CESTAT grants ASEAN FTA customs duty benefit for cocoa powder imports with valid Malaysian origin certificate

CESTAT Ahmedabad allowed the appeal challenging denial of concessional customs duty benefit under ASEAN FTA for imported natural cocoa powder from Malaysia. The appellant produced a certificate of origin from Malaysia's Ministry of International Trade and Industry showing 47% Regional Value Content, exceeding the required 35%. The department denied the benefit based on assumptions from a separate 2014 investigation involving different parties, without verifying the appellant's certificate or conducting proper investigation with Malaysian authorities. The tribunal held that once valid documentary evidence is produced, the burden shifts to the department to prove its falseness, which they failed to discharge. The demand for differential duty of Rs. 6,44,233 was set aside along with penalty and interest.

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Issues Involved:
1. Validity of the Certificate of Origin.
2. Compliance with the Regional Value Content (RVC) requirement.
3. Justification for the denial of concessional customs duty benefits.
4. Procedural adherence by the customs authorities.

Summary:

1. Validity of the Certificate of Origin:
The appellant imported Natural Cocoa Powder from Malaysia under Bill of Entry No. 5152802 dated 12.02.2018, availing concessional customs duty benefits as per Notification No. 46/2011-CUS dated 01.06.2011 and Notification No. 53/2011-CUS dated 01.07.2011. The Certificate of Origin was issued by the Ministry of International Trade and Industry (MITI) Malaysia, certifying a Regional Value Content (RVC) of 47%, which is higher than the required 35%.

2. Compliance with the Regional Value Content (RVC) Requirement:
A Show Cause Notice dated 30.05.2019 challenged the Certificate of Origin, alleging that the goods were derived from Cocoa Beans of Ghana origin with an RVC of only 13-17%, based on a 2014 investigation by DRI. However, no specific verification was conducted for the appellant's import in 2018. The appellant provided a letter dated 02.05.2016 from the foreign supplier certifying an RVC of 47%, verified by MITI Malaysia.

3. Justification for the Denial of Concessional Customs Duty Benefits:
The customs authorities denied the concessional duty benefits based on assumptions from a previous investigation in 2014 involving another party. The appellant argued that no retroactive check was requested for their import, and the Certificate of Origin was never referred to the issuing authority for verification. The appellant's import occurred much later, and the previous intra-department references were irrelevant.

4. Procedural Adherence by the Customs Authorities:
The customs authorities did not conduct any verification for the appellant's import and relied on assumptions from the 2014 investigation. The department failed to prove the fakeness of the Certificate of Origin or conduct any verification with the Government of Malaysia. The case laws cited by the department were distinguishable as they involved different circumstances.

Conclusion:
The Tribunal concluded that the denial of concessional duty benefits was based on assumptions and without any verification. The onus to prove the fakeness of the Certificate of Origin was on the department, which it failed to discharge. The appeal was allowed with consequential relief regarding duty, penalty, and interest. The decision emphasized the need for proper verification and adherence to procedural requirements before denying benefits under the ASEAN-India Free Trade Agreement (AIFTA).

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