The Kolkata Regional Bench of the Customs, Excise and Service Tax Appellate Tribunal has delivered a significant ruling in favor of M/s Instamod Air Pipe Pvt. Ltd., setting aside a duty demand of Rs. 12,59,301 along with an equivalent penalty and a redemption fine of Rs. 9,80,000. The tribunal determined that the proceedings initiated by the Customs Department were fundamentally flawed due to the use of inadmissible, undisclosed evidence and the failure to observe statutory limitations prescribed under the India-Malaysia Comprehensive Economic Cooperation Agreement .

The legal battle centered on a consignment of miscellaneous iron and steel articles, including aluminium pipes and fittings, which the importer had cleared for home consumption in February 2018 . At the time of clearance, the company sought the benefit of preferential duty rates under Notification No. 53/2011-Cus , supported by a Certificate of Origin issued by Malaysian authorities. While the goods were initially assessed and granted out-of-charge status by the proper officer, the Department later challenged the exemption, alleging that the certificate was non-authentic based on a broader alert circular issued by the Directorate of Revenue Intelligence .

In its final order, the bench, comprising Member (Judicial) Ashok Jindal and Member (Technical) K. Anpazhakan, observed that the adjudicating authority had anchored its case on evidence that was never disclosed to the appellant. The tribunal noted, "Moreover, in the adjudication order, the adjudicating authority has relied on the e-mail dated 19.06.2021 from CBIC and email dated 18.05.2021 from MITI or email dated 22.07.2021 . This email was not the subject matter of the show-cause notice , neither this email was provided to the appellant for explanation." The tribunal emphasized that justice requires a fair opportunity to respond to the specific materials used against a party, a requirement that was notably absent in the present case.

Procedural Failures and Time-Barred Claims

The appellate bench further scrutinized the timeline of the investigation, finding that the Department’s attempt to invoke an extended period of limitation was legally unsustainable. Under the Rules of Origin linked to the India-Malaysia trade agreement, the verification of a Certificate of Origin must be conducted within a six-month window. In this instance, the goods were cleared in February 2018 , yet the Department did not initiate an investigation until May 2021 . The subsequent show-cause notice was only issued in February 2023 .

The tribunal ruled that the Department failed to provide any evidence of collusion , willful misstatement , or suppression of facts by the importer that would warrant extending the statutory limitation period. Addressing the lack of evidence, the bench observed, "We find that there is no allegation against the appellant was aware of the alleged nature of COO or had connived with the overseas suppliers." Consequently, the tribunal held that the show-cause notice was highly time-barred, effectively neutralizing the legal basis for the recovery of differential duty under Section 28(4) of the Customs Act, 1962 .

Inapplicability of Intelligence Alerts

A further point of contention was the Department’s reliance on a 2021 alert circular from the Directorate of Revenue Intelligence concerning allegedly fraudulent certificates of origin. The tribunal found a clear disconnect between the alert and the nature of the goods involved in this case. The Department’s intelligence alert specifically concerned antimony trioxide and re-melted zinc ingots from Thailand and Malaysia, whereas the appellant’s imports consisted primarily of aluminium pipes and fittings.

The tribunal noted that the Department had provided no proof that the importer’s specific certificate was among those identified as non-authentic by the Malaysian Ministry of International Trade & Industry ( MITI ). Without concrete evidence that the certificate in question was forged or that the signature of the issuing authority was fabricated, the tribunal concluded that the certificate could not be discarded.

Final Disposition and Consequential Relief

Regarding the redemption fine of Rs. 9,80,000 imposed by the lower authority, the tribunal found that the penalty was untenable as the goods were no longer physically available for confiscation. Citing the precedent established by the Larger Bench of the Tribunal in Shiv Kripa Ispat Pvt. Ltd. vs. Commissioner of C. Ex. & Customs, Nashik , and affirmed by the Bombay High Court , the bench reiterated that redemption fines cannot be imposed on goods that have already been cleared and sold in the ordinary course of business.

The ruling underscores the importance of procedural rigor in customs litigation. By setting aside the impugned order, the tribunal has provided the appellant with full consequential relief. The decision serves as a reminder to revenue authorities that reliance on internal correspondence or generic intelligence alerts does not substitute for established verification protocols or the fundamental principles of natural justice . As of the pronouncement of the order, the duty demand , penalties, and confiscation orders have been formally vacated, concluding the long-standing dispute between the importer and the Customs Department .