Verified certificate of origin under SAFTA prevails over limited suspicious material; customs demand and penalties were unsustainable.

Under the SAFTA framework, exemption under Notification No. 99/2011-Cus could not be denied where the certificate of origin was issued by the competent Afghan authority and its validity was not disproved through the prescribed verification process. Limited slips in a few bags and alleged defects in phytosanitary certificates were insufficient to displace the verified origin certificate or to show that the entire consignment was non-Afghan. On that basis, the customs demand, confiscation, interest, and penalties were not sustainable because the department did not establish misdeclaration of origin on the evidence required by the preferential trade regime.

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Issues: (i) Whether the benefit of exemption under Notification No. 99/2011-Cus could be denied on the basis of three slips/tags and alleged defects in phytosanitary certificates, despite production and verification of the certificate of origin under the SAFTA framework. (ii) Whether the demand of duty, confiscation, and consequential penalties and interest were sustainable when the claimed Afghan origin of the goods was not disproved by the competent issuing authority.

Issue (i): Whether the benefit of exemption under Notification No. 99/2011-Cus could be denied on the basis of three slips/tags and alleged defects in phytosanitary certificates, despite production and verification of the certificate of origin under the SAFTA framework.

Analysis: The exemption notification required the importer to establish origin through a certificate of origin issued under the SAFTA rules. The record showed that the certificate of origin was issued by the competent Afghan authority and was not denied by that authority. The alleged slips were found only in three bags out of a large consignment and could not, by themselves, establish that the entire cargo was of non-Afghan origin. Alleged irregularities in phytosanitary certificates did not determine country of origin and, at best, raised a collateral issue that could not override the verified certificate of origin in the absence of a denial by the issuing authority or a proper consultation process under the SAFTA rules.

Conclusion: The denial of exemption was not justified and the appellant was entitled to the benefit of the notification.

Issue (ii): Whether the demand of duty, confiscation, and consequential penalties and interest were sustainable when the claimed Afghan origin of the goods was not disproved by the competent issuing authority.

Analysis: Once the certificate of origin was accepted as duly issued and the department failed to establish its invalidity through the prescribed verification mechanism, the foundation for alleging misdeclaration of origin failed. The material on record did not support confiscation or the invocation of penal and interest provisions merely on suspicion or on the basis of limited incriminating material. In particular, the evidentiary burden was not discharged to sustain the finding that the goods were of U.S. origin so as to attract the customs demand and penal consequences.

Conclusion: The duty demand, confiscation, interest, and penalties were not sustainable against the appellant.

Final Conclusion: The appeal succeeded because the verified certificate of origin under the SAFTA regime prevailed over the departmental allegations, and the consequential customs demands and penal action could not survive.

Ratio Decidendi: A verified certificate of origin issued by the competent authority under the preferential trade regime cannot be disregarded on the basis of limited suspicious material unless its invalidity is established through the prescribed verification and consultation process.

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