Strange indeed.... :
But u should not get panic & try to respond back with following proves.
1. Copy of receipt paper having receipt number (probably it is email sent by CIO to you) of your application fee by CIO
2. Contact draft issuing authority i.e. bank or money exchanger if they can be of any help in providing further evidence of encashment of draft by CIO
Shoot a case specific query with proves to LVO convincing them they requested for resubmission of application fee by mistake at your soonest.
InshAllah everything will be fine.