2021 (4) TMI 742 - HC - Customs

Refund of Customs Duty - Import of Caustic Soda - customs duty paid at the time of filing of Bill of Entry under the self assessment procedure under the Customs Act, 1962 - whether the petitioner is entitled to have the impugned show cause notice issued by the respondent quashed or should be relegated to participate in the said proceedings? - HELD THAT - The show cause notice delayed considerably. Even though, there is no limitation prescribed under 124 of the Customs Act, 1962, the peitioner is entitled to abandon the imported goods abandoned under Section 23 of the Customs Act, 1962. It cannot be said that the peitioner had indulged in any offence while importing the goods. On the other hand, the petitioner is an victim of fraud perpetrated by the Chinese. The petitioner has paid a sum of ₹ 13,58,794/- as Customs duty in good faith on the goods declared in the Bill of Trading namely Remelted Lead Ingots - That being the case, the petitioner is entitled for refund of the Customs duty paid in good faith. The amount that was paid for imported the Remelted Lead Ingots cannot be retained. There is no justification in not ordering refund of ₹ 6,85,687/- being the difference in the above amount to the petitioner. The respondent Customs Department can at best order confiscation of the imported Caustic soda and Industrial Salt with an option to the petitioner to pay fine in lieu of confiscation under Section 125 of the Customs Act, 1962. It cannot force Customs Duty on imported goods on the petitioner - there is no justification in not refunding the aforesaid differential amount of ₹ 6,85,687/- to the petitoner. Once the goods are ordered to be consficted assuming they are liable to be confisated, they become the property of the Union of India under Setopm 126 of the Customs Act, 1962. Petition allowed.

Summary

Issues:
1. Impugned show cause notice for payment of customs duty on imported goods.
2. Alleged fraud by Chinese exporter leading to import of incorrect goods.
3. Refund claim for customs duty paid in advance.
4. Dispute over refund claim denial and subsequent legal proceedings.
5. Legitimacy of show cause notice and penal actions against involved parties.

Analysis:

Issue 1: Impugned show cause notice for payment of customs duty on imported goods
The petitioner challenged a show cause notice issued by the 1st respondent regarding the payment of customs duty for imported goods, specifically Caustic Soda. The notice questioned the discrepancy between the imported goods and the details in the Bill of Entry, raising concerns of reassessment and confiscation under the Customs Act, 1962.

Issue 2: Alleged fraud by Chinese exporter leading to import of incorrect goods
The petitioner imported goods from a Chinese supplier, expecting Remelted Lead Ingots but receiving Caustic Soda Bags and Industrial Salt instead. Upon inspection, it was discovered that the imported cargo was of inferior quality, including Chalk Powder and lower grade Caustic Soda. This led to the petitioner's decision to abandon the goods and seek a refund of the customs duty paid.

Issue 3: Refund claim for customs duty paid in advance
The petitioner had paid customs duty in advance based on the import documents and Bill of Entry, totaling &8377; 13,58,794/-. Despite filing a refund application and pursuing legal recourse, the claim was initially rejected, prompting the petitioner to challenge the decision through various legal avenues.

Issue 4: Dispute over refund claim denial and subsequent legal proceedings
Following the rejection of the refund claim, the petitioner engaged in legal battles, including filing a writ petition, appeal, and contempt petition. The courts directed the authorities to reconsider the refund claim, emphasizing the petitioner's entitlement to a refund of the customs duty paid in good faith for the imported goods.

Issue 5: Legitimacy of show cause notice and penal actions against involved parties
The show cause notice raised concerns of penal actions against various parties involved in the import process, including the petitioner, the shipping company, and others, for alleged failures and discrepancies. The court, after considering arguments from both sides, ruled in favor of the petitioner, directing the refund of the differential amount paid as customs duty and outlining the process for further adjudication of the show cause notice.

In conclusion, the judgment highlighted the petitioner's plight as a victim of fraud by the Chinese exporter, emphasizing the need for a fair resolution in the form of a refund of the customs duty paid in advance. The court's decision aimed to balance the interests of all parties involved while upholding the principles of justice and legality in customs proceedings.