Unjust enrichment in excise refund claims is not rebutted by mere reversal of Modvat credit by the buyer.

A refund claim under excise law is not defeated by the buyer's reversal of Modvat credit alone. The relevant inquiry is whether the duty burden was actually passed on and later returned to the manufacturer through a credit note or similar adjustment. Mere reversal of credit only shows that the buyer did not avail the credit benefit; it does not, by itself, disprove passing on of duty. On that basis, the unjust enrichment bar continued to apply and the refund remained unsustainable.

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Issues: Whether a refund claim under excise law is barred by unjust enrichment where the buyer has reversed Modvat credit equivalent to the duty element claimed as refund.

Analysis: The decisive question was whether reversal of Modvat credit by the buyer could, by itself, establish that the duty burden had not been passed on by the manufacturer. In the absence of evidence showing that the duty incidence was returned to the manufacturer by way of a credit note or similar adjustment, the mere reversal of credit only showed that the buyer chose not to avail the credit benefit. It did not rebut the passing on of the duty burden.

Conclusion: Reversal of Modvat credit by the buyer does not, by itself, defeat the bar of unjust enrichment. The refund claim remained unsustainable and was rightly denied.

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