TaxTMI 
TaxTMI 
2024 (9) TMI 716
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....ing of platinum alloy sheets and the release thereof being made subject to the submission of a PD Bond equivalent to 100% of the assessable value along with a Bank Guarantee of differential duty @ 10.712% thereof pending verification of the Country-Of-Origin [COO] certificate accompanying those goods. 2. The petitioners contend that the action of the respondents is wholly arbitrary since no reasons have been assigned in the impugned orders which may be viewed as being even suggestive of the formation of a reasonable belief or opinion that the COO certificate or the imported articles were non-compliant with the statutory prescriptions which apply. The petitioners refer to the detailed statutory mechanism prescribed by Section 28DA of the Customs Act, 1962 [Act] read along with the Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between India and the United Arab Emirates) Rules, 2022 [CEPA Rules] together with the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 [CAROTAR] and which compendiously create a minimum threshold which may warrant the detention of goods covered by a Trade Agreement pending....
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....came to be inserted in the Act providing for a detailed procedure in respect of imports made under Trade Agreements and the claims of importers for a preferential rate of duty being applied. It is pursuant to the aforesaid provision coming to be inserted in the statute that CAROTAR came to be framed. 7. Section 28DA reads as follows: - "SECTION 28DA. Procedure regarding claim of preferential rate of duty. - (1) An importer making claim for preferential rate of duty, in terms of any trade agreement, shall, - (i) make a declaration that goods qualify as originating goods for preferential rate of duty under such agreement; (ii) possess sufficient information as regards the manner in which country of origin criteria, including the regional value content and product specific criteria, specified in the rules of origin in the trade agreement, are satisfied; (iii) furnish such information in such manner as may be provided by rules; (iv) exercise reasonable care as to the accuracy and truthfulness of the information furnished. (2) The fact that the importer has submitted a certificate of origin issued by an Issuing Authority shall not absolve the importer of the responsibility ....
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....s to be recorded in writing : Provided that in case of receipt of incomplete or non-specific information, the proper officer may send another request to the Issuing Authority stating specifically the shortcoming in the information furnished by such authority, in such circumstances and in such manner as may be provided by rules. (9) Unless otherwise specified in the trade agreement, any request for verification shall be sent within a period of five years from the date of claim of preferential rate of duty by an importer. (10) Notwithstanding anything contained in this section, the preferential tariff treatment may be refused without verification in the following circumstances, namely :- (i) the tariff item is not eligible for preferential tariff treatment; (ii) complete description of goods is not contained in the certificate of origin; (iii) any alteration in the certificate of origin is not authenticated by the Issuing Authority; (iv) the certificate of origin is produced after the period of its expiry, and in all such cases, the certificate of origin shall be marked as "INAPPLICABLE". (11) Where the verification under this section establishes non-compliance of the....
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....mplated under Section 28DA thereafter stands amplified and spelt out in greater detail under the CAROTAR. Rule 3 of the CAROTAR while dealing with preferential tariff claims makes the following provisions:- "RULE 3. Preferential tariff claim. - (1) To claim preferential rate of duty under a trade agreement, the importer or his agent shall, at the time of filing bill of entry, - (a) make a declaration in the bill of entry that the goods qualify as originating goods for preferential rate of duty under that agreement; (b) indicate in the bill of entry the respective tariff notification against each item on which preferential rate of duty is claimed; (c) produce certificate of origin covering each item on which preferential rate of duty is claimed; and (d) enter details of certificate of origin in the bill of entry, namely : (i) certificate of origin reference number; (ii) date of issuance of certificate of origin; (iii) originating criteria; (iv) indicate if accumulation/cumulation is applied; (v) indicate if the certificate of origin is issued by a third country (back-to-back); and (vi) indicate if goods have been transported directly from country of origin. (....
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....orter in terms of rule 4 to ascertain correctness of the claim. (2) Where the importer is asked to furnish information or documents, he shall provide the same to the proper officer within ten working days from the date of such information or documents being sought. (3) Where, on the basis of information and documents received, the proper officer is satisfied that the origin criteria prescribed in the respective Rules of Origin have been met, he shall accept the claim and inform the importer in writing within fifteen working days from the date of receipt of said information and documents. (4) Where the importer fails to provide requisite information and documents by the prescribed due date or where the information and documents received from the importer are found to be insufficient to conclude that the origin criteria prescribed in the respective Rules of Origin have been met, the proper officer shall forward a verification proposal in terms of rule 6 to the nodal officer nominated for this purpose. (5) Notwithstanding anything contained in this rule, the Principal Commissioner of Customs or the Commissioner of Customs may, for the reasons to be recorded in writing, disallo....
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....riff treatment. (3) When a verification request is made in terms of this rule, the following timeline for furnishing the response shall be brought to the notice of the Verification Authority while sending the request : (a) timeline as prescribed in the respective trade agreement; or (b) in absence of such timeline in the agreement, sixty days from the request having been communicated. (4) Where verification in terms of clause (4) or (b) of sub-rule (1) is initiated during the course of customs clearance of imported goods (a) the preferential tariff treatment of such goods may be suspended till conclusion of the verification; (b) the Verification Authority shall be informed of reasons for suspension of preferential tariff treatment while making request of verification; and (c) the proper officer may, on the request of the importer, provisionally assess and clear the goods, subject to importer furnishing a security amount equal to the difference between the duty provisionally assessed under section 18 of the Act and the preferential duty claimed. (5) All requests for verification under this rule shall be made through a nodal office as designated by the Board. (6) Wh....
