2017 (9) TMI 398 - AT - Customs

Preferential rate of duty - import of Gold jewellery - N/N. 46/2011-cus dt. 01/06/2011 as amended read with N/N. 189/2009-Cus(NT) dt. 31/12/2009 - The assessing officer denied the exemption holding that the impugned gold jewellery do not qualify as originating goods in terms of Rule 4 of Customs Tariff (Determination of origin of Goods under the Preferential Trade Agreement between the Government of Member States of the Association of Southeast Asian Nationas (ASEAN) and the Republic of India) Rules, 2009 - The bone of contention of the Revenue in this case is regarding the non-maintenance of records by the supplier M/s. PT. Antam. It is also the Revenue s case that they sought retroactive check as per Rule 16 of the said Rules which communicated that the supplier M/s. PT. Antam has not maintained any acceptable inventory records to ascertain the origin of gold used for manufacturing of imported jewellery - whether respondent herein is eligible for preferential rate of duty in terms of Notification No.46/2011-cus dt. 01/06/2011 as amended read with Notification No.189/2009-Cus(NT) dt. 31/12/2009 for import of gold jewellery of 5.0244 kgs. or otherwise? Held that - the adjudicating authority, as rightly held by the first appellate authority, cannot go beyond the provisions of notifications and come to a conclusion based upon an assumption and presumption that the gold mined by the exporting country could not have been used by the supplier / manufacturer for producing the imported gold jewellery. The first appellate authority was correct in recording that notification provides for detailed verification process in case of reasonable doubt. It is on record, as stated by the Departmental representative that verification report received from the Indonesian authorities were inconsistent with each other, but there is no denial as to the fact that the said verification report clearly indicates that all the documents with imported consignments were genuine. In the absence of any suspicion on documents, the adjudicating authority could not have gone beyond the provisions of notifications. This kind of preferential trade agreement between the member state of ASEAN and the Republic of India is a reciprocal arrangement between the countries in order to facilitate free movement of trade, will be hampered if the exemption sought under the said Rules is denied on some pretext which are based on assumptions and presumptions and is uncalled for and would render the entire exemption notification otiose, more so when on the face of the records the documents like certificate of origin is not disputed. Benefit allowed - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Eligibility for preferential rate of duty under Notification No. 46/2011-Cus as amended, read with Notification No. 189/2009-Cus(NT) for the import of gold jewellery.
2. Compliance with the conditions of the notifications, including the maintenance of inventory records by the supplier.
3. Validity and verification of the certificate of origin issued by Indonesian authorities.

Issue-wise Detailed Analysis:

1. Eligibility for Preferential Rate of Duty:
The primary issue was whether the respondent was eligible for a preferential rate of duty for importing 5.0244 kgs of gold jewellery under Notification No. 46/2011-Cus and Notification No. 189/2009-Cus(NT). The respondent had claimed a 'Nil' Basic Customs Duty (BCD) and 0% Countervailing Duty (CVD) based on these notifications. The assessing officer initially denied the exemption, arguing that the gold jewellery did not qualify as "originating goods" under the Rules. However, the first appellate authority allowed the appeal, stating that the respondent had complied with all relevant legal provisions and produced a valid certificate of origin from the Indonesian authorities.

2. Compliance with Notification Conditions:
The Revenue argued that the supplier did not maintain any inventory records to indicate the origin of the gold ore or gold dore bars used in manufacturing the jewellery, as required under Rule 12 of Notification No. 189/2009-Cus(NT). They contended that the supplier's inability to maintain acceptable inventory records made it impossible to determine the origin of the gold used. However, the first appellate authority found that the lower adjudicating authority's conclusion was not backed by evidence and that the origin of the product could not be decided based on assumptions. The appellate authority emphasized that the supplier was a state-owned company in Indonesia and that the gold ore was sourced from their own mines, thus fulfilling the conditions for preferential duty.

3. Validity and Verification of Certificate of Origin:
The Revenue also raised doubts about the validity of the certificate of origin, citing inconsistencies in verification reports from Indonesian authorities. Despite these inconsistencies, the appellate authority noted that the certificate of origin was not disputed and that the documents were verified as genuine by the issuing authorities. The authority held that the adjudicating officer could not deny the benefit of the notification based on assumptions about the mining capacity of Indonesia or the supplier's production capacity. The appellate authority concluded that the notification provides a detailed verification process for any reasonable doubt, and the department had not placed any evidence to refute the documents submitted by the respondent.

Conclusion:
The appellate authority upheld the respondent's eligibility for the preferential rate of duty, stating that all required documents were genuine and that the supplier's state-owned status and mining operations in Indonesia were not disputed. The authority found no merit in the Revenue's appeal and directed the assessing officer to assess the Bill of Entry by extending the claimed exemption within one week from the date of the order. The judgment emphasized that assumptions and presumptions could not override the clear provisions and verification mechanisms provided in the notifications.