Unjust enrichment does not bar refund claims where excise duty incidence is not passed on in captive consumption cases.

Refund claims for excise duty on inputs used captively in manufacture were treated as outside the doctrine of unjust enrichment where the duty incidence had not been passed on. The text states that excess duty paid on HVI spindle oil used in making spray oil was initially rejected on the view that the duty element formed part of the wholesale price, but the later constitutional bench ruling did not decide the captive consumption question and left it open. Existing High Court decisions on captive consumption and non-passing of duty incidence were therefore applied, and the refund claims were not barred.

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Issues: Whether refund claims for excise duty paid on inputs used captively in the manufacture of final products were hit by the doctrine of unjust enrichment.

Analysis: The refund claims arose from excess duty paid on HVI spindle oil used in the manufacture of spray oil and were rejected at the first instance on the footing that the duty element had been included in the wholesale price. The later constitutional bench decision relied on by the Revenue was found not to have decided the question of captive consumption; on the contrary, the judgment left that issue open and stated that it would not apply where goods were captively consumed. In that situation, the existing High Court decisions dealing with captive consumption and non-passing of duty incidence were held to govern the matter.

Conclusion: The doctrine of unjust enrichment was held not to bar the refund claims in cases of captive consumption, and the decision in favour of the assessee was upheld.

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