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TMI Blog2024 (5) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... er kinds from the supplier for inflating the value. It has been alleged that the appellant has exported the machine to the supplier for manufacturing of the goods in question for processing of the goods in question. We find that there is no bar in SAFTA that the appellant cannot export such machinery to a manufacturer located in Bangladesh for manufacturing of the goods in question. Therefore, on the basis of that it cannot be alleged that the appellant has violated any provisions of SAFTA under the Customs Act, 1962. It is not the case of the Revenue that the exporter in Bangladesh have not processed the goods and cleared as such to the appellant. It is a fact on record that the supplier in Bangladesh has imported crude oil form Malayasia/Indonesia and processed the same and exported to the appellant RBD Refined Palm Olein, therefore, it cannot be alleged that the supplier/exporter has not processed the goods. We further take note of the fact that it is not the case of the Revenue that the certificate issued by the exporter is not genuine or correct and the verification report given by Deputy Director, EPB, Bangladesh is not correct. The certificate of country of origin and the ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs duty on these items in 2018. As per intelligence inputs, the price of Refined Palm Olein/RBD Palm Olein supplied from Bangladesh was intentionally inflated by the Bangladeshi supplier, in connivance with the Indian importers, in order to fraudulently show the prescribed minimum domestic value addition that is supposed to be done in the exporting state Bangladesh, as per SAFTA Rules of Origin. 4. Contemporaneous imports of the same product, imported directly into India from Malyasia and Indonesia by different Indian importers, including the present appellant showed contemporaneous import prices less by around 300 USD to 500 USD per MT. The prices of these direct imports (into India) were also in sync with prevailing international prices, as well as the Tariff Value notified by the Government of India. The corroborated intelligence inputs that the prices were being artificially inflated in respect of imports routed through Bangladesh, in order to claim inadmissible Customs duty exemption under SAFTA Agreement. 5. On the basis of the said intelligence, the premises of the appellant were searched and certain documents were seized and recovered and voluntary statements of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SG Oil and it is also alleged that against the tariff value of RFD Palm Oil fixed by the Indian Government between USD 597 to USD 709, in respect to the subject imports made by the appellant from SG Oils, the value declared was ranging between USD 925 to USD 1125. 10. It is his contention that in terms of SAFTA Rules of Origin, the supplier of the goods/exporter has to issue certificate of country of origin that they have processed the goods and have done value addition in terms of SAFTA Rules and exported the same. It is his submission that there is no dispute with regard to country of origin certificate has been issued by the exporter and the same has been verified by the Revenue from the exporting contracting state Bangladesh, who after verification issued the verification report and found that the exporter has manufactured and exported the goods in terms of SAFTA Rules. Therefore, it is his contention that the benefit of exemption Notification cannot be denied to the appellant. 11. On the other hand, the Ld.AR for the department supported the impugned order and submitted that the same goods if imported from Malyasia and Indonesia directly are having much lower value. Moreover, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cleared as such to the appellant. It is a fact on record that the supplier in Bangladesh has imported crude oil form Malayasia/Indonesia and processed the same and exported to the appellant RBD Refined Palm Olein, therefore, it cannot be alleged that the supplier/exporter has not processed the goods. 19. Further, the supplier has issued certificate of country of origin and the same has been verified by the Revenue from Deputy Director, EPB, Bangladesh, who has verified and certified that the certificate issued by the exporter in Bangladesh are genuine and correct. 20. For better appreciation, the certificate issued by Deputy Director, EPB, Bangladesh is extracted below:- 21. We further take note of the fact that it is not the case of the Revenue that the certificate issued by the exporter is not genuine or correct and the verification report given by Deputy Director, EPB, Bangladesh is not correct. The certificate of country of origin and the verification report cannot be doubted unless and until, the same is proved fake by the Revenue. No such allegation in the show cause notice that the certificate of country of origin provided by the exporter and the verification report are fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as follows :- 9. Firstly, on the facts we find that the assessee had given to the Sponsoring Ministry its entire Project Report. In that report they had indicated that for the expansion of the fertilizer project they needed an extra item of capital goods, namely, 6MW Captive Power Plant. In their application, the assessee had made it clear that the fertilizer project was dependant on continuous flow of electricity, which could be provided by such Captive Power Plant. Therefore, it was not open to the Revenue to reject the assessee s case for nil rate of duty on the said item, particularly when the certificate says so. In the judgment of this Court in the case of Tullow India Operations Ltd. (supra), this