2016 (11) TMI 755 - AT - Customs

Demand of duty alongwith interest and penalty - import of 5.470 MT of alloys steel bars - mis-statement of the facts as DEPB was not actually debited - Whether the appellant is entitled for refund of duty paid or not? - Held that - the amounts recovered from the appellant and CHA or their representatives against the bills of entry in question, shall be given due credit to the respective parties against the demand for basic excise duty from the date of recovery of the said amounts - No part of amount of duty so paid by them was attributable to the amount of fine and penalty against them in the instant case. As it is the fact on record that the duty confirmed against the appellant has already been recovered, in that circumstance and in view of the Hon ble High Court s order, the amount is to be refunded to the appellant. Therefore, the demand of ₹ 1,27,350/- is set aside and the same is required to be refunded to the appellant. Whether the penalty can be imposed on the appellant or not? - Held that - As the appellant was not vigilant at the time buying of DEPB scrips, and DEPB found to be fake or forged. In that circumstance, the penalty is imposable on the appellant. As the appellant has paid duty alongwith interest and the same was appropriated in the impugned order. In that circumstance, the penalty is restricted to 25% of the duty involved. Appeal disposed off.

Summary

Issues:
1. Whether the appellant is entitled to a refund of duty paid or not?
2. Whether the penalty can be imposed on the appellant or not?

Analysis:

Issue No. (i):
The appellant contended that they purchased DEPB in good faith and were unaware of any fraudulent activity. They argued that the penalty should not be imposed as they paid duty based on the department's assurance of a refund if the amount was recovered from the CHA or their representative. The tribunal referred to a High Court order and found that the duty confirmed against the appellant had already been recovered from other parties involved in the fraud. Consequently, the tribunal set aside the demand of &8377; 1,27,350/- and ordered the amount to be refunded to the appellant.

Issue No. (ii):
The department argued that the appellant, though not directly involved in the fraud, was not vigilant while purchasing the DEPB scrips. The tribunal acknowledged the lack of vigilance on the appellant's part and found the penalty to be imposable. However, considering that the appellant had paid the duty along with interest, the tribunal decided to restrict the penalty to 25% of the duty involved. Therefore, the tribunal disposed of the appeal with these terms.

In conclusion, the tribunal ruled in favor of the appellant regarding the refund of duty paid, setting aside the demand and ordering a refund. However, the tribunal imposed a penalty of 25% of the duty involved due to the lack of vigilance on the appellant's part during the purchase of DEPB scrips. The judgment was pronounced on 18.10.2016 by the members of the tribunal, Mr. Ashok Jindal and Mr. Devender Singh.