2024 (1) TMI 781 - AT - Customs

Import of cocoa powder under free trade agreement - origin of goods - whole case of the department is based on presumptions and assumptions that all the above might have transpired in their cases also vis-a-vis the cases which were investigated by the DRI - HELD THAT - In the present case, the lower authorities have confirmed order simply on the basis of a communication of DRI which pertained to different parties about which verification was done. In the present instance, there is no evidence of department having conducted any verification of the certificate of origin as is the requirement under Annexure-III the Customs Tariff (determination of Origin of Goods under the Preferential Trade Agreement between the Governments of the Republic of India and Malaysia) Rules, 2011. It is found 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 - it is found that this fails to comply with the requirement of the Annexure-III (ibid) of the relevant free trade agreement. Appeal is allowed.

Summary

Issues:
The judgment involves the issue of import of cocoa powder covered under a free trade agreement, verification of certificate of origin, presumption and assumptions made by the department, compliance with Customs Tariff Rules, and the requirement of retroactive check for origin verification.

Import of Cocoa Powder:
The appellants imported cocoa powder covered under a free trade agreement, with the certificate of origin showing it was wholly obtained in Malaysia. Customs Authority allowed clearance based on the documents. However, subsequent investigation raised suspicions about the authenticity of the certificates issued by Malaysian authorities due to non-disclosure of cost data by the manufacturer. The show cause notice was issued, and lower authorities confirmed the order based on assumptions from other cases.

Presumptions and Assumptions:
The appellant argued that the department's case was based on presumptions and assumptions from other cases investigated by DRI. The confirmation of duty based on such presumptions was deemed not maintainable in law. The appellant pointed out that in similar cases investigated by DRI, proceedings were eventually dropped, indicating the lack of concrete evidence.

Compliance with Customs Tariff Rules:
The judgment highlighted the requirement under Annexure-III of the Customs Tariff Rules for origin verification in cases of preferential trade agreements. It was noted that the department did not conduct any verification of the certificate of origin as required by the rules. The absence of a verification report for the appellant failed to comply with the provisions of the relevant free trade agreement.

Retroactive Check for Origin Verification:
To displace the certificate of origin issued by Malaysian authorities, a verification process involving a retroactive check by Customs Authorities of India was necessary. The judgment emphasized the importance of requesting a verification report from the issuing authorities to ensure compliance with the free trade agreement. Since no such verification report was brought on record for the appellant, it was concluded that the requirement of Annexure-III of the Customs Tariff Rules was not met.

Conclusion:
The appeal was allowed, as it was found that the lower authorities confirmed the order without proper verification of the certificate of origin as required by the Customs Tariff Rules. The judgment emphasized the need for compliance with the provisions of the free trade agreement and the necessity of conducting a retroactive check for origin verification to ensure the authenticity of certificates of origin.