Refund on clearances to a 100% EOU requires merits review and unjust enrichment examination, not mere procedural rejection.

Refund of duty paid on clearances to a 100% EOU could not be rejected solely for non-compliance with the AR-3 procedure where the goods were otherwise claimed to fall within the exemption notification and duty had been paid under mistake. The refund claim therefore had to be examined on merits, including whether the notification applied, and the bar of unjust enrichment. As the lower authority had rejected the claim only on merits and had not examined unjust enrichment, the matter was remanded for fresh adjudication on both aspects, with no final determination on the refund entitlement.

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Issues: Whether refund of duty paid on clearances to a 100% Export Oriented Unit could be denied for non-compliance with the procedure prescribed under the exemption notification, and whether the matter required reconsideration on merits and unjust enrichment.

Analysis: The goods had been cleared on payment of duty, though the buyer was stated to be a 100% EOU holding a CT-3 certificate. In that situation, the objection that the AR-3 procedure was not followed could not be treated as decisive, because the appellant's case was that duty had been paid under mistake and the procedural route contemplated for duty-free clearance was not adopted only for that reason. The entitlement to refund therefore had to be examined with reference to whether the goods were covered by the notification and also whether the bar of unjust enrichment applied. Since the refund had been rejected on merits, the aspect of unjust enrichment had not been examined by the lower authority.

Conclusion: The matter was remanded to the lower adjudicating authority for fresh decision on merits and on unjust enrichment; no final finding was recorded on the refund claim itself.

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