Unjust enrichment limits excise refund where duty was passed on, but pre-determination payment remained refundable.

Refund of excess central excise duty under the compounded levy scheme was examined on unjust enrichment principles. Amount deposited on the Assistant Commissioner's demand before final determination of annual production capacity was treated as payment from the assessee's own pocket, so refund was admissible for that sum. By contrast, duty paid for March 1998 during the month of clearance was treated as having been passed on to buyers, so the unjust enrichment bar applied and refund was not admissible for that amount. The Revenue's challenge therefore failed in part and succeeded in part only on the March 1998 payment.

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Issues: Whether refund of excess central excise duty paid under the compounded levy scheme was barred by unjust enrichment, and whether refund was admissible for the amount deposited on the Assistant Commissioner's demand as well as the amount paid for the month of March 1998.

Analysis: The duty amount of Rs. 10,87,824/- was deposited on 25-3-1998 on the Assistant Commissioner's demand, before final determination of annual production capacity, and was treated as payment made from the assessee's own pocket. In contrast, the amount of Rs. 1,36,870/- paid for March 1998 was deposited during the month of clearance, when the goods had already been cleared and the incidence of duty was presumed to have been passed on. The principle of unjust enrichment therefore applied only to the latter amount.

Conclusion: Refund was admissible for Rs. 10,87,824/- and was not admissible for Rs. 1,36,870/-, so the Revenue's challenge failed.

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