Circulars benefiting Assessee have Retrospective Application: CESTAT Affirms 12% IGST on Poultry Machinery Imports [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, affirmed a 12% Integrated Goods and Services Tax (IGST) on poultry machinery imports, while noting that circulars benefitting assessee have retrospective application.

The Commissioner of Customs imposed redemption fine of INR 1 crore against the confiscation of goods under Section 111(m) alongwith penalties under Section 114A, 114AA and under Section 112(a) of the Customs Act (the Act).

The facts of the case reveal that the appellant/importer M/s Quality Systems and Equipment P. Ltd. had imported “poultry keeping machinery" and “parts/equipment of poultry keeping machinery” and cleared the same upon payment of duties including 12% IGST. However, during the post clearance audit, IGST Notification No. 1/2017 dated 28.06.2017 was issued which covered some goods that had attracted 12% IGST now will attract IGST @ 18%. Accordingly, a show cause notice was issued.

The counsel for the appellant submitted that they had not attended the final hearing made before the Commissioner as no notice was sent to them for appearance. After this, they sought an adjournment through email on 21.08.2024. Appellant informed the Respondent that on 29.09.2022 the Fitment Committee recommended that parts of machinery were to be covered under the said Notification.

It was argued that the Commissioner had not taken note of the change through retrospective effect and ruled on a ‘as it where is’ basis. The rival contentions note the correctness of the order passed by the Commissioner.

The two member bench of Dr. Suvendu Kumar Pati (Judicial Member) and M. M. Parthiban (Technical Member) was of the view that precedents have shown that those clarifications would have retrospective application when it is favouring the assessee since it is beneficial circular and not an oppressive one.

CESTAT carefully considered the dates of the orders and the circular notification and concluded that circulars are not advisory in nature but binding on Central Excise officers. Further, past cases have shown that when circular is against the assessee, they have a right to claim prospective application.

Accordingly, the Tribunal held that the lower rate of IGST, i.e., 12% should be imposed and the order by the Commissioner is sustainable both in law and facts.

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