Certificates of origin must be challenged through the prescribed verification mechanism before preferential customs duty is denied.

Preferential customs duty under the applicable Thailand-origin notification could not be denied merely on doubt about value addition shown in certificates of origin. The Interim Rules of Origin required acceptance of a claim supported by a certificate issued by the competent foreign authority, and any challenge had to follow the prescribed verification mechanism, including a retroactive check through the issuing authority in the exporting country. Because the customs authorities relied on statements and local opinion evidence without first invoking that mandatory procedure, rejection of the certificates was improper. The denial of exemption, duty demand, and penalties were therefore unsustainable, and the impugned order was set aside with consequential relief.

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Issues: Whether the Customs authorities could deny preferential duty benefit on the basis of doubt about the value addition shown in the certificates of origin without following the verification mechanism prescribed under the Interim Rules of Origin.

Analysis: The preferential exemption was claimed for goods imported from Thailand under the relevant notification, and the certificates of origin issued by the competent Thai authority recorded the requisite value addition. Rule 14 of the Interim Rules of Origin required acceptance of a claim supported by such a certificate, and Rule 15 of Annexure B provided the exclusive mechanism for verification by way of retroactive check at random or on reasonable doubt, including a request to the issuing authority in the exporting country. The record showed that the authorities instead relied on statements and local opinion evidence to dispute the correctness of the certificates, without first invoking the prescribed verification procedure with the issuing authority in Thailand. That course was contrary to the mandatory process laid down for questioning country-of-origin certificates.

Conclusion: The denial of the exemption and the confirmation of duty demand and penalties could not be sustained, and the appellants succeeded.

Final Conclusion: The impugned order was set aside and the appeals were allowed with consequential relief.

Ratio Decidendi: A certificate of origin issued by the designated foreign authority cannot be disregarded or rejected except in accordance with the verification procedure prescribed in the applicable rules, and any challenge to its correctness must be routed through that mechanism before preferential treatment is denied.

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