2017 (11) TMI 1256 - AT - Customs

Tribunal overturns denial of customs exemption based on value addition; origin certificates from Sri Lanka deemed valid.

M/s R.S. Industries (Rolling Mills) Ltd., Shri R.S. Patodia, Director And Shri Mahesh Chand Gupta, M.D. Versus CCE, Jaipur – I

The Tribunal set aside the Original Authority's decision to deny exemption under Notification No.26/2000-CUS to the appellant based on the value addition ... Exemption under N/N. 26/2000-CUS dated 01/03/2000 - denial on the ground that condition of Rule 7 of the said Origin Rules not fulfilled as the value addition in Sri Lanka fall below 35% - case of appellant is that there is no evidence to the effect that the certificate of origin issued by the Competent Authority was based on incorrect information or the said certificate has been withdrawn or amended later, and thus exemption cannot be denied - Held that: - certificate of origin and the data submitted to get such certificates cannot be questioned based on statements of the importers. There are 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. The issue regarding country of origin certificate and questions of bonafideness was discussed in the bilateral meeting of working group between the two countries on 05/06/2002 it was agreed that no detention or hold up of cargo is to be ordered on the question of bonafideness of certificates. Verification, if any, can be done post-facto with the concerned local nodal focal points at the respective headquarters. In the presence of valid certificates of origin issued by Competent Authority, the assessing authorities in India are not right in denying the benefit of exemption notification - appeal allowed - decided in favor of appellant. Issues:- Eligibility for exemption under Notification No.26/2000-CUS dated 01/03/2000 based on the value addition requirement of 35% under Customs Tariff Rules.- Denial of exemption, confirmation of differential duty, and confiscation of goods by the Original Authority.- Dispute regarding the valuation of Zinc Ingots and the certificate of origin issued by the Competent Authority of Sri Lanka.- Allegations of collusion between the importer and the Sri Lankan supplier to avail the exemption.Analysis:1. The appeals challenged the order of the Commissioner of Central Excise, Jaipur, regarding the eligibility of the appellant for exemption under Notification No.26/2000-CUS dated 01/03/2000. The dispute centered around the fulfillment of the 35% value addition requirement under the Customs Tariff Rules for goods originating from Sri Lanka.2. The Original Authority denied the exemption claimed by the appellant, confirmed a differential duty, and ordered the confiscation of goods along with penalties on the importing company's Managing Director and Director. The denial was based on the alleged failure to meet the value addition criteria.3. The appellant argued that the imports were supported by valid certificates of origin issued by the Competent Authority in Sri Lanka. They contended that the Original Authority wrongly concluded on their ineligibility for exemption based on the valuation of Zinc Ingots, emphasizing the authenticity of the certificates and lack of evidence to question them.4. The Revenue, however, alleged that the value addition requirement was not met as the valuation of Zinc Ingots imported by the Sri Lankan supplier was deemed incorrect. They suggested collusion between the importer and the supplier to obtain an ineligible certificate of origin based on false information.5. The Tribunal noted that the certificates of origin were issued by the Competent Authority of the Sri Lankan Government and were not recalled or canceled. The denial of exemption solely based on the perceived low value addition in Sri Lanka was deemed insufficient grounds for rejection, as the assessment by Sri Lankan customs could not be reevaluated in India.6. The Tribunal further analyzed the reports from Sri Lankan customs cited in the impugned order, finding no concrete evidence of non-fulfillment of the value addition condition by the supplier. The valuation discrepancies highlighted by the Original Authority were deemed irrelevant to challenge the validity of the certificates of origin. Moreover, statements by the Director of the importing company were not considered sufficient to question the certificates.7. Ultimately, the Tribunal concluded that in the presence of valid certificates of origin issued by the Competent Authority of Sri Lanka, the Indian assessing authorities were unjustified in denying the exemption. The impugned order was set aside, and the appeals were allowed based on the authenticity of the origin certificates and the lack of substantial evidence to question them.