Refund limitation and unjust enrichment: controlled-price regime prevented duty pass-through, keeping the refund claim maintainable.

A refund claim arising after appellate recognition of concessional duty was held not barred by limitation where the initial application was filed within time and the assessee's mistaken filing before the wrong authority was later corrected by refiling before the proper authority. The refund was also held not hit by unjust enrichment because the sale price of urea was Government-controlled and the duty on naphtha was not loaded into the retention price, showing that the incidence had not been passed on. The rejection of refund was therefore set aside and the claim succeeded on both grounds.

---

---

Issues: (i) Whether the refund claim was barred by limitation under Section 11B of the Central Excise Act, 1944. (ii) Whether the refund was barred by unjust enrichment.

Issue (i): Whether the refund claim was barred by limitation under Section 11B of the Central Excise Act, 1944.

Analysis: The refund arose after the appellate order held the assessee eligible for concessional duty on naphtha. The claim was not to be tested by the date of original duty payment in the ordinary manner, and the assessee had also bona fide pursued the refund before the jurisdictional authority first approached. The record showed that the initial application was filed within the relevant period and that the mistaken filing before one authority and later refiling before the proper authority could not defeat the claim.

Conclusion: The refund claim was not barred by limitation and was maintainable.

Issue (ii): Whether the refund was barred by unjust enrichment.

Analysis: The price of urea was fixed by the Government, and the price mechanism did not take into account the higher duty burden on naphtha. The evidence, including the certificate from the Fertilizer Industry Co-ordination Committee, showed that excise duty on naphtha was not loaded into the retention price. In such a controlled-price regime, the assessee could not have passed on the duty burden to buyers.

Conclusion: The refund was not hit by unjust enrichment.

Final Conclusion: The order rejecting refund was set aside and the assessee's refund claim succeeded on both limitation and unjust enrichment.

Ratio Decidendi: Where a refund claim follows an appellate determination granting concessional duty and the incidence of duty is not passed on because the sale price is fixed by the Government without factoring in that duty, the claim is not defeated by limitation or unjust enrichment.

---