Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Sulekha Beevi C.S. (Judicial Member) allowed an appeal brief facts of which were that the appellants imported Lead Ingots and Refined Lead Ingots for manufacture of pure lead and lead alloys and had entered into contract with M/s. KYEN Resources Pte. Ltd. Singapore for import of refined lead ingots and based on the documents received it was observed that M/s. Navam Lanka Ltd. was the manufacturer and shipper of the goods. The appellant claimed exemptions from payment of BCD vide Notification No. 26/2000 dated 1.3.2000 under FTA. The said bills of entry were assessed to duty and facilitated under RMS. The appellant had paid the IGST of Rs.61, 24,785/- on 5.9.2018 and 11.9.2018. The appellant was not able to get the original documents for taking delivery of the impugned goods. It was understood by the appellant that the supplier at Singapore had become bankrupt and was not in a position to provide the original documents. The appellant filed application for refund of the IGST paid on the imported goods as he did not intend to take release of goods. Meanwhile, M/s. Navam approached the appellant to grant NOC (No Objection Certificate) to enable Navam to take charge of the goods and to mitigate the losses.
Pursuant to the issue of NOC, the appellant was under the impression that M/s. Gravita India Ltd. would get the IGM amended and would file fresh bills of entry in their name for clearing the goods. However, M/s. Gravita India Ltd. informed that since cancellation of the bills of entry was not possible in the ICEGATE system, they amended the name of the importer in the bills of entry. Ideally, the customs department ought to have refunded the IGST initially paid by the appellant and ought to have collected the IGST from the substituted importer (M/s. Gravita India Ltd. in this case) with applicable interest. As the refund claim was already withdrawn, the appellant did not respond to the deficiency memo. A Show Cause Notice dated 6.2.2019 was issued proposing to impose penalty on the appellant under sec. 114AA of the Customs Act, 1962 alleging attempt to claim undue refund of the duty to the tune of Rs.61,24,784/-.
Section114AA of the Customs Act, 1962 prescribes that penalty is to be imposed for use of false and incorrect material.
The Tribunal was of the opinion that appellant has replied to the Show Cause Notice explaining the entire situation by which he had to file the refund claim and thereafter the application for withdrawing the refund claim. The adjudicating authority however proceeded to impose a penalty of Rs.50 lakhs. The Tribunal believed that appellant has been put to hardship of making predeposit on such huge penalty by wrong appreciation of facts. The tribunal further found that there was nothing brought out in evidence which attracts the ingredients of section 114AA of the Customs Act, 1962. The mere fact that the department had already appropriated the duty amount paid by the appellant towards the imported goods and therefore could not collect further amount against the amended bills of entry presented by the new purchaser cannot be a ground to issue a Show Cause
Notice alleging attempt to claim undue refund. The appeal was allowed.[Chloride Metals Ltd. v. Commr. Of Customs, 2021 SCC OnLine CESTAT 2599, decided on 02-11-2021]