2024 (7) TMI 767 - AT - Customs

Importer wins appeal against duty demand as revenue fails to prove Chinese origin allegations with inadmissible statements under Section 138B

CESTAT Ahmedabad allowed the appeal and set aside the demand order. Revenue alleged wrongful availment of preferential duty under Indo-ASEAN FTA ... Wrongful availment of benefit of preferential duty under N/N. 46/2011-Cus. dtd. 01.06.2011 (Indo- ASEAN FTA). As per the revenue goods imported by the Appellant from Malaysia and declared to be of Malaysian origin, were, in fact, of Chinese Origin and were routed through Malaysia to wrongly avail the benefit of preferential duty and other applicable duties, on goods, at the time of import. HELD THAT:- It is found that all the documents viz. Bill of Entry of import, packing list, commercial invoice, Mill Inspection Certificate, Bill of Lading for Port-to –port Transport, Fumigation Certificate, Certificate of Origin –ASEAN –India Free Trade Area Preferential Tariff clearly shown that the goods in questions were imported from Malaysia and that they are of Malaysia Origin. Appellant have adduced sufficient proof to establish that the impugned goods are Malaysia Origin. In the present matter revenue in support of allegations rely upon the statements of Shri Sanjay Jain and Shri GuganKumar. However it is found that said persons were not examined in the adjudication proceedings even after the request of Appellant and as such their statements are not admissible as evidence under the provisions of Section138B of Customs Act, which provides that - if an authority in any proceedings under the Act wants to rely upon the statement of any person (made during enquiry), such person is required to be examined as witness and if the adjudicating authority finds the evidence of the witness 'admissible', then such witness should be offered for cross-examination and only thereafter the evidence is admissible. In absence of compliance with the provision of Section138B of the Act, the statements are not admissible as evidence. In the present matter the Supplier of the goods at Malaysia nowhere have claimed that the goods have been supplied were Chinese origin. It appears that the allegations were very serious but no cogent material was collected to substantiate these allegations. It is settled law that in case of difference between documentary evidence and oral evidence the former should be given precedence and later should be ignored. In view of the settled law, the statements of persons cannot be relied upon or the same cannot be the sole basis to confirm the charge against the appellant as the same is contrary to documentary evidence which is in the form of Commercial Invoices, MILL Inspection Certificate , Packing List, Bill of Lading for Port to Port, Country Origin Certificate, Bill of Entry etc. The demands confirmed against Appellant is not sustainable - the impugned order set aside - appeal allowed. Issues Involved:1. Wrongful availing of preferential rate of duty under Notification No. 46/2011-Cus.2. Authenticity of the Certificate of Origin.3. Denial of cross-examination of key witnesses.4. Violation of principles of natural justice.5. Reliability of documentary versus oral evidence.Detailed Analysis:1. Wrongful Availing of Preferential Rate of Duty:The case revolves around the allegation that the appellant wrongfully availed the benefit of the preferential rate of duty under Notification No. 46/2011-Cus. The Department of Revenue Intelligence (DRI) received information that the appellant, in connivance with a supplier, was importing Cold Rolled Stainless Steel Coils from China but declaring them as originating from Malaysia to avail the preferential duty benefits. The goods were routed through Malaysia, and the appellant submitted documents such as packing lists, commercial invoices, and Certificates of Origin to support their claim.2. Authenticity of the Certificate of Origin:The investigation revealed that the Certificates of Origin submitted by the appellant were not genuine. The DRI's investigation included searches and recorded statements from involved parties, which suggested that the goods were of Chinese origin. However, the appellant provided comprehensive documentation, including Mill Inspection Certificates, Bills of Lading, and Fumigation Certificates, to prove the Malaysian origin of the goods. The Tribunal noted that the Customs department had initially accepted these documents during the import process without objection.3. Denial of Cross-Examination of Key Witnesses:The appellant argued that the statements of key witnesses, including Mr. Sanjay Jain, were crucial to the case but were not subjected to cross-examination. The appellant's request for cross-examination was denied by the adjudicating authority. The Tribunal emphasized that under Section 138B of the Customs Act, statements made during an inquiry must be admissible only if the witness is examined and cross-examined. The denial of cross-examination was seen as a violation of the principles of natural justice.4. Violation of Principles of Natural Justice:The Tribunal found that the rejection of the appellant's request for cross-examination amounted to a violation of the principles of natural justice. The Tribunal cited the case of Veetrag Enterprises v. Commissioner of Customs, which underscores the importance of cross-examination in ensuring a fair trial. The Tribunal held that not providing an opportunity for cross-examination violates the rules of natural justice.5. Reliability of Documentary versus Oral Evidence:The Tribunal observed that the documentary evidence provided by the appellant, such as Commercial Invoices, Mill Inspection Certificates, and Certificates of Origin, should be given precedence over the oral statements of witnesses. The Tribunal referred to established legal principles that in cases of contradiction between documentary and oral evidence, the former should prevail. The Tribunal cited several judgments, including Philip Fernandes v. Commissioner and R.P. Industries v. Collector, supporting this view.Conclusion:The Tribunal concluded that the demands confirmed against the appellant were not sustainable. The Tribunal set aside the impugned order and allowed the appeal, granting consequential reliefs to the appellant. The judgment emphasized the importance of adhering to the principles of natural justice and the reliability of documentary evidence over oral statements in adjudicating such cases.(Pronounced in the open court on 12.07.2024)