Customs refund claims must satisfy unjust enrichment and captive consumption must be examined before refund eligibility is decided.

Amended Section 27 of the Customs Act, 1962 applies the principle of unjust enrichment to customs refund claims, so refund cannot be granted without examining whether the duty incidence was passed on; the contrary view adopted below was found unsustainable. The matter also required fresh consideration because the appellate record did not adequately address whether the imported phosphoric acid was captively consumed, and supporting evidence on that question was to be examined before deciding refund eligibility. The impugned order was therefore set aside and the refund issue remitted for a fresh decision in accordance with law.

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Issues: (i) Whether refund of customs duty on imported phosphoric acid was barred by the principle of unjust enrichment under Section 27 of the Customs Act, 1962 in the light of the amended statutory scheme and the decision in Solar Pesticides. (ii) Whether the matter required reconsideration on the question whether the imported goods were captively consumed and whether evidence on that aspect should be examined before final determination of refund.

Issue (i): Whether refund of customs duty on imported phosphoric acid was barred by the principle of unjust enrichment under Section 27 of the Customs Act, 1962 in the light of the amended statutory scheme and the decision in Solar Pesticides.

Analysis: The amended provisions of Section 27 of the Customs Act, 1962 embody the principles of unjust enrichment, and the decision dealing specifically with the post-amendment position and the allied provisions was treated as the more appropriate authority. The contrary view relied upon by the lower appellate authority was not regarded as governing the issue.

Conclusion: The denial of refund on the basis adopted by the lower appellate authority was held not sustainable.

Issue (ii): Whether the matter required reconsideration on the question whether the imported goods were captively consumed and whether evidence on that aspect should be examined before final determination of refund.

Analysis: The record showed that the finding on captive consumption had not been dealt with adequately at the appellate stage, and the appellant undertook to produce supporting evidence before the authority.

Conclusion: The matter was sent back for reconsideration of refund eligibility after examining evidence regarding captive use of the goods.

Final Conclusion: The appeal succeeded to the extent that the impugned order was set aside and the refund issue was remitted for fresh decision in accordance with law after consideration of evidence on captive consumption.

Ratio Decidendi: In refund matters governed by the amended customs refund provision, the principle of unjust enrichment applies and refund cannot be granted without examining whether the incidence of duty has been passed on, including the effect of captive consumption where relevant.

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