2025 (2) TMI 751 - AT - Customs

Applicability of Anti-Dumping Duty (ADD) - Origin of imported consignments of PVC Flex Banner - Malaysian origin or Chinese origin - admissibility and reliability of statements and documents provided by witnesses - cross-examination of only one witness allowed while that of otheres were denied - applicability of section 138B of the Customs Act - HELD THAT - The entire case has been built up by the investigation on the basis of the statements recorded and documents submitted by these persons. The appellants have questioned the veracity of these documents as the originals of these documents were never given to them. The appellants also submitted that the persons who handed over the documents never disclosed the origin of the documents and from where they got them. Thus if the Department wanted to rely upon the statements recorded from them and the documents submitted by them then the Department should have allowed cross examination of all those persons. In stead cross examination only one person by name Shri Arup Bandhu Guha was conducted. Thus the statements recorded and documents submitted by all persons other than Shri Arup Bandhu Guha are not admissible as evidence in the adjudication proceedings as they have not fulfilled the tests prescribed in Section 138B of the Customs Act 1962. By relying on the decision of the Hon ble Calcutta High Court in Ajay Saraogi Vs. Union of India 2023 (9) TMI 733 - CALCUTTA HIGH COURT it is held that the statements given and documents recovered from those persons who have not been cross examined cannot be relied upon in the adjudication proceedings in this case. Regarding the statements recorded and the documents submitted by Shri Arup Bandhu Guha whose cross examination was conducted it is observed that during the cross examination Shri Guha has given vague and unclear answers to the questions put by the appellants. Regarding the origin of the goods we observe that the appellants have produced AIFTA Certificate of Origin which was issued by the Ministry of International Trade Industry Malaysia. It is observed that the investigation has not established that the said Certificates are not genuine. The investigation only alleges that the said certificates have been obtained by influence but it is observed that the said claims were not supported by any evidence. In all the swift transfer messages name of the overseas supplier of Malaysia was given. We find that there is no allegation that the money was transferred to supplier appearing in the alleged master bill of lading. The entire payments were remitted to said overseas supplier and there is no evidence that said supplier had not received the payments remitted by the appellants. Thus the evidences available on record indicate that the Malaysian exporter was the actual beneficiary of the money transfer. The demands of Anti-Dumping Duty Customs Duty and interest confirmed in respect of all the ten consignments imported by the appellants is legally not sustainable and accordingly the same are set aside. Since the demands of duty are not sustainable the question of imposition of penalties does not arise. Conclusion - The evidences available on record indicate that the goods are of Malaysian origin and thus no Anti-Dumping Duty is payable on the 10 consignments imported by the appellant. The appellant is eligible for the benefit of concessional rate of duty provided under Customs N/Ns.46/2011-Cus. dated 01.06.2011 and 053/2011-Cus. dated 01.07.2011. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the imported consignments of PVC Flex Banner were of Malaysian origin or Chinese origin, impacting the applicability of Anti-Dumping Duty.
The admissibility and reliability of statements and documents provided by witnesses, especially in the absence of cross-examination.
The legality of the demands for Anti-Dumping Duty, Customs Duty, interest, and penalties imposed on the appellants based on the alleged mis-declaration of the country of origin.
The appellants' eligibility for concessional duty rates under specific Customs Notifications.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Origin of Goods

Legal Framework and Precedents: Customs Notification No. 82/2011-Cus. mandates Anti-Dumping Duty on imports from China, while Notifications Nos. 46/2011-Cus. and 053/2011-Cus. provide exemptions for goods of Malaysian origin.
Court's Interpretation and Reasoning: The Tribunal found that the investigation did not adequately prove that the goods were of Chinese origin. The appellants produced AIFTA Certificates of Origin from Malaysia, which were not proven to be fraudulent.
Key Evidence and Findings: The Tribunal noted the lack of independent evidence to support the claim that the goods were Chinese. Payment records showed transactions to Malaysian accounts, supporting the appellants' claim of Malaysian origin.
Application of Law to Facts: The Tribunal applied the legal principle that the burden of proof lies with the party making the claim. In this case, the Department failed to provide sufficient evidence to counter the appellants' documentation.
Treatment of Competing Arguments: The Department's reliance on statements and documents from witnesses who were not cross-examined was deemed insufficient.
Conclusions: The Tribunal concluded that the goods were of Malaysian origin, exempting them from Anti-Dumping Duty.

Issue 2: Admissibility of Evidence

Legal Framework and Precedents: Section 138B of the Customs Act requires cross-examination for the admissibility of statements in adjudication proceedings.
Court's Interpretation and Reasoning: The Tribunal emphasized the importance of cross-examination to uphold principles of natural justice, citing the Calcutta High Court's decision in Ajay Saraogi Vs. Union of India.
Key Evidence and Findings: Only one witness was cross-examined, and his testimony was found to be vague and unreliable. The other witnesses' statements were inadmissible due to the lack of cross-examination.
Application of Law to Facts: The Tribunal determined that the lack of cross-examination rendered the evidence from three witnesses inadmissible.
Treatment of Competing Arguments: The Tribunal rejected the Department's argument that the statements and documents were sufficient without cross-examination.
Conclusions: The Tribunal excluded the unexamined witnesses' statements from consideration, undermining the Department's case.

Issue 3: Legality of Duty and Penalties

Legal Framework and Precedents: The Customs Act provisions for duty demands and penalties require a valid basis for claims of mis-declaration.
Court's Interpretation and Reasoning: The Tribunal found that the demands and penalties were based on insufficient evidence and thus legally unsustainable.
Key Evidence and Findings: The Tribunal noted the absence of credible evidence proving mis-declaration of the country of origin.
Application of Law to Facts: The Tribunal applied the principle that penalties cannot be imposed without a proven violation of law.
Treatment of Competing Arguments: The Tribunal dismissed the Department's claims due to the lack of admissible evidence.
Conclusions: The Tribunal annulled the duty demands and penalties, ruling them as baseless.

3. SIGNIFICANT HOLDINGS

Verbatim Quotes: "The statements recorded and documents submitted by all persons, other than Shri Arup Bandhu Guha, are not admissible as evidence in the adjudication proceedings as they have not fulfilled the tests prescribed in Section 138B of the Customs Act, 1962."
Core Principles Established: The necessity of cross-examination for the admissibility of evidence in customs adjudication; the burden of proof lies with the party alleging mis-declaration.
Final Determinations: The Tribunal set aside the demands for Anti-Dumping Duty, Customs Duty, interest, and penalties, affirming the appellants' eligibility for duty exemptions based on the Malaysian origin of goods.

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