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2024 (8) TMI 266 - AT - CustomsFTA benefit on import of Cocoa powder from Malaysia - Denial of benefit of Notification issued under FTA - denial 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 - HELD THAT - The issue is no longer res-integra - reliance placed in the case of SHIRAZEE TRADERS VERSUS C.C. -MUNDRA 2024 (1) TMI 781 - CESTAT AHMEDABAD where it was held that ' We find that to displace the certificate of origin issued by the Malaysian authority, which is in the nature of documentary evidence, the verification process by the Customs Authorities of India reference to issuing authorities to do a retroactive check is required. In the present instance no such request for verification report in respect of the appellant has been brought on record. We find that this fails to comply with the requirement of the Annexure-III (ibid) of the relevant free trade agreement.' Since the facts and charges levelled in those cases and in the present case are identical, the ratio of the above decision are directly applicable in the present case - the impugned orders are not sustainable - Appeal allowed.
Issues Involved:
1. Wrongful availing of custom duty benefit under FTA. 2. Compliance with value addition condition of 35%. 3. Validity and verification of the certificate of origin. 4. Invocation of extended period of limitation under Section 28 of the Customs Act, 1962. Issue-wise Detailed Analysis: 1. Wrongful Availing of Custom Duty Benefit Under FTA: The appellant imported Alkalised Cocoa Powder from Malaysia and claimed benefits under Notification No. 46/2011-Cus and Notification No. 53/2011-Cus, which provide preferential duty rates under the Free Trade Agreement (FTA). The customs authorities issued show cause notices alleging wrongful availing of these benefits due to non-compliance with the value addition requirement. 2. Compliance with Value Addition Condition of 35%: The core issue was whether the imported cocoa powder met the 35% value addition criterion stipulated under the FTA. The customs authorities based their allegations on intelligence reports suggesting non-compliance but did not conduct independent verification. The appellant argued that the certificate of origin was valid and should not be doubted without proper verification. 3. Validity and Verification of the Certificate of Origin: The appellant contended that the certificate of origin issued by Malaysian authorities was not independently verified by Indian customs. The customs authorities relied on a previous case (Morde Foods Pvt Ltd.) and similar cases where the certificate of origin was questioned. However, it was noted that the customs authorities did not follow the verification process outlined in Annexure-III of the Customs Tariff Rules, 2011, which mandates a retroactive check by the issuing authority when there is doubt about the certificate's authenticity. 4. Invocation of Extended Period of Limitation Under Section 28 of the Customs Act, 1962: The appellant argued that the demand for differential duty was time-barred as the show cause notice was issued beyond the normal period of limitation. They contended that all relevant facts were disclosed at the time of import, and there was no deliberate mis-declaration. The tribunal found merit in this argument, noting that the customs authorities could have issued the show cause notice within the normal limitation period if they had doubts. Judgment: The tribunal found that the customs authorities denied the FTA benefit based on assumptions and without proper verification of the certificate of origin. The tribunal cited several judgments, including the cases of Shriazee Traders and Global Exim, where similar issues were resolved in favor of the importers. The tribunal emphasized that the customs authorities did not comply with the retroactive check process required under the FTA rules and that the demand was time-barred. Conclusion: The tribunal allowed the appeals, setting aside the impugned orders and granting consequential relief to the appellant. The judgment highlighted the importance of proper verification procedures and adherence to statutory timelines in customs duty disputes.
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