2021 (11) TMI 202 - AT - Customs

Refund of IGST - allegation is that the appellant attempted to obtain undue refund of duty - penalty u/s 114AA of Customs Act - HELD THAT - It can be seen that the refund claim was filed on 9.10.2018 in a situation where appellant paid duty and was not able to clear the goods. The duty of ₹ 61,24,785/- having been paid on 5.9.2018 and 11.9.2018, the appellant filed refund claim since he did not find any ways to clear the goods. Later, the foreign supplier has arranged for a new purchaser and the NOC was issued by the appellant. It is understood from the facts of the case that by this time the duty paid vide bill of entry presented by the appellant was appropriated towards the imported goods. Even though the title of the goods were transferred to the new purchaser by amended bills of entry, the duty could not be collected from the new purchaser as the duty on the goods already stood discharged. The allegation in the Show Cause Notice is that the appellant has made deliberate attempt to obtain undue refund. In fact, the 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 ₹ 50 lakhs. Interestingly, the Commissioner (Appeals) after taking cognizance of all the facts has observed that the appellant did not respond to the Show Cause Notice and did not appear for personal hearing before the adjudicating authority - the conclusion arrived by the Commissioner (Appeals) that the appellant did not reply to the Show Cause Notice did not appear for the personal hearing would establish the mens rea is not only wrong but highly absurd. Levy of penalty u/s 114AA of Customs Act - HELD THAT - There is 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. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged attempt to claim undue refund of IGST, Imposition of penalty under sec. 114AA of the Customs Act, 1962.

Analysis:
1. The appellant imported goods but faced challenges in clearing them due to the unavailability of original documents. Consequently, a refund claim for IGST was filed, which was later withdrawn after the duty amount was adjusted by the customs department against the goods cleared by a new purchaser.

2. The appellant's representative argued that there was no intention to claim an ineligible refund, emphasizing that the duty was paid in good faith for goods that could not be cleared initially. The appellant's application for refund withdrawal was based on the understanding that the duty could not be refunded but had to be adjusted against the duty liability.

3. The department issued a deficiency memo and a Show Cause Notice alleging an attempt to claim undue refund and imposed a penalty of &8377; 50 lakhs under sec. 114AA of the Customs Act, 1962. The appellant provided a detailed reply to the Show Cause Notice and attended the personal hearing, refuting the allegations and explaining the circumstances leading to the refund claim and subsequent withdrawal.

4. The Tribunal analyzed the situation and found that there was no evidence to support the imposition of the penalty under sec. 114AA. The Commissioner (Appeals) incorrectly concluded that the appellant did not respond to the Show Cause Notice or attend the personal hearing, leading to a flawed assessment of mens rea. The Tribunal overturned the penalty, emphasizing that the appellant acted in good faith and did not engage in any deliberate attempt to claim an undue refund.

5. Ultimately, the Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any, on 02.11.2021. The judgment highlighted the importance of distinguishing between genuine errors or misunderstandings and deliberate attempts to obtain undue benefits, as per the legal provisions and precedents cited.

(Judgment delivered by Ms. Sulekha Beevi C.S., Member (Judicial))