No Evidence of Wilful Delay: CESTAT Holds Late Fines Unjustified, Granting Relief to Importer [Read Order]

The Eastern Zonal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at Kolkata, has upheld the waiver of late filing fees imposed on the appellant, holding that the disappearance of four advance Bills of Entry from the ICEGATE system was due to a systemic error, and the importer could not be penalised for circumstances beyond its control.

The Revenue had filed four appeals challenging the common order passed by the Commissioner of Customs (Appeals), Kolkata, which had set aside late fines levied on four Bills of Entry originally filed by the respondent on December 1, 2021 for import of polyester and polyamide monofilament yarn. The respondent had filed these advance Bills of Entry in the normal course but was unable to clear the consignments during the COVID-19 pandemic due to financial constraints and disruption of operations.

When the importer later instructed its Customs House Agent to pay duty for clearance, the CHA found that all four advance Bills of Entry had vanished from the ICEGATE system. Upon being informed, ICEGATE advised the importer to re-assess and re-file the Bills of Entry, following which new Bills dated January 19, 2022 were filed. The EDI system automatically imposed a late fine of ₹4,65,000 per Bill without considering the duty amount. Though the lower authority later reduced the fine to match the duty payable, it declined to grant full waiver.

Shalimar Wires sought complete waiver of the late fee, explaining that the missing advance Bills were the result of a technical error and not any failure on its part. The importer also relied on the Supreme Court’s order in Re: Cognizance for Extension of Limitation, which had extended limitation periods from March 15, 2020, to February 28, 2022, due to the COVID-19 pandemic. The Commissioner (Appeals) accepted these submissions and deleted the late fine entirely.

Challenging this relief, the Revenue argued before the Tribunal that the advance Bills of Entry had been purged because the importer did not regularise them within 30 days, and that the system had automatically generated the late fees as per regulations. The Department contended that the Commissioner (Appeals) had erred in treating the disappearance of the Bills of Entry as a system malfunction.

After hearing both sides, the Bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member), upheld the Commissioner (Appeals)’s findings. The Tribunal observed that the four advance Bills of Entry were indeed filed in time but were not available in ICEGATE when the importer attempted duty payment.

In such a situation, the importer could not be held responsible for the disappearance of the Bills from the system. The Tribunal held that the Commissioner (Appeals) had rightly concluded that the late filing occurred due to a system error, not due to any inaction or negligence by the importer.

The Tribunal also emphasised that the relevant period coincided with the extraordinary circumstances of the COVID-19 pandemic, during which the Supreme Court had ordered the exclusion of time for limitation purposes. Any delay in this period, therefore, could not be treated as a delay attributable to the importer.

Finding no infirmity in the Commissioner (Appeals)’s decision, the CESTAT dismissed all four appeals filed by the Revenue and confirmed the waiver of the late filing fees.

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