2007 (9) TMI 133 - AT - Customs

There is no condition u/r 7(a) of Custom Tariff Rules 2000 that value addition in the country of origin should be in the form of material parts etc. and not cost of labour The rule only speaks about the value addition in the country of origin so exemption under Not.26/2000 cannot be denied

Summary

Issues:
- Appeal against benefit of Notification No. 26/2000-Cus.
- Interpretation of Rule 7(a) of Customs Tariff (Determination of origin of goods under the Free Trade Agreement between the Democratic Socialistic Republic of Srilanka and the Republic of India) Rules, 2000.

Analysis:
1. The appeal was filed by the Revenue against an order granting the benefit of Notification No. 26/2000-Cus. The Revenue contended that Rule 7(a) of the Customs Tariff Rules was not met.

2. The Commissioner (Appeals) analyzed the issue and highlighted that the appellant fulfilled the eligibility requirements under Rule 4 of the origin rules. The appellant claimed preferential treatment, produced the required evidence, and submitted a valid certificate of origin from the Govt. of Srilanka. The Commissioner found no fault in the origin certificate and noted that the appellant also provided a cost statement showing compliance with the value addition criteria.

3. The Commissioner further explained that Rule 5(b) allows products not wholly produced in Srilanka to be eligible for preferential concession under Rule 7. In this case, the goods met the conditions of Rule 7(a) as the value of non-originating material did not exceed the specified limit, and the final manufacturing process occurred in the exporting country. The goods also satisfied Rule 7(b) by being classified differently under the Harmonized System.

4. The Revenue's main argument revolved around the interpretation of Rule 7, specifically concerning the nature of value addition required in the country of origin. However, upon review, the Tribunal found no such condition within the rule. The Tribunal emphasized that Rule 7 only pertains to value addition in the country of origin, without specifying the form it should take. Consequently, the appeal was dismissed based on the lack of merit in the Revenue's contentions.