2026 (2) TMI 39 - AT - Customs

Determination of origin for tin ingots and AFTA RVC compliance confirms entitlement to preferential tariff exemption; duty demand set aside

Determination of origin addressed whether exported tin ingots met AFTA regional value content rules to qualify as deemed originating goods. The tribunal ... Determination of origin of goods - Rules of Origin - deemed originating goods - Certificate of Origin - preferential tariff treatment - AIFTA Regional Value Content (RVC) / AFTA content 35% requirement - Notification No. 46/2011 - Notification No. 189/2009 - whether Rules of Origin have been violated by the appellant as alleged - HELD THAT:- It is an admitted fact that Tin Ingots as were exported by M/s. MSC to Indian importers including the appellant were exported after being manufactured by them using the three of free raw materials (Tin Ingots) of origin of Non-ASEAN countries, it becomes clear that the case of the appellant falls under sub-clause (b) of the said rule. Since the certificates have admittedly been produced by the appellant, no evidence is produced to rebut the genuineness of the said certificate which was issued by the government authority designated by the Malaysian country. It stands clear that there is no proof that the RVC content was less than 35% and that the Certificate of Origin was fake. Resultantly, both conditions of Notification No. 46/2011 are observed to have been fulfilled by the appellant. He is held eligible for the benefit of Exemption Notification No. 46/2011. The differential duty is held to have wrongly been demanded. Resultantly, the order under challenge is hereby set aside. Consequent thereto, the appeal is allowed. Issues: Whether the appellant violated the Rules of Origin under Notification No. 189/2009 (specifically the requirement of minimum AIFTA/Regional Value Content of 35% and related origin criteria) such that the benefit of Notification No. 46/2011 (concessional BCD) rightly stands denied.Analysis: The Tribunal examined Notification No. 189/2009 and its origin criteria (Rule 3 and Rule 5) which distinguish wholly obtained products from products not wholly produced in the exporting party and require an AIFTA/RVC of not less than 35% and a change in tariff subheading where applicable. The record established that the goods were manufactured in Malaysia using some non-ASEAN inputs, bringing them within clause (b) of Rule 3 and the ambit of Rule 5. The assessing record did not contain any calculation demonstrating that the AIFTA/RVC was less than 35%. The original Certificates of Origin, issued by the designated Malaysian authority, were produced by the appellant and no affirmative evidence was placed on record by the department to rebut the genuineness of those certificates. External communications (Ministry of International Trade and Industry / CBIC) did not provide a definitive basis for denial. Allegations about MSC's internal cost sheets and possible malpractice were not supported by evidence sufficient to displace the prima facie validity of the Certificates of Origin or to establish that the RVC fell below the statutory threshold.Conclusion: The conditions for claiming preferential treatment under Notification No. 46/2011, as governed by the origin rules in Notification No. 189/2009 (including the AIFTA/RVC requirement), were not disproved by the department; consequently the appellant is eligible for the benefit of Notification No. 46/2011 and the demand of differential duty was incorrectly confirmed. The impugned order is set aside and the appeal is allowed.Ratio Decidendi: Where a Certificate of Origin is issued by the exporting party's designated authority and is produced by the importer, and where the revenue fails to produce cogent evidence that the Regional Value Content or origin criteria mandated by the relevant origin rules are not satisfied, preferential tariff benefit under the applicable notification cannot be denied.