2024 (4) TMI 123 - AT - Customs

Denial of benefit of N/N. 46/2011-Cus dtd. 01.06.2011, as amended - concessional rate of Customs duty benefit on the basis of county of Origin Certificate - Malaysian Origin goods - HELD THAT - In the present disputed matter appellant has claimed the goods to be originating in Malaysia as provided under Rule 5 of the AIFTA Rule i.e. not wholly obtained or produced. In respect of all the subject consignments, the appellants produced certificate of origin in Form A-1 issued by the Ministry of Internal Trade and Industry (MITI) of Government of Malaysia showing the Regional Value content of the subject goods as more than 35% CTSH . However case of the department is that intelligence gathered by the DRI officers suggested that the said RVC was misstated as the overseas suppliers and goods also not origin of Malaysia. It is also noticed that in the disputed matter the Revenue without getting confirmation from the Malaysia Government about their doubt of authenticity of the country of origin certificate and activity of respective suppliers of the goods proceeded to deny the benefit in respect of COOs issued by Suppliers to the appellants is not genuine and consequently denied Exemption Notification No. 46/2011, dated 1-6-2011 and consequential demand was confirmed - as per the documents submitted by the appellants it prima facie appears that there is no doubt on the authenticity of the country of origin certificate issued and import of the goods by Appellants on the basis of said COOs. However, to clear any doubt it is the burden on the department to get the verification from the Malaysia Government regarding authenticity of Certificate of origin which has not been discharged by the department in the present matter. Without checking the authenticity of certificate of origins, the certificate of origins cannot ne discarded and on that basis benefit cannot be denied - in the interest of justice, one chance is given to the department to get the verification from concerned authorities about the genuineness of the certificate of origin issued by supplier of Malaysia to importers, thereafter to pass a fresh order. The impugned orders are set aside - Appeals are allowed by way of remand to adjudicating authority for passing fresh orders preferably within a period of six months from the date of this order.

Summary

Issues:
The judgment involves multiple appeals filed against Orders passed by the Adjudicating Authority regarding the denial of Customs duty benefit on imported goods declared as 'Natural Cocoa Powder' due to doubts about the country of origin.

Issue 1: Country of Origin Verification
The appellants imported goods claiming the benefit of Customs duty exemption based on a Certificate of Origin from Malaysia. However, investigations revealed that the goods were diverted from Ghana, not Malaysia, leading to a dispute over the minimum qualifying value content required for the exemption. Show cause notices were issued, demands confirmed, and penalties imposed. The appellants challenged these decisions before the Tribunal.

Issue 2: Compliance with Rules of Origin
The appellants argued that the Indian Customs should accept the Certificate of Origin issued by the Malaysian authority and follow the prescribed procedure for rejecting it if doubts arise. They contended that they complied with Notification No. 46/2011-CUS and submitted valid certificates as per the Rules of Origin.

Issue 3: Department's Position
The Revenue reiterated the findings of the impugned orders, supporting the denial of the exemption benefit based on the doubts raised regarding the authenticity of the country of origin certificate.

Judgment Summary:
The Tribunal examined the relevant Rules of Origin and found that the appellants claimed the goods to be originating in Malaysia under Rule 5 of the AIFTA Rules. Despite the department's doubts, the appellants provided certificates showing the Regional Value content as required. The Tribunal noted that the department did not verify the authenticity of the certificates with the Malaysian Government before denying the benefit. It was deemed necessary for the department to seek verification to substantiate their doubts. Therefore, the impugned orders were set aside, and the appeals were allowed for a remand to the adjudicating authority for fresh orders within six months.