Valid certificate of origin protects customs exemption; foreign valuation cannot be re-assessed without factual basis.

Valid certificates of origin issued by the competent Sri Lankan authority barred denial of customs exemption, because the certificates had not been withdrawn, cancelled, or amended. Indian customs could not re-open or re-assess the foreign valuation merely on the assumption that the declared value of inputs was understated or that the 35% value addition requirement was unmet. The record did not establish failure of the origin condition under Rule 7, and the reports relied on did not discredit the certificates. The order confirming duty, confiscation, and penalties was therefore unsustainable.

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Issues: Whether exemption under the customs notification could be denied on the ground that the value addition condition under the origin rules was allegedly not satisfied, despite production of valid certificates of origin issued by the competent authority of Sri Lanka.

Analysis: The certificates of origin issued by the competent authority of Sri Lanka were not shown to have been withdrawn, cancelled, or amended. The denial of exemption rested mainly on the view that the value declared for the Sri Lankan inputs was understated and that the 35% value addition requirement was not met. The assessment of the imported goods in Sri Lanka could not be re-opened or re-assessed by Indian customs on that basis, and the record did not support the conclusion that the origin condition under Rule 7 had failed. The reports relied on did not establish non-fulfilment of the prescribed value addition, and the certificate of origin could not be discredited merely from the valuation assumptions adopted in the impugned order.

Conclusion: The exemption could not be denied in the face of valid certificates of origin, and the impugned order confirming duty, confiscation, and penalties was unsustainable.

Ratio Decidendi: Where a valid certificate of origin issued by the competent foreign authority remains unchallenged by cancellation or recall, Indian customs cannot deny preferential exemption by independently re-assessing the foreign valuation or by questioning the certificate without factual basis.

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