2021 (10) TMI 85 - AT - Customs

Refund of Customs Duty - duty paid under protest - rejection on the ground that the transfer bonds in which the goods were transferred from Vizag Customs to EOU Bheemli have been closed which was duly intimated to the appellant but was not contested at the appropriate stage - shortage in the quantity of chemical imported - principles of natural justice - HELD THAT - The goods imported, since were highly volatile in nature were mentioned to be susceptible to evaporation during the course of transit from Visakhapatnam port to the factory which is situated at more than 50 KMs. But the simultaneous perusal of record reveals that this submission of appellant came for the first time, vide the letter of appellant dated 27.03.2015 whereas the first transfer bond got already closed on 19.01.2014 and the last transfer bond among 5 was closed on 11.02.2015. There is no explanation of the appellant about his silence for almost more than one and half year since the closure of first bond of transfer bond and for almost five months from the closure of last transfer bonds. Though the appellant has reflected grievance about violation of principles of natural justice as being not given the opportunity of hearing at the time of closure of transfer bonds but apparently and admittedly the bonds have been closed in terms of Section 67 of Customs Act, 1962. The provision makes it clear that Procedure for submission of transfer bonds and the closure thereof is not possible in the absence of the executor of the bonds who requests removal of the imported goods from one warehouse to another. Hence the allegations of the appellant are observed to be wrong - Apparently and admittedly present is not the case of provisional and the final assessment since the appellant accepted while executing the transfer bonds the noticed shortage but has failed to explain sufficient cause for the silence to contest the same for almost one and half year, the subsequent refund application is nothing but a after-thought. The noticed shortage is apparently more than 1%. This is not a fit case for refund - there are no infirmity in the order passed by Commissioner (Appeals) - appeal dismissed.

Summary

Issues:
1. Demand of customs duty on alleged shortages in imported goods.
2. Rejection of refund application by Commissioner (Appeals).
3. Allegation of violation of principles of natural justice.
4. Interpretation of Customs Act, 1962 regarding closure of transfer bonds.
5. Application of Circular No. 96/2002-CUS dated 27.12.2002.

Issue 1: Demand of customs duty on alleged shortages in imported goods
The appellant imported goods for their EOU unit under procurement services issued by Central Excise Authorities. The Department proposed to recover ?3,82,143/- from the appellant due to shortages in goods. The appellant paid the amount under protest, except for one shortage within the permissible limit of less than 1%. The appellant sought a refund, which was rejected based on the closure of transfer bonds and lack of contestation by the appellant.

Issue 2: Rejection of refund application by Commissioner (Appeals)
The refund application was initially returned with directions to approach the appropriate jurisdictional Commissionerate. Upon resubmission, the refund was rejected through a Show Cause Notice and subsequent orders. The rejection was based on the closure of transfer bonds without contestation by the appellant, leading to the denial of the refund.

Issue 3: Allegation of violation of principles of natural justice
The appellant alleged a lack of opportunity for a personal hearing during the closure of transfer bonds. However, it was argued that the closure of transfer bonds is governed by Section 67 of the Customs Act, 1962, which does not require the presence of the importer for closure. The appellant's silence for an extended period after the closure of the transfer bonds was also noted.

Issue 4: Interpretation of Customs Act, 1962 regarding closure of transfer bonds
The judgment analyzed Section 67 of the Customs Act, 1962, which allows the removal of goods from one warehouse to another with the permission of the proper officer. The closure of transfer bonds was found to be in accordance with the procedural requirements of the Act, despite the appellant's contentions of a violation of natural justice.

Issue 5: Application of Circular No. 96/2002-CUS dated 27.12.2002
The appellant relied on Circular No. 96/2002-CUS to support their claim for a refund. However, the judgment found that the circumstances of the case did not align with the provisions of the Circular, as the appellant had accepted the noticed shortage while executing the transfer bonds and failed to contest it for an extended period.

In conclusion, the Tribunal upheld the order rejecting the refund application, citing the appellant's delay in contesting the shortages and the procedural closure of transfer bonds as per the Customs Act, 1962. The appeal was dismissed, emphasizing the lack of grounds for a refund based on the observed circumstances.