CESTAT Kolkata Sets Aside Penalty After Authority Relied On Undisclosed Emails, Inapplicable DRI Alerts
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a ₹12.59 lakh customs duty demand and an equivalent penalty imposed on an importer for allegedly wrongly claiming preferential duty benefits under the India-Malaysia trade agreement.
The tribunal found that the adjudicating authority relied on emails that were neither mentioned in the show-cause notice nor provided to the importer for an explanation.
“Moreover, in the adjudication order, the adjudicating authority has relied on the e-mail dated 19.06.2021 from CBIC and email dated 18.05.2021 from MITI or email dated 22.07.2021. This email was not the subject matter of the show-cause notice, neither this email was provided to the appellant for explanation,” the tribunal observed.
The bench of Judicial Member Ashok Jindal and Technical Member K. Anpazhakan also found that the Department had failed to establish that the importer knew of any alleged defect in its certificate of origin or had colluded with its overseas suppliers.
The dispute arose after the importer claimed preferential customs duty on aluminium pipes and fittings, along with certain valves and brackets, under the India-Malaysia Comprehensive Economic Cooperation Agreement. The Department questioned the authenticity of the certificate of origin and demanded ₹12.59 lakh in differential customs duty, along with interest and an equivalent penalty.
The tribunal found that the prescribed verification of the certificate had not been completed within the stipulated six-month period. The goods had been cleared in February 2018, but the investigation began only in May 2021. The show-cause notice followed in February 2023.
It ruled that the Department could not invoke the extended limitation period in the absence of evidence of collusion, wilful misstatement or suppression of facts.
The tribunal also found that the Directorate of Revenue Intelligence alert relied upon by the Department concerned different products. It held that the alert was not applicable to the goods imported by the company.
Setting aside the impugned order, the tribunal held the duty demand and penalty unsustainable. It also set aside the confiscation and redemption fine, noting that the goods were no longer available.
For Appellant: Umang Srivastava and Gunjan Tanwar, Advocates
For Respondent: A.K. Choudhary, Authorised Representative