2014 (11) TMI 817 - AT - Customs

Waiver of pre deposit - Benefit of exemption Notification No. 26/2000-Cus. dated 1.3.2000 - origin of goods - Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and Republic of India - contravention of the conditions of the Rules, 2000 - Confiscation of goods - Imposition of interest and penalty - Held that - the importer shall prove to the satisfaction of the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, in accordance with the Customs Tariff (Determination of Origin of Goods under the Free Trade Agreement (ISFTA) between the Democratic Socialistic Republic of Sri Lanka and Republic of India), Rules, 2000 published with the Notification of the Govt. of India in the Ministry of Finance, Department of Revenue, Notification No.19/2000-Cus. dated 6.3.2000 that the goods in respect of which the benefit of this exemption is claimed are the origin of Sri Lanka. letter of the Department of Commerce, Sri Lanka that the cost statement were not declared in respect of import from France and South Korea. It is also seen that the DRI officers had also found several materials which would reveal the doubt in respect of the authenticity of the certificate of country of origin. Thus, there is a factual dispute, which would be examined at the time of hearing the appeal at length. applicant has not made out a strong prima facie case for waiver of entire amount of dues - Partial stay granted.

Summary

Issues:
- Denial of exemption benefit under Notification No. 26/2000-Cus.
- Demand of duty and penalty imposition against 25 Bills of Entry.
- Confiscation of goods under Section 111(m) and 111(o) of the Customs Act, 1962.
- Interpretation of Rules 6, 7, 8, 11, and 13 of the Customs Tariff (Determination of Origin of Goods under the Free Trade Agreement) Rules, 2000.
- Verification of certificate of origin by the exporting country.
- Compliance with conditions for preferential treatment under the India Sri Lanka Free Trade Agreement.

Analysis:
The judgment involves a case where an applicant imported Poultry Feed Premix for Broiler Finisher under 25 Bills of Entry, claiming exemption under Notification No. 26/2000-Cus. However, the Directorate of Revenue Intelligence (DRI) found discrepancies in the certificate of origin, leading to a show-cause notice proposing denial of exemption, duty demand of &8377; 2,26,50,335/-, penalty imposition, and confiscation of goods. The Commissioner of Customs denied the exemption, confirmed the duty demand, imposed a penalty, and ordered confiscation under the Customs Act, 1962.

The applicant argued that the certificate of origin complied with Rule 11 of the Customs Tariff Rules, 2000, as it was issued by the designated authority of the exporting country. They contended that the verification by the exporting country confirmed the authenticity of most certificates, excluding a few canceled ones, which were not part of the proceedings. The applicant asserted that the goods were cleared after proper verification, challenging the sustainability of the duty demand.

On the other hand, the Revenue highlighted Rule 7, emphasizing the requirement for the final process of manufacture to be performed within the exporting country. They pointed out discrepancies in the cost estimates for imports from France and South Korea, citing the need for satisfaction of the proper officer regarding rule compliance. The Revenue supported the adjudicating authority's findings.

The Tribunal analyzed the Customs Tariff Rules, noting the conditions for claiming exemption under Notification No. 26/2000-Cus. It emphasized Rule 7, which pertains to goods not wholly produced in the exporting country, outlining the eligibility criteria for preferential treatment. The judgment highlighted the importance of Rule 13, emphasizing cooperation between contracting parties to prevent misuse through false declarations or falsification of documents.

Upon review of the evidence, including correspondence and investigation findings, the Tribunal observed doubts regarding the authenticity of the certificate of origin, particularly related to purchases from third-party countries. Given the factual dispute, the Tribunal directed the applicant to predeposit a specified amount while allowing waiver of the balance dues during the appeal process.

In conclusion, the judgment underscores the significance of complying with the Customs Tariff Rules for preferential treatment under the Free Trade Agreement. It highlights the need for thorough verification of certificates of origin to prevent misuse and emphasizes cooperation between contracting parties to ensure the integrity of trade agreements.