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....oved exporter referred to in rule 34. (2) A Certificate of Origin shall be valid for twelve months from the date of issue in the exporting Party. (3) The Certificate of Origin shall be submitted to the Customs Administration of the importing Party in accordance with the procedures applicable in that Party 15. Certificate of Origin and Certification Procedures. - (1) The Certificate of Origin shall be in the format as specified in Annexure-E and shall include the HS Code, description and quantity of the products, name of consignee, name of exporter or producer or manufacturer, country of origin, and origin criteria such as value content or change in tariff classification. (2) The Certificate of Origin shall be in the English language. (3) The Certificate of Origin shall bear a unique, sequential serial number separate for each office of issuance and affixed by the issuing authority in the exporting Party. (4) The Certificate of Origin shall be issued by the competent authority of each Party and it shall bear the authorised signature and official seal of the competent authority. (5) The Certificate of Origin shall be valid for the purpose of only one import and shall in....
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....true copy of the original made on the basis of the export documents in their possession bearing the endorsement of the words "CERTIFIED TRUE COPY" (in lieu of the original certificate) and the date of issuance of the original Certificate of Origin. The certified true copy of a Certificate of Origin shall be issued within the validity period of the original Certificate of Origin. The exporter shall immediately notify the loss and undertake not to use the original Certificate of Origin for exports under these rules to the competent authority. (13) Minor discrepancies between the Certificate of Origin and the documents submitted to the Customs Administration at the port of importation for the purpose of carrying out the formalities for importing the products shall not ipso facto invalidate the Certificate of Origin, if such Certificate of Origin corresponds to the products under importation. Minor discrepancies include typing errors or formatting errors, subject to the condition that these minor errors do not affect the authenticity of the Certificate of Origin or the accuracy of the information included in the Certificate of Origin. Discrepancies in the specimen signatures or seals....
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....verification is on a random basis or the veracity of the information is in doubt In case the determination of origin is in doubt, the competent authority shall provide detailed grounds for the doubt concerning the veracity of the Certificate of Origin. (5) The proceedings of verification of origin as provided in these rules shall also apply to the products already cleared for home consumption under preferential tariffs in accordance with the provision of these rules. 23. Procedure for Verification. - (1) Any request made pursuant to rule 22 shall be in accordance with the procedure set forth in this rule. (2) The Customs Administration of the importing Party shall make a request for verification by providing a copy of the Certificate of Origin and any supporting document such as an invoice, packing list, bill of lading or airway bill, etc. (3) The Customs Administration of the importing Party shall specify whether it requires a verification of the genuineness of the Certificate of Origin to rule out any forgery, seeks the minimum required information with supporting documents or seeks to verify the determination of origin. (4) In cases where the Customs Administration ....
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....e requested Party shall promptly inform the dates of the visit, but no later than forty-five days of the receipt of request and give a notice of at least twenty-one days to the requesting Party and exporter or producer or manufacturer so as to enable arrangements for the visit. (9) The competent authorities of the exporting Party shall accompany the authorities of the importing Party in their visit, which may include the participation of specialists who shall act as observers. Each Party can designate specialists, who shall be neutral and have no interest whatsoever in the verification. Each Party may deny the participation of such specialists whenever the latter represent the interests of the companies involved in the verification. (10) Once the visit is concluded, the participants shall subscribe to a "Record of Visit". The said record shall contain the following information: date and place of the carrying out of the visit; identification of the Certificate of Origin which led to the verification; identification of the products under verification; identification of the participants, including indications of the organs and institutions to which they belong; and a record of pro....
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....rity of the exporting Party or exporter or producer or manufacturer is not sufficient to prove that the product qualifies as an originating product as defined under these rules. (2) In cases where the Certificate of Origin is rejected by the Customs Administration of the importing Party, after following the due process provided under its domestic laws, a copy of the decision, containing the grounds of rejection, shall be provided to the importer and the competent authority of the exporting Party. The Customs Administration of the importing Party shall, along with the communication of the decision, return the original Certificate of Origin to the competent authority of the exporting Party. (3) Upon being communicated the grounds for denial of preferential tariff treatment, the exporter or producer or manufacturer in the exporting Party may, within the period provided for in the custom laws of the importing Party, file an appeal against such decision with the appropriate appellate authority under the customs laws and regulations of the importing Party." 19. Before us, there is no dispute that platinum alloy sheets are goods which are otherwise entitled to preferential tariff tre....
