Unjust enrichment and refund entitlement: refund survives where evidence shows the excess duty was not recovered from buyers.

Refund is not barred by unjust enrichment where an assessee can prove that the duty incidence was not passed on to buyers, even if invoices reflected a higher duty rate. Here, after the deemed credit under Notification No. 25/2001-CE increased, the effective duty rate fell, and the Tribunal accepted customer letters and related evidence showing that buyers had objected to the higher amount and paid only the reduced duty. On those facts, the higher duty shown on invoices was not actually recovered, so the refund claim was not hit by unjust enrichment and rejection of the refund was unsustainable.

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Issues: Whether the refund claim was barred by the principle of unjust enrichment where the assessee had issued invoices showing duty at a higher rate but produced evidence that customers had objected and had paid only the reduced duty.

Analysis: The dispute related to a short period after the deemed credit under Notification No. 25/2001-CE was increased, resulting in a reduced effective duty rate. The Tribunal accepted the evidence showing that the customers had deducted the excess amount and had paid only the reduced duty, supported by their letters. On those facts, the assessee was found not to have collected duty at the higher rate despite the invoice entries. The bar of unjust enrichment applies where the duty burden has been passed on, but it does not apply when the evidence shows that the amount was not recovered from customers.

Conclusion: The refund claim was not hit by unjust enrichment and the rejection of refund was unsustainable.

Ratio Decidendi: Unjust enrichment does not bar refund where the assessee proves that the duty incidence was not passed on and the excess amount was not collected from buyers.

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