CESTAT Chennai Sets Aside IGST Demand, Interest, Fine & Penalty After DGFT Redemption

Suryadev Alloys And Power Pvt. Ltd. Vs Principal Commissioner of Customs (Audit) (CESTAT Chennai)

The CESTAT Chennai allowed the appeal filed by M/s. Suryadev Alloys & Power (P) Ltd. against Order-in-Original No. 103043 of 2023 dated 11.09.2023, which had confirmed customs duty in the form of IGST, interest, redemption fine and penalty for alleged violation of the pre-import condition under the Advance Authorization Scheme during 13.10.2017 to 09.01.2019. The appellant had imported non-alloy steel melting scrap against exports of steel billets under five Advance Authorizations. The appellant had made exports before importing the inputs as replenishment and claimed exemption under Notification No. 18/2015-Cus dated 01.04.2015. Notification No. 79/2017-Cus dated 13.10.2017 amended the exemption by introducing the pre-import condition for IGST exemption under Sections 3(7) and 3(9) of the Customs Tariff Act, 1975.

The appellant submitted that four Advance Authorizations had been issued before 13.10.2017, making compliance with the subsequently introduced pre-import condition impossible. In relation to the fifth authorization, the appellant also relied on the circumstances of its exports and imports. The jurisdictional DGFT had subsequently issued redemption letters for all five Advance Authorizations, and Customs had closed the corresponding bonds. The appellant contended that its export obligations had therefore been discharged. It also disputed invocation of the extended limitation period under Section 28(4) of the Customs Act, 1962, challenged the levy of interest in the absence of a machinery provision under Section 3(12) of the Customs Tariff Act, 1975 during the relevant period, and pleaded revenue neutrality because IGST paid could be claimed as input tax credit.

The adjudicating authority had confirmed customs duty of Rs. 16,64,05,698/- under Section 28(4), along with interest under Section 28AA, imposed redemption fine of Rs. 4,50,00,000/- under Section 125 for goods held liable to confiscation under Section 111(o), and imposed an equal penalty of Rs. 16,64,05,698/- under Section 114A.

On the first issue, the Tribunal noted that Para 2.57 of the Foreign Trade Policy made DGFT the final authority on matters concerning interpretation of the Policy and Handbook of Procedures. Since DGFT had issued redemption letters after being satisfied regarding fulfilment of export obligations and Customs had also closed the corresponding bonds, the Tribunal held that Customs could not independently demand IGST under the Customs Act without DGFT recalling the redemption letters and adjudicating the matter under the FTDR Act, 1992. If Customs suspected irregularity, it could approach DGFT for appropriate action. The Tribunal therefore set aside the demand on this ground.

On limitation, the Tribunal found that the imports had been examined by the proper officer and that the pre-import condition appeared to have remained unnoticed by both the assessing officer and the appellant. It considered this contributory negligence and found no suppression of material facts by the appellant with intent to evade duty. Relying on the principles stated in the cited Supreme Court decisions concerning suppression, the Tribunal held that the extended period under Section 28(4) could not be invoked. The demand, being beyond the normal limitation period, was therefore unsustainable on limitation also.

On interest, the Tribunal considered the decision in Mahindra & Mahindra and its affirmation by the Supreme Court, as well as subsequent CESTAT decisions. It noted that Section 3(12) of the Customs Tariff Act, 1975 was amended with effect from 16.08.2024 to specifically include interest, recovery, offences and penalties. The Tribunal held that the amendment was prospective and that, in the absence of the relevant machinery provision during the period in question, interest, fine and penalty could not be demanded for the imports made before 16.08.2024.

The Tribunal also found the transaction to be revenue-neutral because the Supreme Court’s decision in UOI vs Cosmo Films permitted eligible importers to claim refund or input credit of IGST, and CBIC Circular No. 16/2023-Cus. dated 07.06.2023 provided for reassessment upon payment of IGST. It further held that, as no mala fide or intent to evade customs duty was proved, there was no justification for confiscation or redemption fine, particularly since the goods had already been released.

Accordingly, the Tribunal summarised that the DGFT redemption letters and Customs bond closures prevented independent Customs demand, the demand was time-barred, interest, fine and penalty lacked a machinery provision for the relevant period, and the exercise was revenue-neutral. The appeal was allowed with consequential benefits, if any, in accordance with law. The order was pronounced on 22.08.2025.

Cases Discussed

• M/S. Philips India Limited V. Commissioner of Customs, Import, Air Cargo Mumbai (CESTAT Mumbai), [2025 (7) TMI 1414 – CESTAT MUMBAI]
• M/S A.R. Sulphonates Private Limited VS UOI & Others (Bombay High Court), [2025(40) TMI 578 – BOMBAY HIGH COURT]
• Flextronics Technology India Pvt. Ltd. Vs. Commissioner of Customs, Chennai VII Commissionerate (CESTAT Chennai), [2025 (3) TMI 695 – CESTAT CHENNAI]
• Svam Toyal Packaging Industries Pvt. Ltd. Versus Principal Commissioner of Customs Delhi (CESTAT New Delhi), [2025(2) TMI 965 – CESTAT NEW DELHI]
• M/s. Super Cassettes Ind. Ltd. and Shri Sunil Wadhwani Director Versus Commissioner of Customs, New Delhi (CESTAT New Delhi), [2025 (1) TMI 233 – CESTAT New Delhi]
• M/s. Poddar Pigments Limited Versus Commissioner Central Excise & CGST, Jaipur (CESTAT New Delhi), [2024 (10) TMI 732 – CESTAT NEW DELHI)
• M/S. Sakar Industries Pvt Ltd Vs Commissioner of Customs (CESTAT Ahmedabad), [2024 (10) TMI 1141 -CESTAT, AHMEDABAD]
• M/S. Chiripal Poly Films Ltd V. Commissioner of Customs (CESTAT Ahmedabad), [2024 (9) TMI 940 – CESTAT, AHMEDABAD]
• M/ s Mayur Uniquoters Limited And M/S JLC Electromet Private Limited Versus Commissioner (APPEALS), Central Excise & CGST, Jaipur (CESTAT New Delhi), [2024 (8) TMI 1060 – CESTAT NEW DELHI]
• M/s. Acer India (Pvt.) Ltd. Versus Commissioner of Customs (Audit), Chennai (CESTAT Chennai), [2024 (5) TMI 478 – CESTAT CHENNAI]
• M/S Himadri Specialty Private Limited VS PR CC Vizag (CESTAT Hyderabad), [2024(4) TMI 383 — CESTAT HYDERABAD]
• M/s. Texmaco Rail Engineering Limited Versus Commissioner of Customs (Port), Kolkata (CESTAT Kolkata), [2024 (1) TMI 902 – CESTAT KOLKATA]
• M/s Designco, M/s Amit Exports and M/s Sharma International Vs. Union of India & Others (Delhi High Court), 2024 [110 TMI 1150 – Delhi High Court]
• Union of India 8s ORS. Vs Mahindra 8s Mahindra Ltd (Supreme Court), [2023(8) TMI 135 – SC ORDER]
• M/s. Acer India Private Ltd. Versus the Commissioner of Customs, Chennai (CESTAT Chennai), 2023 (9) TMI 1553 – CESTAT CHENNAI
• Mahindra 8s Mahindra Ltd (Automotive Sector) Vs. The Union of India, The Settlement Commission Mumbai 8s ADG, DGCEI, Mumbai (Bombay High Court), [2022 (10) TMI 212 – BOMAY HIGH COURT]

