Unjust enrichment does not bar refund where excess compounded levy duty was fixed and sale price remained unchanged.

Excess duty paid under the compounded levy scheme was treated as refundable where the duty was fixed under Section 3A of the Central Excise Act, 1944 and not linked to actual clearances, and the sale price of the finished goods remained unchanged. On those facts, the incidence of duty could not be said to have been passed on to buyers, so the doctrine of unjust enrichment did not apply as a bar to refund. The ruling confirms that a refund claim for excess payment pending redetermination of annual production capacity under Section 3A(5) must be tested on whether duty incidence was actually shifted.

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Issues: Whether refund of excess duty paid under the compounded levy scheme could be denied on the ground of unjust enrichment when the sale price of the finished goods remained unchanged and the duty was paid at a fixed rate unrelated to actual clearances.

Analysis: The duty liability arose under the compounded levy arrangement under Section 3A of the Central Excise Act, 1944, and the refund claim related to excess payment made pending re-determination of annual production capacity under Section 3A(5) of the Central Excise Act, 1944. Since the sale price of the finished goods had not changed and the duty was fixed under the scheme without relation to actual clearances, the incidence of duty could not be said to have been passed on so as to attract the bar of unjust enrichment.

Conclusion: The bar of unjust enrichment was not applicable, and the appellants were entitled to refund of the excess duty.

Ratio Decidendi: In a refund claim arising from excess duty paid under a compounded levy scheme, where the duty is fixed and the sale price remains unchanged, the doctrine of unjust enrichment does not bar refund.

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