Court held that essentiality certificate must be treated as a proof of fulfilment of the eligibility conditions by the importer for obtaining the benefit of the exemption notification. We may add that, the essentiality certificate is also a proof that an item like Captive Power Plant in a given case could be treated as a capital goods for the fertilizer project. It would depend upon the facts of each case. If a project is to be installed in an area where there is shortage of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. The issue involved is the installed capacity of the appellant vis- -vis their eligibility to Notification Nos. 24/91 and 5/93-C.E. The concession of notification is available when the installed capacity is not exceeding 1,98,000 T.P.A. It is admitted fact that the Director of Industries, Madhya Pradesh, who is designated as a competent authority in the Notification itself has more than once certified the installed capacity of the appellant to be 1,98,000 T.P.A. As observed by the Hon ble Supreme Court in normal circumstances such a certificate is to be acted upon. The Hon ble Supreme Court directed this Tribunal to examine the various material relied on by the Revenue to contest the appellant s claim for exemption. We perused of the impugned order which was passed after the specific direction of this Tribunal to approach the competent authority for re-examining all the facts, material, evidence, furnished by both the sides to certify the installed capacity. As per the direction of this Tribunal the Director of Industries was addressed by the Adjudicating Authority on 5-9-2002 along with copies of 11 documents (Para 12 of the impugned order) which are relied upon by the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down by the Courts certificates of origin produced by the Appellant cannot be discounted. There is no evidence on record that designated authority of Bangladesh under SAPTA Rules was maliciously involved with the supplier of cloves and the Appellant. 5 . Adjudicating authority has relied upon some indigenous sources to conclude that neither the imported goods are processed cloves nor the value addition to extent claimed is justified. Appellant asked for the cross-examination of Shri Sunil Doletram Chhabria, Shri C.J. Jose, Dr. J. Chakraborty and Shri Pratab Chakroborty as per Para 18 of Appellants reply dated 5-12-2005 to the show cause notice dated 26- 8-2005. These facts have been duly reflected in the submissions of the main appellant in the Order-in-Original dated 28-2-2007 but the request of cross-examination of the witnesses has been conveniently avoided by the Adjudicating Authority and no observations are given as to why request of the appellant for cross-examination is not acceptable. In the absence of cross-examination the evidentiary value of the relied upon witnesses is lost. Secondly, Shri Doletram T. Chhabria is also an exporter and importer of spices whose busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freedom of trade, commerce and intercourse throughout the territory of India. It is argued that article 304(a) cannot come to the rescue of the State for justifying this levy inasmuch as article 304(a) provides that the legislature of a State may by law impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced. In support of this contention, the learned counsel has relied on State of Madhya Pradesh v. Bhailal Bhai, Firm A.T.B. Mehtab Majid and Company v. State of Madras and State of Rajasthan v. Ghasiram Mangilal. On the other hand, Mr. Goswami, learned counsel for the State of Assam, contends that there is no discrimination between onion imported from outside and onion grown in the State of Assam inasmuch as both are subjected to levy of sales tax. The argument in this connection has centred round the definition of the word processed . It is urged by the learned counsel for the petitioner that onion cannot be processed inasmuch as it is not subjected to any mechanical process after it has been removed from the earth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value addition, after satisfying about the nature of processing activities done by the supplier and the extent of expenses incurred by such supplier in carrying out the activities of cleaning, handling, storage, sorting, packing, etc. 6 . In view of the above observations and the settled proposition of law certificates of origin issued by the designated authority under SAPTA cannot be rejected which is the only requirement for the satisfaction of the Customs department under Notification No. 105/99- Cus., dated 10-8-1999. Once on merit the case goes in favour of the main appellant, there is no question of confiscation of imported goods and imposition of penalties upon the appellants. 7 . Appeals filed by the Appellants are allowed with consequential relief, if any. 23. Further, the said decision of the Tribunal was followed by this Tribunal in the case of Romil Jewelry Ors. vs. Commissioner of Customs, Air Cargo Complex, Mumbai vide Final Order No.A/86251- 86265/2023 dated 29.08.2023, wherein this Tribunal has observed as under:- 9. In this context and sans any allegation of collusive arrangement of buyer and seller, statements and other documentation are not really evidentiary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation of non-compliance and the eligibility arises from certification that has been issued as adhering to rule 6 or rule 7 of Interim Rules of Origin. There is also no allegation that the stipulation of final process in rule 6(b) of Interim Rules of Origin have not been complied with. Likewise, there is no allegation pertaining to change in tariff classification. The issue is, thus, all about local value added content which is prescribed as 20% or more. 13. The