FULL TEXT OF THE CESTAT CHENNAI ORDER

This appeal is filed by the Assessee-Appellant viz. M/s. Suryadev Alloys & Power (P) Ltd. against Order-in-Original No. 103043 of 2023 dated 11.09.2023 passed by the Principal Commissioner of Customs (Audit), Chennai whereby, the Commissioner has fastened the Assessee with liability to pay customs duty collected in the form of IGST in terms of Section 3(7) & 3(9) of the Customs Tariff Act, 1975 [‘CTA’ for short] along with interest in terms of section 28AA of the Customs Act, 1962, Redemption Fine in terms of Section 125 ibid. apart from penalty under Section 114A ibid. for alleged violation of ‘Pre-Import Condition’ in connection with imports made under Advance Authorization Scheme (HAAS’ for short) for the period from 13.10.2017 to 09.01.2019.

2. Facts as we could gather from the Appeal records are that the Appellant admittedly imported input materials viz. NON-ALLOY STEEL MELTING SCRAP against export of STEEL BILLETS under five Advance Authorizations; the Appellant appears to have made the export first and later on imported the inputs as replenishment and claimed the benefit of Exemption Notification No. 18/2015-Cus dated 01.04.2015 for the period under dispute; but however, cleared the goods without payment of IGST. The said Notification No. 18/2015-Cus came to be amended by Notification No. 79/2017-Cus w.e.f. 13.10.2017 whereby, the IGST exemption could be allowed subject only upon the fulfillment of ‘pre-import condition’. The ‘pre-import condition’ was inserted as a condition “(xii)” to the said Notification No. 18/2015 supra for allowing exemption from integrated tax (IGST) leviable thereon under Section 3 (7) and 3(9) of CTA.

3. It is the case of appellant that four of its Advance Authorizations having been issued prior to 13.10.2017, it could under no circumstances fulfill the pre-import condition, but continued to avail IGST exemption under Notification No.18/2015 supra without fulfilling ‘pre-import’ condition. In respect of the fifth Advance Authorization (0410163795) which was issued on 18.12.2017, it appears that the imports and exports made prior to 01.07.2017 and 13.10.2017 as explained in the Table below:

Sl. No.	Advance Authorisation No.	Date	Shipping Bill No. & Date of First Export	Remaining Exports done during	Date of first Import against such exports
1.	0410163227	13.06.2017	4852494 dt. 20.03.2017	March 2017	33455747 / 03.10.2017
2.	0410163230	13.06.2017	4568156 dt. 06.03.2017	March 2017	3686509 / 20.10.2017
3.	0410163561	28.09.2017	9249682 dt. 12.10.2017	October 2017	4048267 / 17.11.2017
4.	0410163562	28.09.2017	9412334 dt 20.10.2017	October 2017	4666929 / 03.01.2018
5.	0410163795	18.12.2017	No Exports		5930529 / 10.04.2018

4. Imports made during the relevant period appears to have been subjected to examination as HMS scrap was considered sensitive item and self-assessment was not allowed. Exemption of IGST was allowed and the ‘pre-import condition’ was missed both by the Revenue as well as the appellant.

5. It appears that the DRI, Kolkata took up the investigation of imports made without compliance of pre-import condition resulting in the issuance of summons on 18.04.2018. It appears from the record that the Appellant took up the matter with DGFT, New Delhi on 06.06.2018 and made representation to Member (Customs) CBIC on 29.06.2018 seeking clarification on such Advance Authorizations issued prior to 13.10.2017 and for cases where exports have already been made before 13.10.2017 but only the imports made subsequent to exports.

6. It further appears that some of the importers challenged the insertion of ‘pre-import condition’ in FTP and Customs Notification before various High Courts invoking the writ jurisdiction. The Hon’ble Gujarat High Court granted stay initially and allowed SCA along with SCA by M/s. Maxim Tubes Co. Pvt. Ltd. V/s. UOI [2019 (368) ELT 337 (Guj.)]; the Union of India has further challenged the above judgment of Gujarat High Court before the Hon’ble Apex Court.

7. Appellant was again summoned by SIIB, Chennai and the appellant appears to have informed SIIB that they have obtained Redemption letters against all Advance Authorizations from the jurisdictional DGFT. Appellant was, however, served with the Show Cause Notice No. 241/2022 on 06.10.2022 apparently seeking the recovery of Customs duties (in the form of IGST) foregone on such imports with interest, Fine and Penalty for breach of the pre-import condition, by invoking the extended period under Section 28 (4) of Customs Act, 1962 and also proposing to confiscate imported goods.

8. In the meanwhile, Hon’ble Supreme Court in UOI vs Cosmo Films Ltd & Others [2023 (5) TMI 42 -SC] allowed the appeal of the Revenue and directed the aggrieved respondents to pay IGST; in the same judgment, the Apex Court also directed the Revenue to permit the respondents to claim refund of input credit. The above resulted in the issuance of CBIC Circular No. 16/2023-Cus. dated 07.06.2023, directing its field officers to re-assess the Bills of Entry to make payments of duty (IGST) along with interest applicable, who had not fulfilled the Pre-Import Condition during the such period, i.e. 13.10.2017 to 09.01.2019.

