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TMI Blog2024 (8) TMI 1347X X X X Extracts X X X X X X X X Extracts X X X X ..... er, when the test results were not acceptable to the appellants, facility for re-testing have not been conducted to provide a reasonable evidence on the test results, as per the guidelines prescribed by CBEC. However, the appellants have got the impugned goods tested in RCA Laboratories, Mumbai, which is approved by the FSSAI and the rest result in report dated 02.07.2018 provides the results of chemical testing, microbiological identification, tracing of residues and other trace metals, to conclude that it cannot recognize the country of origin of the tested samples on the basis of above factors. In the above factual matrix, it is opined that the test results obtained either by the Department or by the appellants do not provide any concrete evidence for determination of the origin of the imported goods. Hence it is not feasible to take the same for arriving at the conclusion of the disputed issue. From the documents/evidences produced to support the fact about the country of origin of the impugned goods is of Sri Lanka, it is opined that country of origin (COO) as stated by the appellants is correct, and there are no independent evidence adduced by the Department to prove against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Partner of the above said business entity (herein after, for short referred together as the appellants ), assailing Order-in-Appeal Nos. 640 to 642 (Gr. I IA)/ 2023 (JNCH)/Appeals dated 13.06.2023 (herein after, referred to as the impugned order ) passed by Commissioner of Customs (Appeals), Jawaharlal Nehru Custom House (JNCH), Mumbai-II Zone, Nhava Sheva, District Raigad, Maharashtra. 2.1 Briefly stated, the facts of the case are that the appellants herein, inter alia, have imported goods vide Bill of Entry (B/E) No. 3343458 dated 22.09.2017 declaring it as Sri Lanka Areca Nuts and classifying under Customs Tariff Item (CTI) 0802 8090 of the First Schedule to the Customs Tariff Act, 1975 with declared price of USD 351000 for 90 MTs under the cover of four invoices Nos.SAE007/2017 to SAE0010/2017, all dated 16.09.2017. The appellants had claimed the benefit of customs duty exemption under Notification No.26/2000-Customs dated 01.03.2000 under India Sri Lanka Free Trade Agreement (ISFTA). The duty exemption under this notification is subject to the condition that the importer shall prove to the satisfaction of the Deputy Commissioner of Customs/Assistant Commissioner of Customs, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not of Sri Lankan origin for evading 100% BCD applicable on impugned goods. However, on the request of appellants, the goods were provisionally allowed for release upon execution of bank guarantee of Rs. 2,98,04,497/- and the bond for full amount of assessable value. The quantum of bank guarantee was disputed by the appellants, which was decided by the Tribunal in its Final Order No. A/85007/2018 dated 12.01.2018 by reducing the amount of bank guarantee to 50% i.e., Rs.1,49,02,248/-. Upon fulfillment of the conditions of bank guarantee and execution of the bond, the jurisdictional Commissioner of Customs had provisionally released the impugned goods to the appellants. After completion of the investigation, Show Cause Notice (SCN) dated 20.09.2018 was issued on the appellants proposing for confiscation of imported goods by denying the exemption notification benefit claimed by the appellants and for finalizing the assessment of B/E, encashing the bank guarantee for the differential duty, if any, besides proposing for imposition of penalty on the appellants under the Customs Act, 1962. The SCN was adjudicated by the Additional Commissioner of Customs, Appraising Group-I IA, Nhava She ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Director General of Commerce, Sri Lanka. He further submitted that the department had not provided any evidence for such allegation fake COO, as their query for such verification of COOs addressed to the Indian authorities at Colombo by e-mail have also been replied by the Deputy Head, Economic Commercial wing, High Commission of India in Sri Lanka stating that COO issued by the Ministry of Industry and Commerce, Sri Lanka under the SAFTA are accepted by Indian Customs authorities, and if the Customs authorities need to verify the authenticity, the same is to be done separately with the Ministry of Industry and Commerce, Sri Lanka. He further submitted that no such exercise was undertaken by Customs Department and hence the allegation of fake COO is completely baseless. 