formula in rule 6(d) is verifiable only upon availability of value of non-originating materials which is markedly absent in the investigation as narrated in the show cause notices and impugned orders. Ascertainment through domestic agencies or purported admissions in statements recorded by investigation agencies cannot substitute for this essential foundation. Rule 14 of Interim Rules of Origin is again clear on the validity and sanctity of certificate of origin issued by designated Government Authority for determination of eligibility at the importer end. 14. The Operational Certification Procedure is not only elaborate but also sets out details that can lead to rejection of certificate for nonconformity. It is not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made in the impugned order. Further, we note that the valuation of Zinc Ingots as ascertained by the impugned order has no relevance to question the certificate issued by the Competent Authority of Sri Lankan Government. As such, we find the nonfulfilment of condition under Rule 7(a) could not be invoked by the Original Authority, in the facts of this case. Further, it is also recorded by the Original Authority that the Director of the importing Indian company in the statements gave details which supported the allegation of incorrect data submitted by the Sri Lankan supplier. We note that there is no such admission by the Director in his statements. Even otherwise, we note that certificate of origin and the data submitted to get such certificates cannot be questioned based on statements of the importers. We find no record to the effect that the country of origin certificates issued by the Sri Lankan Government has been questioned by the Indian Authorities and follow up after import was done in order to cancel or recall the same. We note that the issue regarding country of origin certificate and questions of bonafideness was discussed in the bilateral meeting of working group bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the supplier in the manufacture of impugned goods in Sri Lanka. Holding that one of the input and the final product fall under the same four digit classification, it was concluded that the provisions of the Rule 7 have not been fulfilled. More specifically, reference was made by the Original Authority to conditions (b) and (d) of the Rule 7. This is based on the certain reports received from Sri Lankan Customs. The Original Authority while conceding the point that the assessment made by Sri Lankan Customs at the time of import of non-originating goods from China cannot be put to question here in India, proceeded to consider certain reports given by Sri Lankan Customs with reference to classification of one of the non-originating inputs. The classification of such input is not in the domain of the assessing officer in India. No opinion or conclusion can be formed based on the assessment, if any, carried out by Sri Lankan Customs. Denial of concession even when valid certificates of origin were submitted (and reiterated) is not legally tenable. 16. In re BDB Exports Pvt Ltd, it has been held that 4. Heard both sides and perused the records of the case. The issue involved in the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us flow of electricity, which could be provided by such Captive Power Plant. Therefore, it was not open to the Revenue to reject the assessee s case for nil rate of duty on the said item, particularly when the certificate says so. In the judgment of this Court in the case of Tullow India Operations Ltd. (supra), this Court held that essentiality certificate must be treated as a proof of fulfilment of the eligibility conditions by the importer for obtaining the benefit of the exemption notification. We may add that, the essentiality certificate is also a proof that an item like Captive Power Plant in a given case could be treated as a capital goods for the fertilizer project. It would depend upon the facts of each case. If a project is to be installed in an area where there is shortage of electricity supply and if the project needs continuous flow of electricity and if that project is approved by the Sponsoring Ministry saying that such supply is needed then the Revenue cannot go behind such certificate and deny the benefit of exemption from payment of duty or deny nil rate of duty. To the said effect is the judgment of the Calcutta High Court in the case of Asiatic Oxygen Ltd. (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtified the installed capacity of the appellant to be 1,98,000 T.P.A. As observed by the Hon ble Supreme Court in normal circumstances such a certificate is to be acted upon. The Hon ble Supreme Court directed this Tribunal to examine the various material relied on by the Revenue to contest the appellant s claim for exemption. We perused of the impugned order which was passed after the specific direction of this Tribunal to approach the competent authority for re-examining all the facts, material, evidence, furnished by both the sides to certify the installed capacity. As per the direction of this Tribunal the Director of Industries was addressed by the Adjudicating Authority on 5-9-2002 along with copies of 11 documents (Para 12 of the impugned order) which are relied upon by the Revenue to contest the correctness of certificate issued by the competent authority. In response, the Commissioner of Industries vide his letter dated 17-6-2003 categorically stated that the installed capacity of the appellant unit is 1,98,000 T.P.A. during the impugned period. He also observed that with reference to the various evidences submitted by the Revenue his office is in agreement with the clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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