9. Apropos to the SCN, the Appellant in their reply, appears to have pleaded that the extended period of limitation under Section 28(4) was not tenable as there was no element of “willful” suppression of facts and therefore the demand was not sustainable; they also filed additional written submission on 04.08.2023 in the light of judgment of the Hon’ble Supreme Court in UOI V M/s Cosmo Films Limited & Others (supra). Appellant also appears to have submitted a letter dated 24.08.2023 with a plea that it was a case of revenue-neutrality.

10. The Original Authority having considered the pleas of the Appellant in adjudication, has passed the impugned Order directing the importer to follow the procedure prescribed by the Circular No 16/2023-Cus. dated 07.06.2023 within thirty days from the receipt of the order failing which, ordered the following:

(i) confirmed total Customs Duty Rs. 16,64,05,698/- under Section 28 (4) of Customs Act, 1962 in the form of IGST saved in imports of goods under Advance Authorization and ordered to recover “interest” in respect of demand confirmed in terms of section 28AA of the ibid Act, 1962.

(ii) held that goods imported under Advance Authorizations are liable to confiscation under Section 111 (o) of Customs Act, 1962 and imposed total Redemption Fine of Rs. 4,50,00,000/- in lieu of confiscation under the Section 125 of Customs Act, 1962.

(iii) imposed a total penalty of Rs. 16,64,05,698/- equal to the duty demanded and confirmed at (i) above under Section 114A of the Customs Act, 1962.

11. Appellant did not opt for payment of IGST along with interest demanded under Section 28AA as directed by the Original Authority and hence, the same has resulted in the present appeal.

12. Shri Ajay Kumar Gupta, Ld. Advocate, appearing for the Appellant, submitted that all the goods so imported have been actually utilized by the appellant in the manufacture of final products which have been exported and the jurisdictional DGFT after being satisfied as to the 5 Advance Authorizations. The 5th Advance Authorization (0410163795) was clubbed with Advance Authorization (0410163562) as Para 4.38 of the Handbook of Procedure 2015-2020. He submitted that primary condition of the AAS was fully satisfied by the Appellant and at this stage when the goods have been exported, the demand of IGST is irrational and unsustainable in law. He also made the following submissions:

A). Closure of Advance Authorizations by DGFT and closure of corresponding Bonds by Customs:

i. All advance authorizations duly stood closed with issuance of Redemption Letters by DGFT and closure of the bonds by Customs as tabulated below:

Si No	Advance Authorisation No.	Date	EODC/Redemption Letter from DGFT, Chennai	Customs Bond Cancellation
1.	410163227	13.06.2017	28.01.2020	16.03.2020
2.	410163230	13.06.2017	28.01.2020	16.03.2020
3,	410163561	28.09.2017	28.01.2020	16.03.2020
4,	410163562	28.09.2017	21.10.2020	12.11.2020
5.	410163795	18.12.2017	21.10.2020	03.11.2020

ii. DGFT provides substantive policy framework for such schemes. This includes, framing of SION, procedures for pre- or post-import conditions through Handbook of Procedure, EODC mechanism and Final redemption. EODC was issued after satisfying the requirement of the FTP [(para 4.47(a) FTP and Para 3.38 of the HBP]. So, substantive compliance has been made by the Appellant.

iii. Appellant had duly brought to the knowledge of DRI Kolkata vide their letter 10.09.2018 about their application made to jurisdictional DGFT.

iv. DGFT being the Licensing authority, having issued EODC once, it is not open for the Customs Authorities to issue SCN without DGFT annulling such EODC & DGFT is the final authority in policy matters as per para 2.57 of the FTP.

v. The Appellant relied upon the following case law:

• • M/s. Super Cassettes Ind. Ltd. and Shri Sunil Wadhwani Director Versus Commissioner of Customs, New Delhi [2025 (1) TMI 233 – CESTAT New Delhi]
  • Svam Toyal Packaging Industries Pvt. Ltd. Versus Principal Commissioner of Customs Delhi [2025(2) TMI 965 – CESTAT NEW DELHI]
  • Pradip Polyfils Pvt Ltd – [2004(173) ELT 3 (Born,.)]

B). Invocation of extended period of time limitation under Section 28(4) of the Customs Act, 1962 is not sustainable

i. Period of import is 13.10.2017 to 09.01.2019 and the date of issuance of SCN is 06.10.2022 and the date of Order-in-Original No. 13.09.2023 and demand under normal time period is time-barred. Invocation of extended period is not sustainable in absence of essential ingredients such as willful mis­statement, collusion and suppression of facts.

ii. Bills of entry were not self-assessed under section 17(1) of the Customs Act, 1962 as the cargo being sensitive in nature, were not allowed RMS clearances.

iii. Both DGFT and Customs Bonds were duly cancelled during investigations.

iv. It is an issue related to Policy interpretation in relation to imports made during the GST transition phase and there is no willful mis-statement in this case. Gujarat High Court in Maxim Tubes & Cosmo Films (supra) pronounced favorable judgments whereas the Hon’ble Supreme Court reversed such judgments, thereby confirming that it was an interpretational issue.

v. Reliance in this regard has been placed on the following case law:

• • Commissioner of Central Excise, Indore Vs M/s. Medicaps Ltd [2011 (8) TMI 417-CESTAT, NEW DELHI]
  • Commissioner Vs M/s. Meghmani Dyes 8s Intermediates Ltd [2013 (6) TMI 141 — GUJARAT HIGH COURT]
  • Collector of Central Excise Vs Chemiphar Drugs 8s Liniments [1989 (2) TMI 116 —SUPREME COURT]
  • M/s. Wanbury Ltd Vs CCE, Guntur [2016 (6) TMI 1056 – CESTAT HYD]
  • M/s Anand Nishikawa Co. Ltd Vs collector of Central Excise, Meerut [2005 (9) TMI 331 — SUPREME COURT]

C) There is no machinery provision for levying and collecting interest under CTA, 1975 during the relevant time 13.10.0217 to 10.01.2019.

i. An amendment in Section 3(12) of the Customs Tariff Act, 1975 has been made for providing an explicit charging section for collecting interest on the IGST collected as Customs duty under section 3(7) & 3(9) of the Customs Tariff Act, 1975 with effect from 16.08.2024. In the impugned case all the imports are prior to 16.08.2024.

ii. In support, ratio in the following cases have been relied upon:

