Precedent — Unjust enrichment — Meaning — Tribunal cannot ignore the High Court decision merely because the appeal is pending in the Apex Court.

The claim for refund of excise duty pre-supposes that excise duty in excess of what is legally due has been paid. The demand on which the excise duty is paid is on the clearance of the goods. The claim for refund arises when subsequently if it is shown that what is paid is an excess of what is legally payable. Section 11-B deals with claim for refund of duty. The condition precedent for making a claim for refund of duty is that the incidence of such duty had not been passed on by the assessee to any other person. The assessee-company had raised the plea of refund of excise duty on the ground of unjust enrichment.

The said principle has been the subject-matter of interpretation by the Apex Court from time to time. A nine-Member Bench of the Apex Court in the case of Mafatlal Industries Ltd. v. Union of India reported in (1997) 89 ELT 247 (SC) has laid down the law on the point.

“The doctrine of unjust enrichment is just and statutory doctrine. No person can seek to collect the duty from both the ends. In other words, he cannot collect the duty from the purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching person. The doctrine of unjust enrichment, is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched.”

A claim for refund made under the provisions of the Act can succeed only if the assessee states and establishes that he has not passed on the burden of the duty to any person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of duty or to the extent he has not so passed on, as the case may. Where the burden of duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can ultimately claim its refund.

It is only if the assessee claims refund on the ground that he has not passed on the burden of duty to his customer by a specific plea and substantiating the same by producing acceptable evidence, then the appropriate authority shall direct payment of the refund amount to the assessee.

The High Court further observed that the adjudicating authority or the Appellate Authority denied relief relying on the judgment of the CESTAT in Addison’s case, when that judgment had been set aside by the Madras High Court, the Tribunal erred in following the judgment and dismissing the appeal of the assessee. Merely because the matter was pending before the Apex Court, that could not be the reason to disregard the judgment of the High Court. The High Court had set aside the judgment rendered by the CESTAT and the said judgment was not operating and therefore the Tribunal was wrong in ignoring the judgment of the Madras High Court.