TaxTMI 
TaxTMI 
2025 (9) TMI 1100
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....hereinafter referred to as "AIFTA Agreement") in terms of Notification No. 46/2011- Customs dated 01.06.2011 read with Notification No.189/2009-Cus (NT) dated 31.12.2009, which notified the Customs Tariff [Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India] Rules, 2009 (in short '2009 Rules'). The present writ petition deals with petitioner's claim of exemption benefits under the AIFTA Agreement based on the strength of 901 Certificates of Origin (hereinafter referred to as "COO") issued by the Issuing Authorities in Vietnam and Thailand, during the period August 2017 to 30.04.2022. 2.1. 1st respondent has issued the Impugned Show Cause Notice bearing F.No.CUS/APR/SCN/194/2022-GR 5A (DIN: 20220973MX000000F778) dated 15.09.2022 and generated on 13.04.2023. The same is challenged by petitioner primarily on the following grounds: a. The Impugned show cause notice is wholly without jurisdiction, as the same has been issued without following rather ignoring the provisions of the Dispute Resolution Mechanism provided under A....
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....tion No.189 of 2009 dated 31.12.2009. The said Rules do not provide for Disputes Settlement Mechanism nor denude power available to the officer under the Customs Act, in case of non levy or short levy and non payment or short payment of Customs duties etc. 3.4. Paragraph 16 and 17 in Annexure III to the 2009 Rules are enabling provisions and directory in nature and not mandatory. Object of the present exercise by the respondent authorities is to find out correctness of entitlement of the COO. Rule 5 of the 2009 Rules provides that product shall be deemed to be rejected if the AIFTA content is less than 35% of the FOB ("Free on Board") value. Rules provide for direct method and indirect method for determining value of AIFTA content. Direct method requires >=35% AIFTA content of the country of origin and indirect method requires non AIFTA part equal or less than 65%. The proof of 35%:65% can be examined by any method. One such method is process of verification provided under Paragraph 16 and 17 in Annexure III of 2009 Rules. However the same is not exhaustive. 3.5. If on verification under methods other than Paragraph 16 and 17 in Annexure III of 2009 Rules, DRI on investigatio....
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....e show-cause notice or at the stage of assessment where alternative remedy by way of filing a reply or appeal as the case may be, is available ..." ii) State of U.P. And another v. Anil Kumar Ramesh Chandra Glass Works and another, reported in (2005) 11 SCC 451 : "6. ... In any event, this Court had repeatedly held that Article 226 should not be permitted to be invoked in order to challenge show-cause notices...." iii) Union of India and another v. Kunisetty Satyanarayana, reported in (2006) 12 SCC 28 : "15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge-sheet." iv) Special Director and another v. Mohd. Ghulam Ghouse and another, reported in (2004) 3 SCC 440 : "5. This Court in a large number of cases has deprecated the practice of the High Courts entertaining writ petitions questioning legality of the show-cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless the High Court is satisfied that the ....
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....ars that grievance of the petitioner is that while issuing the show cause notice, the process contemplated under Articles 16 to 21 of Appendix 'D' to the AIFTA Agreement incorporated in Annexure III of 2009 Rules, has not been complied. This is distinct from the issue of efficacy of Article 24 of Appendix 'D' to the AIFTA Agreement. The verification process would reach Article 24 of Appendix 'D' to the AIFTA Agreement only after the process under Articles 16 to 21 is exhausted. The challenge is on the premise that procedure under Article 16 to 21 of Appendix 'D' to the AIFTA Agreement is not completed while issuing show cause notice, this is different from the question of efficacy of Article 24 which would arise at a later stage after exhausting the steps/process provided in Article 16 to 21 of Appendix 'D' to the AIFTA Agreement. b) Secondly, there is generalisation in rejecting more than 880 Certificates of origin thereby disallowing claim of exemption on the basis of merely 12 certificates. This is an issue which would have to be addressed by Adjudicating Authority. Further, question arises as to the mental element / mens rea of p....