• • Mahindra 8s Mahindra Ltd (Automotive Sector) Vs. The Union of India, The Settlement Commission Mumbai 8s ADG, DGCEI, Mumbai [2022 (10) TMI 212 – BOMAY HIGH COURT] and Union of India 8s ORS. Vs Mahindra 8s Mahindra Ltd [2023(8) TMI 135 – SC ORDER],
  • M/S Himadri Specialty Private Limited VS PR CC Vizag [2024(4) TMI 383 — CESTAT HYDERABAD] ,
  • Chiripal Poly Films Ltd V. Commissioner of Customs [2024 (9) TMI 940 – CESTAT, AHMEDABAD],
  • Sakar Industries Pvt Ltd Vs Commissioner of Customs [2024 (10) TMI 1141 – CESTAT, AHMEDABAD].

iii. In the order of and Bombay High Court and Final Orders of Chennai Bench of CESTAT and Mumbai Bench of CESTAT, it has been held that the amendment in Section 3(12) of the Customs Tariff Act, 1975 is prospective in nature and applicable in such cases.

iv. Appellant has relied upon the following cases laws:

• • M/S A.R. Sulphonates Private Limited VS UOI 8s Others [2025(40) TMI 578 – BOMBAY HIGH COURT]
  • Flextronics Technology India Pvt. Ltd. Vs. Commissioner of Customs, Chennai VII Commissionerate [2025 (3) TMI 695 – CESTAT CHENNAI].
  • Philips India Limited V. Commissioner of Customs, Import, Air Cargo Mumbai in Customs Appeal No 87594 Of 2023 in Final Order in- A/86879/2024 Dated 18.11.2024.

D)Revenue Neutral situation:

i. Appellant submitted that the Hon’ble Supreme Court in M/s. Cosmo Films has allowed importers to claim input credit and accordingly Board Circular No. 16/2023 was issued but demand of interest was not in harmony with the Apex Court judgment.

ii. Reliance in this regard has been placed on the following judicial pronouncements on the aspect of Revenue Neutrality emphasizing that there was no intention to evade the tax/duty:

• M/s Nirlon Ltd. V CCE, Mumbai [2015 (320) ELT 22 (SC)
• M/s CCL Products (India) Ltd V CCE &ST (Appeals) Guntur

He would thus pray for allowing the Appeal.

13. Per contra, Shri Anoop Singh, Ld. Joint Commissioner appearing for the Revenue, has reiterated the findings of the impugned order and pleaded for upholding of the Order. He would also rely upon the decision in Texmaco Rail Engineering Limited Vs. Commissioner of Customs (Port), Kolkata [2024(1) TMI 902 – CESTAT] and contended that the interest is applicable on IGST levied under Section 3 of the CTA as it is held to be customs duty within the meaning of section 2(15) of the Act. He further argued that M/s. Mahindra and Mahindra Ltd. (supra) was in the context of ‘Settlement’ of a case and it cannot be considered to be laying down any legal principle applicable to usual and non-exceptional circumstances.

14. Shri Anoop Singh would also submit that the co­ordinate Chennai Bench in the case of M/S. FLEXTRONICS TECHNOLOGY INDIA PVT. LTD (supra) has clearly held that the amendment to Section 3(12) of CTA is prospective and therefore, no interest is payable on Customs duty (collected as IGST) under sub-sections (7) and (9) of Section 3 of CTA in the absence of any specific machinery provision in section 3(12) of CTA (prior to 16.08.2024); that in the ACER INDIA, this Bench has also relied on the ratio of the judgment in Mahindra and Mahindra (Supra).

15. Having heard both sides at length, after going through submissions made by both the learned counsel and perusing the documents placed on record, we find that the issue involved in the Appeal is regarding the liability to pay the Duty [IGST], Interest, Redemption Fine and Penalty which are confirmed in the impugned Order, for alleged violation of ‘Pre-Import Condition’ in the imports made against AAS during the period from 13.10.2017 to 09.01.2019.

16. We find that prior to introduction of GST, the AAS allowed exemption of additional duty of customs levied under Section 3 of CTA irrespective of the inputs being imported as pre-imports i.e. imports made before making exports or post-imports i.e. imported as replenishment to the inputs used in exports effected prior to imports. With the introduction of GST on 01.07.2017, corresponding changes and amendments were made in Foreign Trade Policy and Customs Notifications. In respect of Advance Authorization issued under Para 4.03 read with Para 4.14 of the Foreign Trade Policy, an amendment was brought in vide Notification No. 33/2015-2020 dated 13.10.2017 by DGFT by which, the exemption from payment of IGST leviable under sub-Sections (7) and (9) respectively to Section 3 of the CTA was subjected to Pre-import condition.

17. Customs Notification 18/2015-customs dated 01.04.2015 exempted materials imported into India against Advance Authorisations issued by the Regional Authority in terms of paragraph 4.03 of the Foreign Trade Policy from the whole of duty of Customs leviable, as specified in First Schedule to the Customs Tariff Act, 1975 and from the whole of additional duty, safeguard duty, transitional product-specific safeguard duty and anti­dumping duty leviable thereon, respectively under Sections 3, 8B, 8C and 9A of CTA, subject to the conditions mentioned therein. The said Notification came to be amended on 13.10.2017 vide Notification 79/2017-Customs dated 13.10.2017 which extended exemption from the payment of IGST at the time of import of input materials under Advance Authorizations, subject to the pre-import condition. Thus, there was no exemption of IGST on the materials imported as replenishment to the inputs used for the exports already made prior to imports. But it is a matter of record that the appellant continued to import inputs as replenishment by claiming IGST exemption under Customs Notification 18/2015 even after 13.10.2017. Appellant however, submitted that meeting the pre-import condition was an impossibility in their case as exports had already been done prior to 13.10.2017 amendment and that the imports had to be made subsequent to exports.

18. It is also undisputed that the jurisdictional DGFT, Chennai had issued redemption letters in all Advance Authorizations and subsequently the customs bonds by the Customs have also been closed and it is urged that the appellant had also intimated the same to DRI Kolkata and SIIB, Chennai.

19. Hon’ble Supreme Court though in UOI vs Cosmo Films has held that the IGST is payable under all circumstances, but has allowed the input credit of the IGST paid and accordingly directed the CBIC to issue instructions for re-assessment of Bills of Entry. The CBIC has accordingly issued Circular 16/2023 — Customs dated 07.06.2023 directing the filed formations to cancel out-of-charge and re-assessment upon payment of IGST along with applicable interest.

