Unjust enrichment does not bar refund where excess duty was not passed on to buyers and debit notes showed the differential.

The doctrine of unjust enrichment does not bar a refund claim where the assessee shows that the duty incidence was not passed on to buyers. Here, the refund related to processed fabrics after an increase in the deemed credit rate, but the assessee continued charging duty at the earlier higher rate because the amendment was not immediately known. Customers objected to the excess charge and issued debit notes for the differential amount, and the Revenue did not dispute those notes. On those facts, the duty sought to be refunded was not recovered from buyers, so unjust enrichment was not attracted and the refund was maintainable.

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Issues: Whether the bar of unjust enrichment applied to the refund claim where the excess duty was allegedly not passed on to customers.

Analysis: The refund arose from clearance of processed fabrics after the deemed credit rate was increased, and the assessee claimed that it had continued to charge duty at the earlier higher rate only because the amendment was not known immediately. The customers had protested the higher charge and had issued debit notes reflecting the differential amount, and these notes were not disputed by the Revenue. In these circumstances, the incidence of duty could not be said to have been passed on to the customers. Since the duty sought to be refunded had not been recovered from the buyers, the doctrine of unjust enrichment was not attracted.

Conclusion: The bar of unjust enrichment did not apply, and the refund claim was maintainable in favour of the assessee.

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