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....The detention would also not sustain when tested on the anvil of the CEPA Rules. Before us, it was not disputed that a COO certificate can be duly verified online and consequently, there was no justification for the respondents having failed to undertake such an exercise. We also take note of the petitioners themselves having placed verified copies of the COO certificates on our record. 25. Notwithstanding the above, we find from a reading of the CEPA Rules that a detailed procedure for verification of the COO certificate stands laid in place. As was noticed by us hereinabove, Rule 3 (2) of the CAROTAR spells out the various contingencies in which the proper officer would be justified in stalling the import pending verification. The validity of a COO certificate may be doubted if it is either incomplete, not in accordance with the format prescribed, has been altered, the certificate not authenticated or where its validity itself may have expired. The impugned order fails to found the decision to detain the goods on any of those contingencies. 26. Similar would be the position which would flow when the impugned action is tested on the anvil of the CEPA Rules. Rule 21 obliges the i....
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....s and which by virtue of Rule 22 prescribes the procedure for determination of authenticity and correctness of the COO Certificate. The procedure for verification is thereafter detailed in Rule 23 of the CEPA Rules. In terms of Rule 23 (2), the Customs Administration of the importing Party is enabled to make a request for verification. While initiating that exercise, the Customs Administration of the importing Party is obliged to specify the reasons for initiation of that verification process and whether it is directed to rule out forgery, elicit minimum required information or determine the point of origin. The aforesaid request is liable to be directed to the Customs Administration of the exporting Party and which is statutorily obliged to provide and transmit the requisite information in terms of Rule 23 (5) of the CEPA Rules. 31. Rule 24 of the CEPA Rules and which deals with contingencies where the proper officer harbours a reasonable suspicion regarding the origin of products, an importing Party may submit a request for the furnishing of a guarantee in order to secure fiscal interest and as a pre-condition for the completion of the import. Rule 26 thereafter stipulates the c....
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....derlying that decision being duly recorded. 36. What we seek to emphasise is that since such an action, undoubtedly, would have serious repercussions, it cannot conceivably be left to rest on conjecture or inference. It is this facet of the statutory scheme which would mandate the recordal of reasons, quite apart from the same otherwise being liable to be held to be a necessary concomitant of the principles of fair play, just action and the command of Article 14 of the Constitution itself. 37. As a necessary corollary to the above, the validity of the action would have to be necessarily tested on the basis of the reasons recorded and assigned. It is by now well-settled that the requirement of reasons being recorded forms the core of our jurisprudential doctrine of fairness, constitutes an important safeguard against arbitrary exercise of power and serves as validation of due application of mind. It constitutes a fundamental component of the rule of law itself. 38. When tested on the aforesaid precepts, it is apparent that the impugned orders clearly fail to satisfy the aforesaid tests. All that the respondents assert is that although the SIB has concluded its investigation, they....
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..... Insofar as the condition of requiring a Bank Guarantee or differential duty is concerned, the respondents appear to have mechanically proceeded upon a purported understanding of the Guidelines regarding Provisional Assessment under section 18 of the Customs Act, 1962 [Guidelines], which have been framed by the Central Board of Excise and Customs [CBEC]. 43. It becomes pertinent to note that in terms of Section 18 of the Act, the proper officer is empowered to detain the goods before being released for home consumption and undertake a provisional assessment in situations which are stipulated in that provision. Section 18 stands couched in the following terms:- "SECTION 18. Provisional assessment of duty.-[(1) Notwithstanding anything contained in this Act but without prejudice to the provisions of section 46 [and section 50],- (a) where the importer or exporter is unable to make self-assessment under sub-section (1) of section 17 and makes a request in writing to the proper officer for assessment; or (b) where the proper officer deems it necessary to subject any imported goods or export goods to any chemical or other test; or (c) where the importer or exporter has produce....
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....(2) is not refunded under that sub-section within three months from the date of assessment of duty finally [or-re-assessment of duty, as the case may be], there shall be paid an interest on such unrefunded amount at such rate fixed by the Central Government under section 27A till the date of refund of such amount. (5) The amount of duty refundable under sub-section (2) and the interest under sub-section (4), if any, shall, instead of being credited to the Fund, be paid to the importer or the exporter, as the case may be, if such amount is relatable to- (a) the duty and interest, if any, paid on such duty paid by the importer, or the exporter, as the case may be, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (b) the duty and interest, if any, paid on such duty on imports made by an individual for his personal use; (c) the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; (d) the export duty as specified in section 26; (e) drawback of duty payable under sections 74 and 75.]" 44. As....
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.... import of gold jewellery from Indonesia, across the board, only because, according to the Department, the certificates of origin issued by the issuing authority in Indonesia could not be verified. The circular dated October 6, 2015 requires an Officer of the Customs who has issued a show-cause notice not to pass orders of provisional assessments. It requires the original certificates of origin along with "appealable orders" to be sent to the Central Board of Excise and Customs. Clearly the circular does not, as was sought to be explained by Mr. Dubey, merely elaborate the procedures. It interferes with the discretion to be exercised by the customs officer who is performing a quasi-judicial function. Paragraph 7.1 of the said circular requires the importers to present facts in support of the certificates of origin, which is not a requirement in the original exemption notification. There is considerable merit in the contention that this goes beyond the mandate of the Customs Tariff Origin Rules and constitutes an unreasonable and onerous condition as far as the importers are concerned. 55. As far as the circular dated January 20, 2016 is concerned, regulation 2(2) of the Customs (....