20. In the impugned order, the Adjudicating Authority has confirmed the demand of duty to be paid along with interest, imposed redemption fine and penalty, but at the same time gave importer an opportunity to follow the procedure prescribed in Circular No. 16/2023-Cus. dated 07.06.2023 within 30 days from the receipt of the order. Appellant, however, appears to have not opted for the benefit of circular 16/2023-supra, perhaps apprehending that the same would mean payment of IGST along with applicable interest. In respect of IGST in any case, the appellant could have taken input credit, but the cumulative interest would have been a direct cost since the goods had already been exported and the export obligation stood discharged even before issuance of Show Cause Notice.

21.1 In the back-drop of the above factual narratives, the following issues arise for our consideration:

i. When an export obligation stands discharged and redemption letters have been issued by JDGFT followed by closure of corresponding Customs bonds, whether the Customs can still issue demand notice independently?

ii. Whether customs duty (in nature of IGST) is recoverable from the appellant, in view of time-bar demands under extended period?

iii. whether interest is chargeable in absence of machinery provision u/ s 3(12) of the Customs Tariff Act, 1975 during the relevant time?

iv. Whether it is revenue neutral when Input GST tax Credit is allowed to the appellant?

21.2 We shall now deal with the above issues in seriatim.

When an export obligation stands discharged and redemption letters have been issued by JDGFT followed by closure of corresponding Customs bonds, whether the Customs can still issue demand notice independently?

21.3 In terms of Para 2.57 of the Foreign Trade Policy, DGFT is the final authority and the decision of the DGFT shall be final and binding on all matters relating to interpretation of Policy or provision in the Handbook of Procedures. It is also a matter of fact that the DGFT is responsible for formulating and implementing the Foreign Trade Policy and hence, DGFT alone can examine whether the importer/exporter has discharged its export obligation and only when satisfied, the DGFT would issue redemption letter. So at this stage, it is not open to the Customs Authorities to question the discharge of export obligation unless DGFT undertakes adjudication under the FTDR Act. If at all Customs department suspects any irregularity, it could at best approach the DGFT seeking remedial actions like the cancellation of Advance Authorizations, etc. and it is for the DGFT to accept or reject the case of the department.

21.4 Hon’ble Supreme Court in the case of Titan Medical Systems Pvt Ltd Vs. Collector of Customs, New Delhi [2002 (11) TMI 108 – SUPREME COURT] has made it clear that that licensing authority is the final authority in the matters relating to Advance licenses and has held that

“………………. Once an advance licence was issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf.”

21.5 Hon’ble Delhi High Court in M/s Designco, M/s Amit Exports and M/s Sharma International Vs. Union of India & Others 2024 [110 TMI 1150 – Delhi High Court] has observed that it would be impermissible for the Customs Authorities to either doubt the validity of an instrument issued under the FTDR Act or go behind benefits availed pursuant thereto absent any adjudication having been undertaken by the DGFT. Any action for recovery of benefits claimed and availed would have to necessarily be preceded by the competent authority under the FTDR Act having found that the certificate or scrip had been illegally obtained.

21.6 Further, in PSL Limited Vs Commissioner of Customs, Kandla [2015 (328) ELT 177 – Tri-Ahmd.] a similar question came to be answered by the Bench in the following words: –

6.3 The next issue for consideration is whether once the licensing authority certified that export obligation has been fulfilled whether such certification is final and binding on the Customs authorities? This issue came before this Tribunal in the case of Navjyothi International v. Commissioner of Customs, Chennai, cited supra. In that case the Revenue sought to deny the benefit of Customs duty exemption under Notification No. 30/97-Cus., dated 1-4-1997 and 51/ 2000-Cus., dated 27-4-2000 under DEEC scheme wherein the importer had undertaken imports under seven quantity based advance licences issued by the DGFT and had fulfilled the export obligation. This Tribunal in that case held as follows :

With regard to licence conditions, the licensing authority has certified full discharge of export obligation by the appellants. The adjudicating authority under the Foreign Trade (D&R) Act has found no violation of licence conditions on their part and its order has been accepted by the Revenue. Hence the Revenue cannot be seen to be critical of that order, nor can the DR be heard to argue against it. It goes without saying that the case law cited by ld. SDR cannot improve the Revenues case or plight. The Revenues allegation was that the appellants had violated conditions (vii) and (viii) of Notification 30/97 and similar conditions of Notification 51/2000. But, in this regard, the DGFTs order has taken the wind out of the Revenue’s sails. In the result, the charge of breach of conditions of the Customs Notifications does not survive.

An identical view was held by this Tribunal in the case of Bharath Steel Corporation v. Commissioner of Customs, Chennai, and Ashok Enterprises v. Commissioner of Customs, Chennai, cited supra. A similar issue came up for consideration before this Tribunal in the case of Kukar Sons (Indo-French) Exports Ltd. v. Commissioner of Customs, Jaipur. In that case the Revenue alleged violation of conditions of Notification No. 204/ 92-Cus. by the appellants as they failed to realize the sale proceeds of exported goods. The DGFT, which is the competent authority in the matter of advance licenses, had already redeemed the bank guarantee and legal undertaking furnished by the appellants after considering the fulfilment of export obligation by the assessee. This Tribunal held as follows :

Once a bank guarantee and legal undertaking has been redeemed by the competent authority and no action is being taken by the competent authority, therefore, we find this finding is not sustainable in view of the decision of the Hon’ble Supreme Court in the case of Titan Medical Systems Pvt. Ltd. (supra). The Hon’ble Supreme Court held that once an advance licence was issued and not questioned by the licensing authority, the Custom authorities cannot refuse exemption on an allegation that there was any misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf.

The ratio decidendi laid down in the above judgments applies to the facts of the present case. In the instant case also, the licensing authority has accepted the fulfilment of export obligation and have issued export obligation discharge certificates and have discharged the appellants from any further obligation. That being the position, the Customs authorities cannot deny the benefit of Customs duty exemption under the notifications governing the advance licensing scheme. If at all they felt that the appellant had violated any of the terms and conditions of the licences, they should have referred the matter to the licensing authority for appropriate action rather than taking action suo mote.

21.7 In the present Appeal, we do not find any such reference being made by the Customs to Licensing Authority calling back the redemption or any such action to adjudicate issues afresh under the provisions of FTDR Act. The closure of AAS and corresponding Customs Bonds are undoubtedly the conscious decisions of the JDGFT and Customs.

22. Therefore, we are of the considered view that once DGFT has issued Redemption Letters and Customs also having closed the corresponding bonds, customs duty (in the form of IGST) cannot be demanded independently under the provisions of the Customs Act, 1962. Therefore, the findings to this effect in impugned order cannot sustain and hence, to this extent the impugned order is set aside. Consequently, the Appeal succeeds on this ground.

ii) Whether customs duty (in nature of IGST) is recoverable from the appellant, in view of time-bar demands under extended period?

