2024 (5) TMI 144 - AT - Customs

Import of Alkalised Cocoa Powder from Malaysia - Denied FTA benefit of Notification No. 46/2011-Cus - Certificate of origin - wrongly availing custom duty benefit - differential duty - Penalty - HELD THAT - We find that the benefit of Notification issued under FTA was denied by the Custom only on the ground that there was an intelligence that the condition of value addition of 35% in respect of cocoa powder supplied from Malaysia is not fulfilled however to support this allegation no verification was carried out by the department. Since the facts and charges levelled in those cases and in the present case are identical, the ratio in the Shriazee Traders 2024 (1) TMI 781 - CESTAT AHMEDABAD and M/s. BDB Exports Pvt. Ltd Vs. CC 2016 (9) TMI 1087 - CESTAT KOLKATA are directly applicable in the present case. Therefore, following the same in the present case also, the impugned orders are not sustainable. Accordingly, the same is set aside. Appeal is allowed.

Issues Involved:

1. Denial of FTA benefit u/s Notification No. 46/2011-Cus dated 01.06.2011.
2. Allegation of non-compliance with the 35% value addition condition.
3. Validity of the certificate of origin and lack of independent verification.
4. Invocation of extended period of limitation u/s 28(4) of the Customs Act, 1962.

Summary:

1. Denial of FTA Benefit:

The appellant imported Alkalised Cocoa Powder from Malaysia and claimed the benefit of Notification No. 46/2011-Cus dated 01.06.2011. The customs authority denied this benefit on the ground that the 35% value addition condition was not met. The adjudicating authority confirmed a differential duty of Rs. 8,55,792/- and imposed an equal penalty, which was upheld by the Commissioner (Appeals).

2. Allegation of Non-Compliance with 35% Value Addition Condition:

The department's denial was based on intelligence suggesting non-compliance with the 35% value addition requirement. However, no verification was carried out to support this allegation. The appellant argued that the certificate of origin was not independently verified, and similar cases were decided in favor of the assessee, citing judgments such as Shirazee Traders and Global Exim.

3. Validity of Certificate of Origin and Lack of Independent Verification:

The tribunal noted that the denial of the FTA benefit was solely based on presumptions and assumptions without any verification of the certificate of origin. It emphasized that the customs authority must follow the verification process outlined in Annexure-III of the Customs Tariff (determination of Origin of Goods under the Preferential Trade Agreement between India and Malaysia) Rules, 2011. The tribunal found no evidence of such verification in the present case, rendering the denial of the benefit unsustainable.

4. Invocation of Extended Period of Limitation:

In the case of Global Exim, the tribunal addressed the issue of limitation, noting that the show cause notice was issued beyond the normal period of limitation. The tribunal held that the demand was time-barred, as the appellant had no control over the issuance of the certificate of origin by the Malaysian authority and had complied with all documentary requirements at the time of filing the Bill of Entry.

Conclusion:

The tribunal concluded that the impugned orders were not sustainable due to the lack of verification of the certificate of origin and the time-barred nature of the demand. The appeal was allowed with consequential relief, setting aside the orders of the lower authorities.

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