2024 (5) TMI 282 - AT - Customs

Denial of FTA benefit under Notification 46/2011-Cus - Import of Alkalised Cocoa Powder from Malaysia - Condition of value addition of 35% - Verification of Certificate of Origin - Duty demand - 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 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. However, all the cases made out on the same line have been decided in favour of the assessee by extending the benefit of Notification 46/2011. Therefore, the issue is no longer res-integra. Since the facts and charges levelled in M/s. BDB Exports Pvt. Ltd Vs. CC 2016 (9) TMI 1087 - CESTAT KOLKATA and R.S. Industries (Rolling Mills) Ltd. Vs. CCE 2017 (11) TMI 1256 - CESTAT NEW DELHI in the present case are identical and are directly applicable in the present case. Therefore, following the same, the impugned order is not sustainable. Accordingly, the same is set aside. Appeal is allowed.

Summary

Issues Involved:
1. Eligibility for FTA benefit under Notification No. 46/2011-Cus and Notification No. 53/2011-Cus.
2. Compliance with the condition of value addition of 35%.
3. Validity of the certificate of origin.
4. Invocation of extended period of limitation u/s 28(4) of the Customs Act, 1962.

Summary:

1. Eligibility for FTA benefit under Notification No. 46/2011-Cus and Notification No. 53/2011-Cus:
The appellant imported Alkalised Cocoa Powder from Malaysia and claimed the benefit of FTA under Notification No. 46/2011-Cus dated 01.06.2011 and Notification No. 53/2011-Cus dated 01.07.2011. The Customs authorities denied this benefit, alleging non-compliance with the 35% value addition requirement.

2. Compliance with the condition of value addition of 35%:
The department's denial was based solely on intelligence reports without independent verification. The adjudicating authority confirmed the differential duty and imposed an equal penalty. The Commissioner (Appeals) upheld the order, leading to the present appeal.

3. Validity of the certificate of origin:
The appellant argued that the certificate of origin was not independently verified by the Customs authorities, and thus, the benefit was wrongly denied. Previous judgments, such as Shirazee Traders and Global Exim, highlighted that the denial of benefits based on presumptions without verification is not maintainable. The Tribunal noted that the Customs authorities failed to request a retroactive check from the Malaysian authorities as required under Annexure-III of the Customs Tariff Rules, 2011.

4. Invocation of extended period of limitation u/s 28(4) of the Customs Act, 1962:
In the case of Global Exim, the Tribunal found that the demand of duty was time-barred as the show cause notice was issued beyond the normal period of limitation. The Tribunal emphasized that the appellant complied with the documentation requirements, and any doubts by Customs should have been addressed within the normal limitation period.

Conclusion:
The Tribunal concluded that the denial of FTA benefits was unsustainable due to lack of verification and reliance on presumptions. The impugned order was set aside, and the appeal was allowed with consequential relief.

(Order pronounced in the open court on 01.05.2024)