23.1 The Appellant has submitted that the imports were not cleared under self-assessment as Melting Scrap was considered as a sensitive item. On perusal of records, we find that these imports were made under Advance Authorization Scheme and the proper officer has examined the goods; debits were made and checked by the Proper Officer against each of such Advance Authorization. It appears that the changes brought-in vide Notification No. 18/2015 supra imposing ‘pre-import condition’ remained unnoticed by both the Assessing Officer as well as the Appellant-importer and hence, it could perhaps be a contributory negligence. Hence, it may not be fair to impute the Appellant alone and charge with suppression, as we do not find suppression of any material fact by the Appellant, that too with an intent to evade duty.

23.2 Hence, we find force in the Appellant’s submission that Revenue cannot invoke extended period of time limitation in cases involving interpretation and the resolution of the issues by higher courts including the Hon’ble Apex Court. We are therefore of the view that the allegation of suppression of facts and invocation of extended period of limitation is not just and proper; there must be a positive and affirmative action of the part of the importer to suppress the facts to evade duty.

23.3 The Supreme Court in M/s.Anand Nishikawa Company Ltd. vs. Commissioner of Central Excise, Meerut [2005 (9) TMI 331 – SUPREME COURT] has held that the term ‘suppression’ must be construed strictly. It does not mean any omission and the act must be deliberate and willful to evade payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. When facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression.

[Emphasis supplied]

23.4 In the case of Pushpam Pharmaceuticals Company Vs. Collector of Central Excise, Bombay [1995 (3) TMI 100 – SUPREME COURT], the Apex Court has held that where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression.

23.5 Ld. Counsel has also relied on Himadri Specialty Chemical Ltd Vs Commissioner of Customs [2024 (4) TMI 383 — CESTAT HYDERABAD] on the issue of demand of Customs Duty (collected in the form of IGST), penalty and fine invoking extended period of limitation, for wrongly availing IGST exemption at the time of imported inputs made in Advance Authorization Scheme. The Bench has observed and concluded as under:

‘….

12. Having considered the rival contentions, we find that it is not disputed that, had the appellant paid the IGST at the time of import they would have been eligible for input tax credit. Further, admittedly the goods have been used as inputs for manufacture of other goods which have undisputedly been exported to Hindalco. Admittedly, DGFT have issue ‘Export Obligation Discharge Certificate’ to the appellant We further take notice that it is not the policy of the Government to export taxes. We further find that it is a case of contributory negligence on the part of Revenue also, as inspite of having registered the Advance Authorisation and the entitlement of the appellant to exemption under Notification No. 21/ 2015-CUS, have allowed the exemption of IGST also as applicable under Notification No. 18/ 2015-CUS. However, in the facts and circumstances, the situation being revenue neutral undisputedly, no case of malafide is made out against the appellant. In this view of the matter, following the ruling of the Apex Court in the Nirlon Ltd., (supra), we hold that the demand is not invokable by invocation to extended period of limitation. Accordingly, we allow this appeal and set aside the impugned order. The appellant shall be entitled to consequential benefits in accordance with law.

24. Thus, we are of the view that the Revenue has failed to prove suppression and the demand of duty being beyond the normal period, the impugned order confirming demand of duty with interest, fine and penalty is not sustainable on the ground of time limitation also. The impugned order confirming the demand by invoking the larger period of limitation thus stands set aside and the corresponding ground/s of Appeal are thus allowed.

iii) whether interest is chargeable in absence of machinery provision u/s 3(12) of the Customs Tariff Act, 1975 during the relevant time?

25.1 Hon’ble Bombay High Court in Mahindra & Mahindra (supra) has held that in the absence of specific machinery provision under the Customs Tariff Act, 1975, interest cannot be recovered from an importer by taking recourse to machinery relating to recovery of duty under the provisions of Customs Act, 1962. This judgment of the High Court has been upheld by the Hon’ble Supreme Court vide order dated 28.07.2023. Further, the Review petition filed by the Revenue also stands rejected by the Apex Court. Therefore, the decision of Bombay High Court in Mahindra & Mahindra (supra) is a binding law for all purposes.

25.2 We find that the ratio of Mahindra & Mahindra (supra) has been widely followed by many benches of CESTAT including Chennai bench, in the following cases involving payment of CVD with interest, fine and penalty:

(a) M/s. Acer India Private Ltd. Versus the Commissioner of Customs, Chennai. – 2023 (9) TMI 1553 – CESTAT CHENNAI the same legal issues arose regarding demand of interest on additional duty of customs (CVD) under the provisions of Customs Act, 1962. It has been held that that penalty, interest etc. cannot be levied in regard to collection of CVD and SAD. In Para 25 & 29 the Tribunal has held:

‘……

25. The above judgment of the Hon’ble High Court was affirmed by the Hon’ble Apex Court in UOI Vs Mahindra & Mahindra Ltd. – 2023 (8) TMI 135 (SC.). Applying the ratio laid in the above judgment, we are of the considered view that the demand of interest (on the total differential duty of Rs. 4,81,74,877/ ) cannot sustain and requires to be set aside. For the same reason, the confiscation of the goods and the imposition of redemption fine are set aside.”

—-

29. In the result, the impugned order is modified to the extent of setting aside, the demand of interest, the order of confiscation of goods, the imposition of Redemption fine, penalties imposed and the appropriation of interest paid by the appellant without disturbing the confirmation of duty.

(b) M/s. Acer India (Pvt.) Ltd. Versus Commissioner of Customs (Audit), Chennai [2024 (5) TMI 478 – CESTAT CHENNAI], this bench has held:

‘…..

8.3 In this regard, the Bombay High Court in Mahindra & Mahindra Ltd. v. Union of India [2022 (10) TMI 212 ­BOMBAY HIGH COURT] has considered a similar issue on levy of interest and penalty in relation to CVD and held that in the absence of specific provisions for levying of interest or penalty due to delayed payment of tax, the same cannot be levied/ charged unless the statute makes a substantive provision in this behalf. This decision of the Hon’ble Bombay High Court has been affirmed by the Hon’ble Apex Court in Union of India Vs Mahindra and Mahindra Ltd, [2023 (8) TMI 135 – SC ORDER]. Further, the Review Petition filed by the Department has also been dismissed vide order dated 09.01.2024 in Review Petition (Civil) Diary No. 41195/2023.

