the buyer was treated as the ultimate consumer and the duty element was found not to have been borne in the manner required to trigger the bar. The rejection of refund on unjust enrichment was therefore unsustainable, and the refund was allowable to the assessee.

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Issues: Whether the refund claim of excess duty paid was barred by unjust enrichment and, if not, whether the assessee was entitled to refund on the basis that the duty burden had not been passed on to the buyer.

Analysis: The agreement between the parties permitted price adjustment on notice, and the buyer had reduced the price and issued debit notes to the assessee. The finding was that the buyer was the ultimate consumer of the goods and the duty element had not been borne by it in the manner required to attract the bar of unjust enrichment. Applying the principle that refund is admissible where the assessee establishes that the duty burden has not been passed on, the rejection of refund on unjust enrichment was found unsustainable.

Conclusion: The refund claim was not hit by unjust enrichment and was allowable in favour of the assessee.

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