No Customs Duty on Goods which was not Received: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that customs duty not leviable on goods which was not received.

The appellant had executed two B-17 ( General Security ) Bonds for Rs.8 crores to procure duty free imported and indigenous materials, to cover the movement of non-duty paid materials from one warehouse to another ware house to use them in the manufacture of export goods. The importer / appellant is exempted from furnishing security to the B-17 Bonds in terms of Board Circular No. 54/2004-Cus. dated 13.10.2004. On the basis of pre-authorized certificates they are permitted to procure imported goods without payment of duty.

After due process of law, the original authority observed that there is indeed short receipt of goods and that it is a clear case of clerical error on the part of supplier and lack of application of mind of the CHA. The proposal of duty demand was dropped. Against this order, the Department filed appeal before Commissioner ( Appeals ) who vide order impugned herein set aside the order of adjudicating authority and allowed the appeal filed by Department.

The counsel for the appellant adverted to the Purchase Order to argue that appellant had placed order only for 1100 pairs and had received the same quantity only. The CHA had filed the Bill of Entry on the basis of supplier’s invoice in which the figure was wrongly mentioned as 11000 pairs. The bank statement would also show that appellant has paid amount towards 1100 pairs only and not for 11000 pairs. The Commissioner ( Appeals ) ought to considered that it was mistake committed in supplier’s invoice. The Counsel prayed that appeal may be allowed.

A Two-Member Bench of Vasa Seshagiri Rao, Technical Member and CS Sulekha Beevi, Judicial Member observed that “We are not able to see any finding rendered by Commissioner ( Appeals ) that the case put forward by the appellant regarding short shipment of goods and mistake in supplier’s invoice to be not genuine. Again, it requires to be noted that on 04.04.2011 itself the appellant has approached the officers informing the short shipment. The immediateness in making such request by the appellant draws a strong inference that there is short shipment of goods and it is a mistake in supplier’s invoice. The appellant cannot be called upon to pay duty on goods which he has not received. We therefore are of the considered opinion that the order passed by Commissioner ( Appeals ) cannot be sustained.”

To Read the full text of the Order CLICK HERE

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