25.3 We also find that the ratio of the Mahindra & Mahindra judgment has been extended while analysing Sections 3(7) and 3(9) of the CTA i.e. integrated tax, by Ahmedabad bench in the following judgments:

a. In M/S. Chiripal Poly Films Ltd V. Commissioner of Customs [2024 (9) TMI 940 – CESTAT, AHMEDABAD]. The issue was whether the appellants were liable to pay duty (to be collected as IGST) u/s 3(7) & 3(9) of the CTA, 1975, interest as per Section 28AA of the Customs Act, 1962, penalty under section114A and redemption fine u/s 125 of the Customs Act, 1962 in connection with imports made under Advance Authorization during 13.10.2017 to 09.01.2019; it has been held that:

……….. we do not find and revenue has also not been able to show us such charging provision for levy and collection of ‘interest, Fine and Penalty” for late payment of IGST leviable under Section 3 (7) or under Section 3 (12) of Customs Tariff Act 1975. Therefore, the orders for recovery of interest, fine and Penalty on late payment of the IGST during Re-assessment process of Bill of Entry for the period from 13.10.2017 to 09.01.2019 are without authority of law and the same are unsustainable.

b. In M/S. Sakar Industries Pvt Ltd Vs Commissioner of Customs [2024 (10) TMI 1141 -CESTAT, AHMEDABAD], the Bench has followed its own earlier order in Chiripal (supra).

25.4 We also note that the decision in Mahindra and Mahindra (Supra) is distinguished on the ground that CVD is different from IGST in terms of Section 3 of the Customs Tariff Act, 1975 in the following cases –

(a) In M/ s Mayur Uniquoters Limited And M/S JLC Electromet Private Limited Versus Commissioner (APPEALS), Central Excise & CGST, Jaipur [2024 (8) TMI 1060 – CESTAT NEW DELHI], the bench has observed that IGST is not a customs duty and has held as under:

‘………

28. The last question to be answered by us if interest is payable on IGST which is paid late. The submission of the learned counsel for the appellant is that Bombay High Court held in Mahindra and Mahindra that no interest is chargeable on the additional duty of customs levied under section 3 of the Customs Tariff Act, 1975 and therefore no interest can be charged on the IGST. We find that this judgment was delivered in a matter where the SCNs were issued in 2004 and 2005 well before the GST was introduced in 2017. At that time, Additional duty of Customs was leviable under section 3 of the Customs Tariff Act, 1975. After the introduction of the GST in 2017, section 3 was completely re-written and instead of ‘additional duty of customs’ equivalent to the duties of excise, IGST at the same rate as leviable under IGST Act became leviable when goods are imported. No judgment of any High Court or Supreme Court has been brought to our notice in which it is held that no interest is chargeable on delayed payment of IGST. Therefore, reliance on Mahindra and Mahindra is misplaced.

(b) Mayur Uniqouters is followed in M/s. Poddar Pigments Limited Versus Commissioner Central Excise & CGST, Jaipur [2024 (10) TMI 732 – CESTAT NEW DELHI) by the same Bench.

25.5 We also find that the Kolkata bench has also passed a detailed judgment in M/s. Texmaco Rail Engineering Limited Versus Commissioner of Customs (Port), Kolkata [2024 (1) TMI 902 – CESTAT KOLKATA] wherein the bench has not concurred with Mahindra and Mahindra (supra). This judgment is relied upon by the Revenue in this case. Mahindra and Mahindra judgment has been questioned on the interpretation of expression “including” used in Section 3(12) of the Customs Tariff Act, 1975.

25.6 Kolkata Bench has also not agreed to this principle of strict construction and held that principle of liberal construction should be applied in taxation matters and interest for delayed payment of duty under Section 28AA of Customs Act is certainly payable.

25.7 In conclusion, we find that subsequent to Mahindra and Mahindra (supra), CESTAT Benches have taken different stands – in that Ahmedabad bench has fully concurred with Mahindra and Mahindra; New Delhi Bench did not directly contest the findings of Mahindra and Mahindra, but stated that the additional duty of customs (CVD) is not the same as IGST and therefore interest is payable on IGST collected as duty of customs; Kolkata Bench did not agree with the Bombay High Court in Mahindra and Mahindra and questioned the very judgment and held that interest is payable on customs duty (collected CVD); and Chennai Bench (In ACER India) agreed with Mahindra and Mahindra and allowed ACER INDIA appeals accordingly. However, when the decision of a higher judicial forum is available which is also approved by the Apex court, the same is binding and therefore, reliance on orders of Co-ordinate Benches are of no consequence, insofar as the issue is concerned.

26. This apart, an amendment in Section 3(12) of the Customs Tariff Act, 1975 is carried out by the Government of India through Finance Act, 2024 and in the amended version, a strict construction is construed for charging and collecting interest and penalty w.e.f. 16.08.2024. The amended section 3(12) reads the following:

“(12) The provisions of the Customs Act, 1962 (52 of 1962) and all rules and regulations made thereunder, including but not limited to those relating to the date for determination of rate of duty, assessment, non-levy, short-levy, refunds, exemptions, interest, recovery, appeals, offences and penalties shall, as far as may be, apply to the duty or tax or cess, as the case may be, chargeable under this section as they apply in relation to duties leviable under that Act or all rules or regulations made thereunder, as the case maybe.”

27.1 But the Delhi Bench apparently did not mention this amendment in Section 3(12). It is evident that the prospective amendment in Section 3(12) of the Customs Tariff Act, 1975 has validated the stand taken by, Ahmedabad Bench in Chiripal Poly Films and Sakar International (supra) and Chennai Bench in ACER INDIA cases (supra).

27.2 It is apparent that amendment in Section 3(12) of the Customs Tariff Act, 1975 went un-noticed until Chennai Bench in the case of M/S. Flextronics Technology India Pvt. Ltd. V. Commissioner of Customs, Chennai VII Commissionerate [2025 (3) TMI 695 – CESTAT CHENNAI, consisting of one of us, i.e. Member (Judicial)] held that no interest or penalty is exigible in the absence of machinery provision till 16.08.2024 i.e. the date of amendment. The relevant portion of the order is reproduced below:

“…..

6.3 We also notice that Section 3(12) of the Customs Tariff Act has been substituted, vide Finance (No 2) Act 2024 which was notified on 16th August 2024, spec fiscally including ‘interest’ among others measures. The new sub-section is reproduced below.

