Unjust enrichment in excise refunds requires chance to prove duty burden was not passed on; remand ordered

Amended Section 11B of the Central Excise Act, 1944, introducing the principle of unjust enrichment, applied to pending refund matters. A refund claim could not be rejected on that ground without first giving the assessee an opportunity to produce evidence that the duty burden had not been passed on to customers. The proper course was remand, so the jurisdictional Assistant Commissioner could reconsider the claim on a fresh record after allowing evidence on passing of duty burden. The earlier rejection was therefore set aside and the matter sent back for fresh consideration.

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Issues: Whether the refund claim rejected on the ground of unjust enrichment could be sustained without affording the assessee an opportunity to produce evidence that the duty burden had not been passed on to customers, and whether the matter required remand for consideration under the amended refund provisions.

Analysis: The refund dispute was decided on a ground not earlier put to the assessee. The amended provisions of Section 11B of the Central Excise Act, 1944, incorporating the principle of unjust enrichment, were held applicable to pending refund matters. In the circumstances, the proper course was not to sustain the rejection on the existing record but to remit the matter so the assessee could lead evidence on passing of duty burden.

Conclusion: The rejection of refund on the ground of unjust enrichment was set aside and the matter was remanded to the jurisdictional Assistant Commissioner for fresh consideration after giving the assessee an opportunity to adduce evidence.

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