TaxTMI 
TaxTMI 
2011 (4) TMI 271
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....is benefit, however, the importer was liable to prove to the satisfaction of the Deputy Commissioner or Assistant Commissioner of Customs, in accordance with the Customs Tariff (Determination of Origin under the Free Trade Agreement between The Democratic Socialistic Republic of Sri Lanka and The Republic of India) Rules, 2000 (Determination of Origin Rules, for short) published vide Notification No.19/2000-Cus.(NT) ibid., that the goods were of Sri Lankan origin. As per Rule 4 of the Determination of Origin Rules, the importer should make a claim that the goods are the produce or manufacture of the country from which they are imported and the same are eligible for preferential treatment under ISFTA, and should also produce evidence thereof. As per Rule 5, preferential treatment in the form of exemption under Notification 26/2000-Cus. could be claimed in the case of (a) products wholly produced or obtained in the territory of the exporting Contracting Party as defined in Rule 6, or (b) products not wholly produced or obtained in the territory of the exporting Contracting Party provided that the products are eligible under Rule 7 or Rule 8. As per Rule 7(a), where Rule 5(b) is appli....
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....the value addition at the end of the Sri Lankan exporter was more than 35%. Thus it appeared to DRI that the appellant violated the norms laid down under the aforesaid Rules and hence was not entitled to claim the benefit of concessional rate of duty in respect of the remelted copper ingots imported from M/s. Sri Chirag Pvt. Ltd., Sri Lanka. For arriving at this conclusion, DRI also relied on certain statements of Shri Daya Kishan Goel, Managing Director of the appellant-company, recorded under Section 108 of the Customs Act. DRI also obtained a copy of the Cost Statement produced by the Sri Lankan exporter before the Department of Commerce (Government of Sri Lanka) for obtaining the C.O. Certificate. The price of the imported raw material (copper scrap) was indicated in the Cost Statement as US$ 1000 PMT and the FOB value of the finished goods (remelted copper ingots) was mentioned as US$ 1539.30 PMT. The raw material percentage was indicated as 64.96% of the FOB value of the finished goods, which appeared to be the basis of the C.O. Certificate issued by the Department of Commerce, Sri Lanka. 3. On the basis of the results of investigations, the department issued a show-c....
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.... 114A of the Act. 5. The present appeal is directed against the Commissioner s order. There are also two miscellaneous applications before us, one filed in October 2010 and the other in March 2011, both under Rule 23 of the CESTAT (Procedure) Rules. These applications seek to bring on record certain documents annexed thereto. These will be considered in due course. 6. Heard both sides. The learned counsel for the appellant has, at the outset, questioned the reliance placed by the Revenue on the Cost Statement. This Cost Statement was submitted to the Sri Lankan authorities as on 14.3.2003. According to the learned counsel, the adjudicating authority erred in relying on this Cost Statement for reaching its conclusion that the C.O. Certificate had been obtained by furnishing incorrect statement to the Sri Lankan authorities inasmuch as the said Cost Statement cannot be applicable to the period of dispute (March to August 2002) in this case. The counsel further submits that, though this objection was raised in the reply to the show-cause notice, it was not considered by the Commissioner. The learned counsel has also contended that the Revenue cannot go behind the C.O. ....
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.... the miscellaneous applications be allowed and the documents produced therewith be admitted in support of the appellant s case against the Commissioner s order. It is submitted that the documents filed with miscellaneous application No.1766/10 include commercial invoices issued to the appellant by M/s. Sri Chirag Pvt. Ltd., Sri Lanka, the connected bills of lading and the bills of entry filed by the appellant in India for clearance of the respective consignments of remelted copper ingots. All these documents relate to the month of March 2003, i.e., after the period of dispute and are intended to show that remelted copper ingots were imported by the appellant from the Sri Lankan exporter at US$ 1550 PMT after the period of dispute also. It is submitted that the declared value has been accepted by the assessing authority in India. The above invoices, bills of lading and bills of entry are listed in Annexure-1 to miscellaneous application No.1766/10. Annexure-2 to the said application is a list of 27 invoices, nearly half of them issued in December 2001 and the rest issued from February to May 2002. All these invoices were issued to M/s. Sri Chirag Pvt. Ltd., Sri Lanka by overseas exp....
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....ong with the two miscellaneous applications be received and admitted as evidence. He prays that the applications be allowed. 13. The learned consultant for the Revenue reiterates the findings of the adjudicating authority. He has also produced excerpts from LME Bulletin to show that the prices of copper scrap in an Asian market (Hong Kong free market) during the period of dispute were much higher than US$ 1000 PMT indicated in the Cost Statement. His endeavour is to show that copper scrap was heavily undervalued in the Cost Statement so as to keep the percentage of imported raw material below 65% of the FOB value of the finished product (remelted copper ingots) exported from Sri Lanka to the appellant in India. In this connection, the learned consultant has also attempted to show that the appellant is related to M/s. Sri Chirag Pvt. Ltd. and that the C.O. Certificate was obtained by the Sri Lankan exporter only to benefit the appellant. Referring to the Board s circular, the learned consultant has expressed the view that the assessing authority, which assessed the relevant bills of entry, was not bound by the circular. In this connection, he claimed support from Varsha Plas....
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....ty/Assistant Commissioner of Customs, in accordance with the Determination of Origin Rules published under Notification No.19/2000-Cus. (NT) dated 1.3.2000, that the goods, in respect of which exemption was claimed, were of the origin of Sri Lanka. The adjudicating authority proceeded to ascertain whether the importer/appellant complied with the said condition in accordance with the Determination of Origin Rules. Though it rightly noted that Rules 5(b), 7(a) and 8 were applicable to the subject-goods, it apparently erred in applying these provisions correctly to the facts and evidence available on record. The value of copper scrap (raw material) imported into Sri Lanka was taken as US$ 1100 PMT and the export price of copper ingots as US$ 1361 PMT for the period of dispute and, on this basis, the value of raw material as a percentage of FOB value of the finished goods was worked out at 80.82%, much above the maximum limit of 65% prescribed under the Rules. Accordingly, the value addition in the product manufactured in Sri Lanka and exported to India was found to be much less than the minimum limit of 35% prescribed under the Rules. It appears from the show-cause notice that a Direc....
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....nkan authorities on these items will continue to be honored till the time further instructions are issued from the Board. The learned counsel for the appellant has claimed the benefit of the Board s instructions by submitting that the C.O. Certificate in question is also liable to be honoured by the Customs authorities in terms of the Board s instructions. The consultant for the Revenue has not claimed that the above instructions of CBEC were subsequently rescinded or modified to the detriment of the appellant. But, claiming support from Supreme Court/High Court decisions, the learned consultant has argued to the effect that the adjudicating authority should not be influenced by the Board s circular. In our view, the circular should be seen as part of the Indian Government s endeavour (a) to prevent circumvention of value addition norms by unscrupulous traders and (b) to ensure smooth working of the Free Trade Agreement by advising the assessing authorities in India, as an interim measure, to accept C.O. Certificates issued by Sri Lankan authorities. The adjudicating authority is expected to act in aid of such governmental endeavours. The case law cited by the learned consu....