“(12) The provisions of the Customs Act, 1962 and all rules and regulations made thereunder, including but not limited to those relating to the date for determination of rate of duty, assessment, non-levy, short-levy, refunds, exemptions, interest, recovery, appeals, offences and penalties shall, as far as may be, apply to the duty or tax or cess, as the case may be, chargeable under this section as they apply in relation to duties leviable under that Act or all rules or regulations made thereunder, as the case may be.”. (emphasis added)

The legislature having now incorporated ‘interest’ into the Customs Tariff Act, 1975, the same can be demanded for non-payment of IGST only after the substitution of the said sub-section as above, from 16.08.2024 and not on the impugned goods which were imported before that date. The appellants prayer hence succeeds on this issue.

……”

27.3 Mumbai bench in M/S. Philips India Limited V. Commissioner of Customs, Import, Air Cargo Mumbai [2025 (7) TMI 1414 – CESTAT MUMBAI] has also relied upon the amended section 3(12) and has passed the following order:

‘…..

14.4 Further, we also note that Sub-section (12) of Section 3 of the Customs Tariff Act, 1975 have been amended vide Finance (No.2) Act, 2024 approved by the Parliament w.e.f. 16-8-2024, in specifically providing for assessment, non-levy, short-levy, recovery etc. in order to overcome the lacunae pointed out in the above said judgement of the Hon’ble High Court and Hon’ble Supreme Court.

(12) The provisions of the Customs Act, 1962 (52 of 1962) and all rules and regulations made thereunder, including but not limited to those relating to the date for determination of rate of duty, assessment, non-levy, short- levy, refunds, exemptions, interest, recovery, appeals, offences and penalties shall, as far as may be, apply to the duty or tax or cess, as the case may be, chargeable under this section as they apply in relation to duties leviable under that Act or all rules or regulations made thereunder, as the case may be.]”

Since, the dispute in the present case relates to levy of additional duty of Customs (IGST) on imports during the period 29.07.2017 to 26.02.2022, such amended provisions do not have any application on the demand of differential additional duty of customs adjudged by the impugned order. Therefore, we are of the considered opinion that on this ground alone the impugned order does not stand the scrutiny of law and thus we do not hesitate in holding that it is liable to be set aside.

……’

28. Hon’ble Bombay High Court decision in A.R. Sulphonates Private Limited VS UOI & Others [2025(40) TMI 578 – BOMBAY HIGH COURT] dated 09.04.2025 is relevant in the context of present appeal. The issue before High Court was almost identical/similar, i.e. violation of “pre-import condition” in imports made under Advance Authorization and payment of IGST along with interest, redemption fine and penalty. Hon’ble High Court has categorically ruled that the amended section 3(12) is prospective in nature and would apply only with effect from 16.08.2024. The Hon’ble High Court has also held that the Circular 16/2023 -Cus Dated 07.06.2023 is bad in law and has passed the following order:

‘……

76. For all the aforesaid reasons, we pass the following orders: –

i. It is declared that Circular No. 16 of 2023-Customs dated 7th June, 2023, to the extent that it purports to levy interest upon the IGST payment, is beyond the provisions of the Customs Tariff Act, 1975 and is bad in law;

ii. The impugned Order dated 1st August, 2024, to the extent that it seeks to recover interest, confiscate goods, impose redemption fine and impose penalty, is quashed and set aside;

iii. It is declared that the amendment to the provisions of Section 3 (12) of the Customs Tariff Act, 1975 by Finance (No. 2) Act, 2024 dated 16th August, 2024 is prospective in nature and is applicable only from 16th August, 2024 onwards;

iv. Rule is made absolute in the aforesaid terms;

v. In the facts and circumstances of the case, there will be no order as to costs.

…..’

29. In view of the above discussions and in the light of the guiding principles laid down by Higher courts (Supra), we are of the view that it is settled beyond doubt that in the absence of specific machinery provision relating to interest, redemption fine and penalty in the Section 3(12) of the Customs Tariff Act, 1975, the same cannot be demanded from the appellant for the imports made before 16.08.2024. Therefore, on this account also, the impugned order is not sustainable.

iv) Whether it is revenue neutral when Input GST tax Credit is allowed to the appellant?

30. The Hon’ble Supreme Court in UOI Vs Cosmo Films at Para 75 has directed the Revenue to permit importers to claim refund or input credit, whichever is applicable and CBIC has, accordingly issued Circular 16/2023-Customs dated 07.06.2023 allowing re­assessment of Bills of Entry and pay IGST with applicable interest. In the case of Himadri Specialty Chemical (supra) on the similar issue of exemption of IGST at the time of import of the input materials under Advance Authorizations, the CESTAT Bench has held that once the DGFT has issued EODC and the fact that taxes cannot be exported, the situation in this case becomes undisputedly revenue neutral. There cannot be any case of malafide against the appellant as the CBIC Circular allows input credit upon re-assessment of Bills of entry. Reliance placed by the appellant on Nirlon Ltd vs Commissioner of Central Excise, Mumbai [2015 (5) TMI 101 – SUPREME COURT] is therefore apt, wherein, it is observed that ‘when an entire exercise is revenue neutral, the appellant could not have achieved any purpose to evade duty’. So, it is a case of revenue-neutrality and more so, when the interest is not payable in the absence of any machinery provision.

31. As stated above, there is no malafide proved in this case or any intent to evade customs duty, there is no justification for confiscation of goods or imposing redemption fine especially when the goods had already been released on final assessment in the manner prescribed by/under law and are not available for redemption. The Larger Bench decision by the Hon’ble Tribunal in Shiv Kripa Ispat Pvt. Ltd [2009 (1) TMI 124 – CESTAT MUMBAI LB] supports this view.

32. Accordingly, we summarise that:

• Once DGFT has issued redemption Letters and Customs also closed the corresponding bonds, customs duty (in the form of IGST) cannot be demanded and confirmed independently under the provisions of the Customs Act, 1962, without DGFT recalling Redemption letters and adjudicating the case under the FTDR ACT, 1992. DGFT redemption letters are final and binding on Customs authorities.
• It is time -barred and hit by limitation.
• In absence of machinery provisions, interest, fine and penalty cannot be demanded and amendment in charging Section 3(12) of the Customs Tariff Act, 1975, is prospective and hence not applicable in this case,
• It is clearly a revenue-neutral exercise.

33. In the result, the appeal stands allowed with consequential benefits if any, as per law.

(Order pronounced in open court on 22.08.2025)