Provisional customs assessment refunds follow final assessment and are not barred by limitation or unjust enrichment for captive use.

Refund arising on finalisation of provisional customs assessment follows the final assessment itself and is not barred by the ordinary refund limitation period. Where imported inputs are captively consumed in manufacture and are not sold as such, the doctrine of unjust enrichment does not apply to defeat the refund. The departmental objection requiring a separate limitation-based claim was rejected, and the fact of captive use was treated as sufficient to exclude unjust enrichment. The impugned order was set aside and consequential refund directed to be granted.

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Issues: (i) Whether refund arising on finalisation of provisional assessment under the customs law was subject to limitation under the refund provisions; (ii) Whether the refund was barred on the ground of unjust enrichment when the imported goods were captively used in manufacture of the final product.

Issue (i): Whether refund arising on finalisation of provisional assessment under the customs law was subject to limitation under the refund provisions.

Analysis: The finalisation of provisional assessment was treated as giving rise to an automatic adjustment between the duty provisionally assessed and the duty finally assessed. The ruling relied on the principle that recoveries or refunds consequential to such finalisation are not governed by the general refund limitation provisions, and that the departmental authorities must give effect to the final assessment without insisting on a separate refund claim within the ordinary limitation period.

Conclusion: The issue was decided in favour of the assessee. The refund could not be denied as time-barred.

Issue (ii): Whether the refund was barred on the ground of unjust enrichment when the imported goods were captively used in manufacture of the final product.

Analysis: The imported inputs were shown to have been used captively in manufacture, and the goods were not sold as such. On that footing, the principle of unjust enrichment was held not to apply, because the duty incidence on captive inputs does not stand on the same footing as duty on goods cleared in the market. The departmental objection that further factual inquiry was necessary was rejected.

Conclusion: The issue was decided in favour of the assessee. The refund was not barred by unjust enrichment.

Final Conclusion: The impugned order was set aside and consequential refund was directed to be granted to the assessee.

Ratio Decidendi: Refund or recovery consequential to finalisation of provisional assessment must follow the final assessment itself and is not defeated by the ordinary refund limitation, and unjust enrichment does not apply where the inputs are captively consumed in manufacture rather than sold as such.

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