Treaty dispute mechanism under AIFTA could not oust customs jurisdiction or invalidate show cause notices

Article 24 of AIFTA was not directly enforceable in municipal courts unless incorporated into domestic law, so it could not be used to invalidate customs show cause notices or exclude customs jurisdiction. The Customs Tariff (DOGPTA) Rules, 2009 and the exemption notification implemented the trade preference regime, but they did not import Article 24 or its dispute mechanism. Section 28 of the Customs Act therefore remained available to investigate and issue notices on prima facie material of suppression, misstatement or fraud, and the later insertion of Section 28DA did not imply a lack of earlier jurisdiction.

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Issues: Whether Article 24 of Appendix D to the AIFTA could be directly enforced to invalidate the customs show cause notices and exclude the jurisdiction of the customs authorities under Section 28 of the Customs Act, 1962.

Analysis: The impugned notices were issued under the Customs Act on allegations of misrepresentation, suppression and fraud in relation to the claimed Regional Value Content for tin ingots imported from Malaysia. The challenge was founded on Article 24 of AIFTA, which was said to provide a special dispute resolution mechanism. The Court held that an international treaty does not become enforceable in municipal courts unless and until it is transformed into domestic law by a statute or other legally effective incorporation. The Customs Tariff (DOGPTA) Rules, 2009 and the exemption notification gave effect to the trade preferences under AIFTA, but they did not incorporate Article 24 or its dispute mechanism into domestic law. Section 28 of the Customs Act remained fully available to the customs authorities to investigate and issue notices based on prima facie material of suppression, misstatement or fraud. The later insertion of Section 28DA did not mean that the earlier law lacked such jurisdiction.

Conclusion: Article 24 of AIFTA was not directly invocable to oust the customs jurisdiction or to invalidate the notices, and the challenge to the notices failed.

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