Refund of indirect tax depends on proof that the duty burden was not passed on; limitation did not apply here.

A refund claim arising from duty collected on an erroneous view of excisability was treated as outside the limitation provisions in Rule 11 and Rule 173(J), because the payment was compulsorily recovered by the Revenue rather than made by the assessee under its own mistake. The later administrative clarification showed the levy was unsustainable, and a cut-off date tied to that clarification was held misconceived. However, the claim failed on unjust enrichment: a refund of indirect tax is not allowable unless the claimant proves that the duty burden was not passed on, and the Court accepted that the burden had entered the cost of the goods. The refund was therefore rejected.

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Issues: (i) whether the refund claim was barred by limitation under the Central Excise Rules, and (ii) whether the refund claim was defeated by the doctrine of unjust enrichment.

Issue (i): whether the refund claim was barred by limitation under the Central Excise Rules.

Analysis: The claim arose from duty collected by the Revenue on a mistaken view that the goods attracted duty. The later clarification by the Central Board of Revenue showed that the levy was unsustainable, and the fixation of a cut-off date for refund based on that clarification was misconceived. On the facts, the payment was not one made by the assessee under its own mistake or misconception, but a compulsory recovery by the Revenue. In that situation, the limitation provisions under Rule 11 and Rule 173(J) were held inapplicable.

Conclusion: The plea of limitation failed against the assessee.

Issue (ii): whether the refund claim was defeated by the doctrine of unjust enrichment.

Analysis: Although the duty was not shown to have been directly collected from consumers, the amount paid under compulsion would have entered the cost of the finished goods. Applying the constitutional bench ruling on refund and restitution, a claimant must establish that the duty burden has not been passed on, and a refund cannot be granted where the burden has been transferred to others. The Court therefore accepted the Revenue's objection on unjust enrichment.

Conclusion: The refund claim was barred by unjust enrichment and was not allowable.

Final Conclusion: The earlier order granting refund was set aside and the assessee's refund claim was rejected in the Revenue's favour.

Ratio Decidendi: A refund of indirect tax is not permissible unless the claimant establishes that the duty burden has not been passed on, and limitation provisions do not apply where the payment was compulsorily collected by the Revenue on a mistaken legal basis rather than paid by the assessee under its own mistake.

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