2011 (9) TMI 529 - HC - Customs

Exemption under SAARC - Rules of Originating - Held THAT - Member of SAARC country, has imported the dates from UAE, and thereafter, it has been imported by the petitioner, will not bring the product under SAFTA agreement. For availing benefit of exemptions product is required to be of the origin of SAARC country.

Summary

Issues:
1. Implementation of SAFTA agreement terms.
2. Eligibility for duty concession under SAFTA.

Issue 1: Implementation of SAFTA agreement terms
The petitioner, engaged in export and import business, sought a writ of mandamus to direct the respondents to implement the terms of the South Asian Free Trade Area (SAFTA) agreement. The petitioner had entered into a contract with a company in Sri Lanka for importing Date Fruits, but the respondents demanded a duty representing 36% of the commodity price. The petitioner argued that this demand was contrary to the SAFTA agreement, which aimed at eliminating trade barriers, promoting fair competition, and ensuring mutual benefits among member countries. The respondents contended that the imported dates were of UAE origin, not a SAARC country, hence not eligible for duty concession under SAFTA.

Issue 2: Eligibility for duty concession under SAFTA
The respondents argued that the imported dates were not eligible for duty concession under SAFTA as they were of UAE origin, not a SAARC country. They cited specific rules regarding the origin of products under the SAFTA agreement, emphasizing that products must be wholly produced or obtained in the territory of the exporting contracting state to qualify for preferential treatment. The court noted that the interpretation given by the respondents was valid, as the product's origin from a SAARC country was crucial for benefiting under the agreement. The court found no merit in the petitioner's contention that import from SAARC countries was sufficient for duty concession, emphasizing that the product's origin must align with SAARC countries for eligibility.

In conclusion, the court dismissed the petition, stating that the product's origin from a SAARC country was essential for duty concession under the SAFTA agreement. The judgment highlighted the importance of complying with the rules of origin outlined in the agreement to avail of benefits, emphasizing that mere import by a SAARC member from a non-SAARC country did not qualify for duty concession.