The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has remanded a customs refund adjustment dispute back to the adjudicating authority after observing that the refund was appropriated without issuing notice or granting personal hearing to the importer, amounting to a gross violation of the principles of natural justice.
The bench of Dr. Suvendu Kumar Pati (Judicial Member) observed that by the time the Commissioner (Appeals), Mumbai passed the order, the tax dues before the Noida Commissionerate were no longer in existence. The Tribunal also emphasized that the importer had already suffered harassment due to the technical glitch which forced double payment of duty for clearance of goods.
The dispute arose after the importer allegedly paid customs duty twice due to a technical glitch on the ICE portal while clearing imported consignments in May 2020. According to the order passed by Judicial Member Dr. Suvendu Kumar Pati, the first payment was not reflected on the portal, compelling the importer to make another payment along with interest for release of goods.
Subsequently, the importer sought a refund of Rs. 12.20 lakh. Although the refund was sanctioned, the amount was appropriated against alleged pending tax dues of Rs. 13.48 lakh relating to proceedings before the Noida Commissionerate.
Before the Tribunal, the importer argued that the adjustment of refund was carried out without any recovery notice, without intimation from the refund sanctioning authority and without providing any opportunity of hearing. The appellant contended that such recovery action was illegal and contrary to settled principles of natural justice.
The appellant further submitted that the very tax demand raised by the Noida Commissionerate had already been set aside by the Commissioner (Appeals), Noida, through an order dated January 4, 2022. Therefore, once the underlying demand itself ceased to exist, the customs department could not continue withholding the refund amount.
During the hearing, the departmental representative supported the reasoning adopted in the appellate order but admitted before the Tribunal that the refund adjustment had indeed been carried out without reference to any statutory provision, without issuing notice to the importer and without granting personal hearing.
The Tribunal held that the matter required fresh adjudication in light of the changed circumstances, particularly because the earlier recovery order had already been set aside in appeal and the importer was denied opportunity of hearing at the earlier stage.
The CESTAT remanded the matter to the Refund Sanctioning-cum-Adjudicating Authority for de novo adjudication with directions to pass a fresh order after granting proper hearing to the importer. The Tribunal also directed that the proceedings be completed within three months considering that the dispute was already several years old.
The appeal was allowed by way of remand.
Case Details
Case Title: J Poonamchand and Sons Versus Commissioner of Customs, Nhava Sheva-V
Citation: JURISHOUR-1147-CES-2026(MUM)
Case No.: Customs Appeal No. 87299 of 2025
Date: 04.05.2026
Counsel For Appellant: Devraj Kansara, Advocate
Counsel For Respondent: Jitesh Jain, Authorized Representative
