2023 (9) TMI 86 - AT - Customs

Tribunal rules in favor of appellant on Certificate of Origin issue; department's failure to follow procedure leads to dismissal.

The Tribunal found in favor of the appellant regarding the authenticity and validity of the Certificate of Origin for PVC Sheeting Flex Banner imported ... Certificate of Origin - Direct consignment - Verification request to the issuing authority under the Origin Rules - Non-discardability of a certificate issued by the designated authority unless cancelled by that authority - Prohibition on departmental reassessment of origin without following prescribed verification procedure - Preferential tariff benefit under notification based on authenticated originCertificate of Origin - Verification request to the issuing authority under the Origin Rules - Prohibition on departmental reassessment of origin without following prescribed verification procedure - Validity of the Certificate of Origin issued by the Malay Chamber of Commerce and whether it could be rejected on the basis of the bill of lading without invoking the verification procedure under the Origin Rules. - HELD THAT: - The Tribunal found that the Certificate of Origin was issued by the designated authority (Malay Chamber of Commerce) and there was no evidence the certificate was shown to be fake or cancelled by the issuing authority. Rule 9 of the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Government of the Republic of India and Malaysia) Rules, 2011 prescribes the conditions for direct consignment and contemplates that where there is doubt about origin the Customs Authority of the importing country must request the issuing authority to check authenticity. The department did not follow that prescribed procedure and relied instead on bills of lading to infer origin. Relying on consistent precedents and the operational certification procedures under comparable preferential arrangements, the Tribunal held that the customs officer cannot act as an adjudicator to overturn a certificate of origin on the basis of indigenous enquiries or assumptions without returning the certificate to and obtaining verification from the issuing authority, or without evidence of cancellation by that authority. Consequently, the certificate could not be discarded merely on the basis of the bill of lading or departmental suspicion. [Paras 4, 5]The certificate of origin could not be rejected and the denial of preferential benefit based on the bill of lading without following the verification procedure under the Origin Rules was unsustainable.Certificate of Origin - Preferential tariff benefit under notification based on authenticated origin - Non-discardability of a certificate issued by the designated authority unless cancelled by that authority - Sustainability of the departmental allegation treating all five consignments as of Chinese origin when discrepancy in bills of lading was shown only for two consignments. - HELD THAT: - The Tribunal noted that discrepancy in bills of lading was established only in respect of two of the five bills of entry; there was no evidence to impugn the remaining three certificates of origin. Under the same legal principles that protect a valid certificate issued by a designated authority, the department cannot extend the adverse finding to consignments for which no discrepancy or supporting evidence exists. The impugned order treated all five bills as being of Chinese origin while failing to challenge or verify three certificates; such a blanket approach lacks basis in the record and in law. [Paras 4]The allegation in respect of the other three certificates of origin was without basis and could not sustain denial of preferential treatment for those consignments.Final Conclusion: The impugned order rejecting preferential treatment was set aside. The Tribunal held that the Certificates of Origin issued by the Malay Chamber of Commerce could not be discarded without following the mandatory verification procedure under the Origin Rules, and there was no basis to impugn the three consignments for which no discrepancy was shown; appeal allowed. Issues Involved:1. Authenticity and validity of the Certificate of Origin.2. Compliance with Rule 9 of the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of The Republic of India and Malaysia) Rules 2011.3. Departmental procedure and authority to question the Certificate of Origin.Summary:1. Authenticity and Validity of the Certificate of Origin:The appellant imported PVC Sheeting Flex Banner from Malaysia and claimed a concessional rate of duty under Notification No. 53/2011-Cus dated 01.07.2011. The department alleged that the goods were of Chinese origin based on the Bills of Lading, despite the Certificate of Origin issued by the Malay Chamber of Commerce Malaysia. The appellant argued that the certificate's authenticity was not proven to be fake or non-genuine and referred to Rule 9 of the Customs Tariff Rules 2011, which mandates retroactive checks in case of doubt.2. Compliance with Rule 9 of the Customs Tariff Rules 2011:The Tribunal noted that the department did not follow the mandatory procedure under Rule 9, which requires the Customs Authority of India to request the issuing authority in Malaysia to verify the authenticity of the Certificate of Origin. The Tribunal emphasized that without such verification, the allegation that the goods were of Chinese origin could not be sustained. The Tribunal cited Rule 9, highlighting that goods must be directly consigned from the exporting party to the importing party or meet specific conditions if passing through a non-party territory.3. Departmental Procedure and Authority to Question the Certificate of Origin:The Tribunal referred to several judgments, including M/s. BDB Exports Pvt. Ltd., M/s. R. S. Industries (Rolling Mills) Ltd., and M/s. MJ Gold Pvt. Ltd., to support the view that the Customs Authority cannot unilaterally discard a Certificate of Origin without following the prescribed procedure. The Tribunal reiterated that the certificate issued by the designated authority must be honored unless proven otherwise through proper channels. The Tribunal also noted that discrepancies were only found in two out of five certificates, making the allegations against the remaining three certificates baseless.Conclusion:The Tribunal concluded that the department's failure to follow the prescribed procedure under Rule 9 rendered their allegations unsustainable. The impugned order was set aside, and the appeal was allowed. The Tribunal emphasized the importance of adhering to procedural requirements and respecting certificates issued by designated authorities to maintain the integrity of international trade agreements.