CESTAT Rules: Refund Sanctioned After Due Verification Cannot Be Withheld on Vague Allegations

Court Name : CESTAT Chennai

Parties : Commissioner of Customs Vs K.I. International Ltd.

Decision Date : 26 July 2023

Judgement ref : Customs Appeal No. 40088 of 2014

Imagine you're a business that's been granted a refund after due verification, only to have it withheld based on vague allegations. Frustrating, isn't it?

Well, the Customs, Excise, and Service Tax Appellate (CESTAT) shared this sentiment. In a recent ruling, the CESTAT held that a refund sanctioned after due verification cannot be withheld based on vague allegations.

This case hinged on the principle that clear and substantial evidence is required to withhold a sanctioned refund. The CESTAT found that the allegations against the business were vague and unsubstantiated, and thus, could not justify withholding the refund.

So, if you're ever faced with a similar situation, remember this ruling. It could be the key to your defense. The CESTAT's decision underscores the importance of clear and substantial evidence in withholding sanctioned refunds.

This is a crucial reminder for all tax professionals. Always ensure that your actions are well-documented and can withstand scrutiny. And remember, vague allegations are not sufficient grounds to withhold a sanctioned refund.

ORDER : Per Ms. SULEKHA BEEVI, C.S.

1. Brief facts are that the respondent filed a refund claim under

Notification No. 102/2007, dated 14.09.2007 as amended. After due

process of law, the original authority sanctioned the refund. Against

this, the Department filed an appeal before the Commissioner

(Appeals) who vide order of impugned herein upheld the order of

sanctioning the refund. Hence this appeal.

2. The learned AR Ms. Anandalakshmi Ganeshram appeared for the

Department. It is submitted by her that out of 27 Bills of Entry, only 9

Bills of Entry with relevant documents were in the case file. The

documents in respect of remaining 18 Bills of Entry were not available.

It can be thus seen that the refund sanctioning authority has not

scrutinized the entire documents while sanctioning the refund. The

learned AR prayed that the appeal may be allowed.

3. The Ld. Counsel Shri. A. Mudimannan, Advocate appeared and

argued for the respondent. It is submitted that the refund sanctioning

authority while passing the Order-in-Original has considered the

documents and verified the invoices, Bills of Entry, Charted Accountant

Certificate etc., produced by the appellant. The Department is now

alleging that the original authority has not verified the documents

which is without any basis. Even before the Commissioner (Appeals),

the Department has not put forward any specific ground to allege that

the original authority has not verified the documents. This aspect has

been noted by the Commissioner (Appeals) in para 5 & 6 of the

impugned order. The learned counsel prayed that the appeal may be

dismissed.

4. On perusal of the grounds stated in the appeal, we find that there

is no specific point raised by the Department. It is vaguely stated that

the original authority has not examined the documents. On perusal of

the orders in original it is seen that 27 bills of entry were taken up for

processing the claim of refund. The refund sanctioning authority has

recorded the conclusion with regard to the details of requisite

documents, submitted by respondent. The payment of additional

customs duty, sale of goods, payment of VAT, correlation of VAT with

goods sold, limitation, endorsement regarding non admissibility of

CENVAT credit in sales invoices, assignment of goods under RSP, goods

sold in consignment, benefit of exemption notification, and the

compliance of Chartered Accountant Certificate are discussed in the

order in original. It can be seen that the original authority has taken

in to consideration the entire points required for sanctioning the refund.

Department did not have any legal or factual grounds in the appeal

filed before the commission (Appeals) also. It is noted by the

Commissioner (Appeals) in the impugned order as under :-

“Hence I am of the opinion that the refund authority has just made the lower

authority to file an appeal contrary to his own justification in the impugned order without pointing out the specific Lacunae”.

5. In the grounds of appeal, as we have already stated there is no

specific points raised by the Department. After considering the

arguments and perusal of the records, we are of the considered opinion

that the impugned order does not call for any interference.

6. The Department appeal is dismissed. The cross objections filed

by the respondent is accordingly disposed off.

(pronounced in court on 26.07.2023)

(VASA SESHAGIRI RAO) (SULEKHA BEEVI C.S.)

Member (Technical) Member (Judicial)

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IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE

TRIBUNAL,

SOUTH ZONAL BENCH, CHENNAI

COURT HALL No. III

CUSTOMS APPEAL No. 40088 OF 2014

(C/Cross Objection/41540/2014-filed by respondent)

(Arising out of Order-in-Appeal C.Cus.No.1016/2013 dated 22.07.2013 passed by

Commissioner of Customs (Appeals), No.60, Rajaji Salai, Custom House, Chennai

600 001)

The Commissioner of Customs …. Appellant

Export Commissionerate,

Custom House,

Chennai - 600 001.

Versus

M/s. K.I. International Ltd. …Respondent

No.664, T.H. Road,

Chennai - 600 081.

APPEARANCE :

M/s. Anandalakshmi Ganeshram, Supdt. (A.R)

For the Appellant

Mr. A.Mudimannan, Advocate

For the Respondent

CORAM :

HON’BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)

HON’BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)

DATE OF HEARING : 21.07.2023

DATE OF DECISION : 26.07.2023

FINAL ORDER No.40615/2023