2024 (1) TMI 781 - AT - Customs

Court Overturns Order Due to Lack of Certificate Verification, Emphasizes Compliance with Free Trade Agreement Rules.

SHIRAZEE TRADERS Versus C.C. -MUNDRA

SHIRAZEE TRADERS Versus C.C. -MUNDRA - TMI Issues:The judgment involves the issue of import of cocoa powder covered under a free trade agreement, verification of certificate of origin, presumption and assumptions made by the department, compliance with Customs Tariff Rules, and the requirement of retroactive check for origin verification.Import of Cocoa Powder:The appellants imported cocoa powder covered under a free trade agreement, with the certificate of origin showing it was wholly obtained in Malaysia. Customs Authority allowed clearance based on the documents. However, subsequent investigation raised suspicions about the authenticity of the certificates issued by Malaysian authorities due to non-disclosure of cost data by the manufacturer. The show cause notice was issued, and lower authorities confirmed the order based on assumptions from other cases.Presumptions and Assumptions:The appellant argued that the department's case was based on presumptions and assumptions from other cases investigated by DRI. The confirmation of duty based on such presumptions was deemed not maintainable in law. The appellant pointed out that in similar cases investigated by DRI, proceedings were eventually dropped, indicating the lack of concrete evidence.Compliance with Customs Tariff Rules:The judgment highlighted the requirement under Annexure-III of the Customs Tariff Rules for origin verification in cases of preferential trade agreements. It was noted that the department did not conduct any verification of the certificate of origin as required by the rules. The absence of a verification report for the appellant failed to comply with the provisions of the relevant free trade agreement.Retroactive Check for Origin Verification:To displace the certificate of origin issued by Malaysian authorities, a verification process involving a retroactive check by Customs Authorities of India was necessary. The judgment emphasized the importance of requesting a verification report from the issuing authorities to ensure compliance with the free trade agreement. Since no such verification report was brought on record for the appellant, it was concluded that the requirement of Annexure-III of the Customs Tariff Rules was not met.Conclusion:The appeal was allowed, as it was found that the lower authorities confirmed the order without proper verification of the certificate of origin as required by the Customs Tariff Rules. The judgment emphasized the need for compliance with the provisions of the free trade agreement and the necessity of conducting a retroactive check for origin verification to ensure the authenticity of certificates of origin.