2022 (10) TMI 292 - AT - Customs

Benefit of nil rate of Basic Customs Duty (BCD) - Free Trade agreement - country of origin - Notification No. 046/2011-Cus dated 01.06.2011 - import of goods, declared to be of Indonesia origin - 22 K assorted jewellery (481 pieces) - denial of benefit on the sole ground that incomplete information to the questionnaire has been provided - authenticity of Country of origin Certificate - HELD THAT - Perusal of the Notification shows that such benefit is available to the importer if the importer proves to the satisfaction of the Deputy Commissioner or Assistant Commissioner of Customs, or as the case may be, that the goods in respect of which the benefit of this exemption is claimed are of the origin from the countries as mentioned in Appendix I or Appendix II, as the case may be , in accordance with provisions of the Customs Tariff Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of Association of Southeast Asian Nations (ASEAN) and the Republic of India Rules, 2009, published in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 189/2009-Customs (NT), dated the 31st December 2009. Apparently and admittedly, the Customs Authority while verifying the origin of goods had issued a questionnaire and denied the benefit on the ground that the complete questionnaire was not answered by the appellant creating a doubt about the Country of origin Certificate. The perusal of the condition No. 7 (c), as above makes it clear that in case of such doubt about the authenticity of Country of origin Certificate i.e. in case where the certificate of origin is not acceptable to the Customs Authorities of the importing country, then the certificate has to be returned back to the issuing authority that too within a reasonable period duly informing the grounds for the denial of preferential tariff treatment. Admittedly and apparently, the said procedure has not been followed by the Department. The impugned Notification is a kind of preferential trade arrangement between States of Association of Southeast Asian Nations (ASEAN) and the Republic of India in order to facilitate free movement of trade. If the exemption sought under the applicable rules is denied on one or the other pretext that too based merely on assumptions and presumptions, it will hamper the free movement of trade between agreeing nations. Same is highly uncalled for and would rather render the entire exemption Notification otiose more so when on the face of the record, the Certificate of Origin is otherwise not disputed - the substantial benefit as that of exemption from payment of duty shall not be denied merely on procedural lapse. The sole ground for denying the benefit of duty exemption despite the valid Country of origin Certificate is not sustainable - Appeal allowed.

Summary

Issues:
- Denial of duty exemption benefit based on incomplete information about the origin of imported goods
- Interpretation of Notification No. 046/2011-Cus dated 01.06.2011 regarding the duty exemption for goods imported from Indonesia
- Compliance with the rules for proving the origin of goods under the Preferential Trade Agreement between ASEAN countries and India
- Validity of the Country of Origin Certificate and the procedural requirements for accepting it

Analysis:
- The appellant, an importer, filed a Bill of Entry for clearance of goods declared as 22 K assorted jewelry from Indonesia to claim a nil rate of Basic Customs Duty under Notification No. 046/2011-Cus dated 01.06.2011. The department raised concerns about incomplete information provided by the appellant regarding the origin of the goods, leading to a denial of the duty exemption benefit.
- The appellant argued that the goods were purchased as 22 K gold jewelry from Indonesia, supported by a Country of Origin Certificate as required by the relevant rules. The appellant contended that the denial of the benefit based on incomplete questionnaire responses was unjustified, as the information not provided was not crucial for verifying the authenticity of the Country of Origin Certificate.
- The department maintained that mere presentation of the Certificate of Country of Origin was insufficient to claim the duty exemption. The Assessing Officer issued a questionnaire to verify the authenticity of the certificate, and the appellant's incomplete responses led to the denial of the benefit.
- The Tribunal analyzed Notification No. 046/2011-Cus dated 01.06.2011, which exempts goods imported from countries listed in the Appendix from excess customs duty. The Tribunal noted that the benefit is available if the importer proves the origin of the goods as per the rules under the Preferential Trade Agreement between ASEAN countries and India.
- The Tribunal highlighted the procedural requirements for accepting the Country of Origin Certificate, emphasizing that in case of doubt, the certificate should be returned to the issuing authority within a reasonable period. The Tribunal found that the department did not follow this procedure despite the appellant providing the necessary documents.
- Referring to a previous judgment, the Tribunal emphasized that denial of duty exemption based on assumptions and procedural lapses would hinder free trade movement between nations. The Tribunal concluded that the denial of the benefit despite a valid Country of Origin Certificate was not justified, setting aside the order and allowing the appeal.