3.3 In support of their stand, learned Advocate had relied upon following decisions of the Tribunal and judgements of Hon ble Supreme Court, in the respective cases mentioned below: (i) Unique Spices. Vs. Commissioner of Customs, Tuticorin 2019 (366) E.L.T. 83 (Mad.) (ii) Aabis International Vs. Commissioner of Customs, Chennai Customs-II Commissionerate 2021 (377) E.L.T. 479 (Mad.) (iii) R.S. Industries ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods classified under CTI 0802 8090 and declared as Sri Lanka Areca Nuts with value of USD 351000 for 90 MTs by the appellants is eligible for availing the benefit of customs duty exemption under Notification No.26/2000-Customs dated 01.03.2000 in terms of India Sri Lanka Free Trade Agreement. (ii) Whether the imported goods fulfill the requirement of DGFT Notification No. 35/2015-2020 dated 17.01.2017, in order to claim the import of impugned goods as Free . (iii) Whether the impugned order dated 13.06.2023 upholding confirmation of adjudged demands in original order is legally sustainable. 6.2 In the impugned order dated 13.06.2023, learned Commissioner of Customs (Appeals) had given a finding that the sealed samples of the imported goods have been tested by the department and test report from the Areca nut Research Development Foundation (ARDF), Mangalore, Karnataka had suggested that the areca nuts imported by the appellants appear to be white split areca nuts of the Indonesian origin, which is in violation of the terms specified in the Notification No.26/2000-Customs dated 01.03.2000 under ISFTA. He had also observed that though the appellants have denied the results of the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of medium nuts with round to oval in shape. Light brown in colour. Frequently portion of a hard, brittle grey, silvery coat are attached more or less firmly to the seed. The cut portion of Betel Nut exhibits a marbled interior, dark brown lines alternating with opal white portions. This resembles to the texture of Indonesian origin. Conclusion: The sample of Areca nuts provided by the Deputy Commissioner of Customs, Office of the Commissioner of Customs, SIIB(I), Nhava Sheva, Raigad, Maharashtra vide letter F. No. SG/Misc-212/2017- 18/SIIB(I) JNCH dated 05.07.2018 under its seal (Bill of Entry No. 3343458 dated 22.09.2017, imported by M/s Shiv Ganga Polypet LLP) has been tested and seems to be of White Split Areca nuts of Indonesian Origin. Nearly 15% of the areca nut samples supplied are infested with fungus. On perusal of the test report, it is seen that the above test report do not bring out the testing of any specific characteristics of the imported areca nuts, to state that the product is from specific origin. There is no definite finding given on the basis of any specific facts to say that the imported goods are not of Sri Lanka origin. It is also on record in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration Rules and the Packaged Commodities Rules. This includes ensuring that the label is written not only in any foreign language, but also in English. The details of ingredients in descending order, date of manufacture, batch no., best before date etc., are mandatory requirements. All products will also have to indicate details of best before on all food packages. (Reference Ministry of Health Notification No. GSR 537(E), dated 13th June 2000). 2.3 All the consignments of edible/food products imported through ports, airports, ICDs, CFSs, Land Customs Stations shall be referred to PHOs for testing and clearance shall be allowed only after receipt of the test report. Pending receipt of test report, such consignments may be allowed to be stored in warehouses under Section 49 of the Customs Act, 1962. If the product fails the test, the Customs authorities will ensure that the goods are re-exported out of the country by following the usual adjudication procedure or destroyed as required under the relevant rules. 2.4 As regards ICDs/CFSs/ports/airports/LCSs, where Port Health Officers are not available, the Customs shall draw the samples and get these tested from the nearest Central F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mples, the following procedure is prescribed : a. Customs officers may draw the samples from import consignments for testing in case of consignments wherever needed. The results of all test reports, adverse or otherwise, shall be communicated to the importer or his authorized representative/Customs Broker immediately on its receipt. b. In case the importer or his agent intends to request the Additional/Joint Commissioner of Customs for a re-rest, then the same shall be made in writing to the said officer within a period of ten days from the receipt of the communication of the test results of the first test. Customs officers may take a reasoned view in case the importer or his authorized representative Customs Broker is unable to do so for reasons beyond his control. c. Where the Additional/Joint Commissioner of Customs grants an opportunity for a second test, he must clearly indicate in writing the name and address of the laboratory/institution where the second test can be carried out. Such referral for re-testing may be made only after being reasonably sure that the desired retesting facilities exist at the laboratory/institution. d. Re-test should be made only on the remnants of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted to provide a reasonable evidence on the test results, as per the guidelines prescribed by CBEC. However, the appellants have got the impugned goods tested in RCA Laboratories, Mumbai, which is approved by the FSSAI and the rest result in report dated 02.07.2018 provides the results of chemical testing, microbiological identification, tracing of residues and other trace metals, to conclude that it cannot recognize the country of origin of the tested samples on the basis of above factors. In the above factual matrix, we are of the considered opinion that the test results obtained either by the Department or by the appellants do not provide any concrete evidence for determination of the origin of the imported goods. Hence it is not feasible to take the same for arriving at the conclusion of the disputed issue. 7.4 In the case before us, for determination of origin of the imported goods specific procedure has been prescribed under Notification No. 19/2000-Customs (N.T), dated 01.03.2000. The extract of the said notification is given below : In exercise of the powers conferred by sub-section (1) of section 5 of the Customs Tariff Act, 1975 (51 of 1975), the Central Government her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding facilitation of joint plant visits and contacts by representatives of both Contracting Parties upon request and on a case-bycase basis. (4) If either Party believes that the rules of origin are being circumvented, it may request consultation to address the matter or matters concerned with a view to seeking a mutually satisfactory solution. Each party will hold such consultations promptly .. In terms of the above procedure prescribed for determination of origin, the appellants submitted requisite Certificate of Origin (COO) vide CO/ISFTA/17/20432, CO/ISFTA/17/20433, CO/ISFTA/17/20435, and CO/ISFTA/17/20436, all dated 19.09.2017 issued by the Ministry of Industry Commerce, Sri Lanka stating that they are certifying that the goods are produced in Sri Lanka on the basis of control carried out by them. On the basis of the query raised by the Consulate General of Sri Lanka in Mumbai, the Ministry of Industry Commerce, Sri Lanka vide their letter dated 27.11.2017 have confirmed that the aforesaid report COO s were certified by them and the same may be informed to the Indian authorities. From the above, we find that the origin of the imported goods have been duly certified in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 17.01.2017. Thus, we are of the considered view that the areca nuts imported by the appellants from Sri Lanka can be allowed for import as Free . Therefore, the conclusion arrived at by the authorities below, that the imported goods have violated the legal provisions under Section 111(d) and 111(m) of the Customs Act, 1962, is not sustainable on the basis of above facts. 8.2 In the absence of any evidence produced by the department to prove the violations in respect of imported goods as per Section 111(d) and 111(m) ibid, as discussed above, the proposal for confiscation of the impugned goods and imposition of redemption fine by the authorities below are not legally sustainable. 9.1 In the case of Commissioner of Customs (Preventive), NER Region, Shillong Vs. Laltanpuii - 2022 (382) E.L.T. 592 (Meghalaya), the Hon ble High Court of Meghalaya had held that the test results reported by nonaccredited laboratory of Areca nut Research and Development Foundation, Mangalore cannot be relied upon and dismissed the appeal filed by the department. The extract of the said judgement is given below: 4. The Division Bench of the Tribunal recorded the finding that the confiscated betel nut is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only material relied upon by the Customs authorities, to doubt the correctness of the aforesaid certificates and invoices, is the detection of certain gunny bags in the containers that held the imported goods, which gave rise to a suspicion that the goods could have been sourced from Indonesia. At this stage of the proceedings, I am of the view that the certificates issued by the Karachi Chamber of Commerce and Industry/Trade Development Authority of Pakistan should be given due weightage insofar as they are certificates issued in terms of a notification that was issued to give effect to a multilateral agreement entered into between South Asian Countries, to which both India and Pakistan were signatories. I am, therefore, of the view that the goods can be permitted a provisional clearance on the petitioner executing a bond for the assessable value, paying duty on the consignment in terms of the SAFTA notification, and paying 35% of the differential duty (on tariff rate) in respect of the consignment that has been imported. The petitioner shall also furnish a bond, without any surety or security, in favour of the respondents towards the remaining portion of the differential duty. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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