Department Cannot Allege Excess Imports Without Explaining IGCR Clearance Irregularly: CESTAT New Delhi

On 10 April, the New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that where imported goods are cleared under the IGCR procedure, the Department cannot allege excess imports without explaining how customs officers permitted such clearance.

A Bench of President Justice Dilip Gupta and Technical Member P.V. Subba Rao set aside a customs duty demand of Rs. 31.40 lakh against K.A. Enterprises. They observed:

“In the absence of any recording as to which of the two Assistant Commissioners committed the irregularity, the demand of duty on the appellant cannot be confirmed.”

K.A. Enterprises manufactures sanitary napkins and imported super absorbent polymers and untreated fluff pulp between October 2018 and June 2021 under Notification No. 50/2017-Cus., availing concessional duty subject to compliance with the IGCR Rules.

The Department alleged that although the appellant imported 452 MT of untreated fluff pulp, it filed declarations under Rule 5 of the IGCR Rules only for 150 MT. It issued a show cause notice and confirmed differential duty and penalty under Sections 28(4) and 114A of the Customs Act.

The Tribunal held that concessional clearance at the port is granted only after the jurisdictional officer forwards the declaration. Therefore, customs officers would have verified the declarations before allowing clearance.

The Bench also noted that the Department did not dispute that the goods were used for the intended purpose, and Rule 8 of the IGCR Rules on misuse did not apply.

Holding that the demand cannot survive unless the Department establishes whether the jurisdictional officer or the port officer committed any irregularity while processing the declarations, the Tribunal set aside the impugned order

Accordingly, the CESTAT allowed the appeal.

Appearance for the Appellant: Dr Prabhat Kumar and Shri Pralabh Mathur, Advocates 

Appearance for the Respondent: Shri Shiv Shankar, Authorised Representative