A customs refund rejection on unjust enrichment is not only an accounting objection. It is a finding that the claimant has not proved that the incidence of duty was borne by it and not passed on to another person. In practical terms, the department is asking: if this money is refunded to you, will you receive back something you already recovered from your buyer?
That question can decide the file even where the underlying duty payment appears excessive. A refund claim under Section 27 of the Customs Act, 1962 should therefore be prepared as both a legal claim and an evidence file. A refund without incidence evidence is like a locked warehouse with the key in another city.
What the refund file should prove
The claimant should assemble the bill of entry, assessment record, challans, ledger extracts, sales invoices, pricing worksheets, credit notes, customer contracts, certificate from a chartered accountant where appropriate, inventory records, and correspondence showing whether the disputed duty was recovered from customers. If the goods were captively consumed or sold under fixed-price contracts, the evidence should explain that commercial path clearly.
Two issues should be kept separate. The first is whether the refund is legally due. The second is whether unjust enrichment bars payment to the claimant and requires credit to the Consumer Welfare Fund. Mixing the two often produces weak replies.
In ITC Limited v. Commissioner of Central Excise, Kolkata IV, decided by the Supreme Court on 18 September 2019, the Court held that refund proceedings cannot be used to reopen an assessment unless the assessment or self-assessment is modified through the statutory route. For customs refund strategy, this is the starting checkpoint. If the refund depends on saying that the bill of entry assessment itself was wrong, the claimant must examine whether an appeal or other statutory modification is needed.
The unjust enrichment principle also has a broader equity foundation. In The Authorised Officer, Central Bank of India v. RNS Shanmugavelu, decided on 2 February 2024, the Supreme Court reiterated that unjust enrichment concerns the inequitable retention of a benefit, while also cautioning that equity follows the law and cannot supplant a clear statutory rule. Applied to customs refunds, the lesson is balanced: evidence of incidence matters, but it must be tested within the statutory framework of Section 27.
Three mistakes to avoid
The first mistake is filing only proof of payment. Payment proves that duty was paid; it does not prove who ultimately bore it.
The second mistake is submitting a certificate without the underlying books. A certificate may help, but the department can still ask whether invoices, ledgers, and pricing records support it.
The third mistake is ignoring the assessment route. If the dispute is really about classification, valuation, exemption, or rate, the refund claim may fail unless the assessment foundation is first corrected in law.
AGS Consulting approaches refund rejection matters through a two-part review: legal maintainability and incidence evidence. Led by Mr. Anil G. Shakkarwar, former Member (Technical), CESTAT, the practice assists importers and counsel in preparing a refund file that can withstand both statutory and evidentiary scrutiny.
For businesses facing refund rejection or unjust enrichment objections, early file review can prevent a technically valid claim from failing on proof. To assess the refund record and reply strategy, contact AGS Consulting for customs advisory support.
FAQs
What does unjust enrichment mean in a customs refund claim?
It means the claimant must prove that the duty burden was not passed on to another person, such as a buyer or customer.
Is proof of duty payment enough for a customs refund?
No. Proof of payment is necessary, but the claimant must also address assessment validity, limitation, and evidence showing who bore the duty incidence.
Can a refund claim challenge the original customs assessment?
A refund claim usually cannot reopen the assessment by itself. If the assessment is wrong, the claimant should examine the statutory route for modification or appeal.
How can AGS Consulting assist with unjust enrichment objections?
AGS Consulting can review invoices, ledgers, pricing records, certificates, assessment documents, and prepare a reply that separates legal entitlement from incidence evidence.