Unjust enrichment cannot bar customs duty refund when records show the duty incidence was not passed on.

Refund of customs duty on imported socks knitting machines turned on whether the doctrine of unjust enrichment applied. Documentary evidence from a cost accountant and a chartered accountant showed that the duty was not included in the machine cost and was recorded as receivable in the refund account. On that basis, the factual foundation for treating the duty as indirectly passed on was not established, so refund could not be denied on mere presumption. The impugned rejection of refund was set aside and consequential relief followed.

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Issues: Whether refund of customs duty on imported socks knitting machines was barred by unjust enrichment on the ground that the duty burden had been passed on, and whether the appellant had established that the burden was not passed on.

Analysis: Refund of duty is available only if the incidence of duty has not been passed on. The record contained certificates from a cost accountant and a chartered accountant stating that the duty amount had not been included in the cost of the machines and was shown as receivable in the refund account. The denial of refund was based only on a presumption of indirect passing on of duty, without factual support. On the evidence produced, the factual foundation for invoking unjust enrichment was not made out.

Conclusion: The refund claim was not hit by unjust enrichment and was allowed in favour of the assessee.

Final Conclusion: The impugned order rejecting refund was set aside and consequential relief followed.

Ratio Decidendi: Where documentary evidence shows that the incidence of customs duty has not been passed on, refund cannot be denied on a mere presumption of indirect passing on under the doctrine of unjust enrichment.

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