Unjust enrichment bars excise refund when post-clearance credit notes to dealers do not prove duty was not passed on.

Refund of excise duty was held to be barred by unjust enrichment where duty had been collected through invoices and later adjusted by credit notes. The decisive issue was whether the incidence of duty had been passed on under Section 12B of the Central Excise Act, 1944. Post-clearance credit notes issued to dealers were found insufficient, by themselves, to prove that the duty burden was not transferred to consumers, especially when there was no evidence of repayment to ultimate buyers. The refund was therefore denied and credit to the Consumer Welfare Fund was sustained.

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Issues: Whether the refund claim was barred by unjust enrichment where excise duty had been collected through invoices and later adjusted by issuing credit notes to dealers.

Analysis: The refund was claimed on duty paid under protest after the classification dispute was resolved in the assessee's favour. The decisive question was whether the incidence of duty had been passed on. The assessee relied on credit notes issued to dealers to show that the duty element was returned. The Tribunal held that the dealers would already have passed on the duty component to consumers, and there was no evidence that the duty had been returned to the ultimate consumers. Applying the principle affirmed by the Supreme Court, issuance of post-clearance credit notes by itself was insufficient to displace the statutory bar under Section 12B of the Central Excise Act, 1944.

Conclusion: The refund claim was hit by unjust enrichment and the credit to the Consumer Welfare Fund was upheld.

Final Conclusion: The appeal failed on the refund issue and the impugned order was sustained.

Ratio Decidendi: Post-clearance credit notes issued to dealers do not, by themselves, establish that the incidence of excise duty was not passed on so as to overcome the bar of unjust enrichment under Section 12B of the Central Excise Act, 1944.

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