Input duty refund under a set-off notification is not hit by unjust enrichment where the statutory proviso applies.

Refund of duty deposited during pendency of appeal, where the claim was directly relatable to set-off of duty on inputs under Notification No. 201/79, was held not to attract the bar of unjust enrichment. The proviso to Section 11B(2) excludes such refund claims from unjust enrichment where they concern credit of duty paid on excisable goods used as inputs in accordance with a rule or notification under the Act. The contrary Supreme Court authority was found inapplicable on the facts, and the refund rejection was set aside with consequential relief.

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Issues: Whether refund of duty deposited during pendency of appeal, being relatable to set-off of duty on inputs under Notification No. 201/79, was barred by unjust enrichment under the proviso to Section 11B(2) of the Central Excise Act, 1944.

Analysis: The duty claimed as refund was deposited during the pendency of the earlier appeal and was directly connected with the set-off scheme under Notification No. 201/79. The proviso to Section 11B(2) carves out an exception for refund claims relatable to credit of duty paid on excisable goods used as inputs in accordance with the rules or a notification issued under the Act. In such a case, the bar of unjust enrichment does not apply. The Tribunal's earlier view on the same principle was followed, and the contrary reliance on a different Supreme Court decision was held inapplicable on the facts.

Conclusion: The refund claim could not be denied on the ground of unjust enrichment and was required to be allowed.

Final Conclusion: The impugned rejection of refund was set aside and the appellant became entitled to consequential relief.

Ratio Decidendi: Where refund is relatable to duty credit or set-off on inputs allowed under a notification or rule, the proviso to Section 11B(2) excludes the application of unjust enrichment.

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