Unjust enrichment limits refund of excise duty paid by mistake when the burden has been passed on to consumers.

Refund of excise duty paid by mistake was examined under the refund machinery in the Central Excise Rules, 1944 and the restitutionary principle in Section 72 of the Indian Contract Act, 1872. The Court emphasised that writ relief should not enable repayment where the duty burden has already been passed on to consumers, as that would amount to unjust enrichment. It noted conflicting authority on refunds claimed after mistaken payment and declined to grant refund relief in the present proceedings, directing that the issue be considered by a larger Bench for determination of entitlement in light of unjust enrichment.

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Issues: Whether refund of excise duty alleged to have been paid by mistake could be granted in writ jurisdiction when the claim was rejected as time-barred and the duty burden was stated to have been passed on to consumers.

Analysis: The claim for refund was considered under the refund machinery in the Central Excise Rules, 1944 and the equitable basis of restitution under Section 72 of the Indian Contract Act, 1872. The Court noted the competing line of authority on refunds of duty paid under mistake, but gave primacy to the principle that a writ court should not facilitate repayment where the burden has already been shifted to consumers, as that would result in unjust enrichment. In that view, the Court expressed disagreement with the earlier view that had granted refund in similar matters and held that the issue required consideration by a larger Bench.

Conclusion: No refund relief was granted in the present proceedings, and the matter was directed to be placed before a larger Bench for adjudication on the entitlement to relief in the light of unjust enrichment.

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