TaxTMI 
TaxTMI 
2026 (6) TMI 189
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....ficates of Origin issued by the Government of Thailand. The goods were initially assessed and cleared after acceptance of the Certificates of Origin by the proper officer. Subsequently, investigation was initiated by SIIB in August 2015 alleging that the Local Value-Added Content (LVAC) declared in the Certificates of Origin at 22% was incorrect and that actual value addition was only about 6.5%, based on the Department's computation. A Show Cause Notice was issued proposing denial of exemption, recovery of differential duty of Rs. 5,68,802/-, confiscation, and penalties. The adjudicating authority confirmed the demand, denied exemption, and imposed penalties under Sections 114A and 114AA of the Customs Act, 1962. The Commissioner (Appeals) after due process of Law upheld the order-in-Original. 2. Aggrieved by the Impugned Order, the Appellant has filed the present Appeal before this Tribunal. 3. The Ld. Advocate Shri Ranjeet Singh appeared on behalf of the Appellant and advanced detailed arguments in support of the appeal. The Ld. Authorized Representative Ms. Rajini Menon appeared for the Department and reiterated the findings of the Impugned Order. 4. The Ld. Advocate S....
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....on: - i. Whether the Department is justified in rejecting the Certificate of Origin and recomputing Local Value Added Content (LVAC) in exported goods and whether such verification burden lies on the importer, and, ii. Whether the demand of duty, invocation of extended period and penalties are sustainable in the facts and circumstances of the case. 8. We now proceed to examine the issues arising for determination, in the backdrop of the statutory framework, factual matrix, interim rules of Origin and judicial precedents cited by both the sides. Issue (i): Whether the Department is justified in rejecting the Certificate of Origin and recomputing LVAC contrary to the Interim Rules of Origin and whether such verification burden lies on the importer 9.1 The principal issue for consideration in the present case arises from the rejection of the Certificate of Origin issued by the designated authority of Thailand and the re-computation of Local Value-Added Content (LVAC) by the Department through an alternate methodology. The issue also necessarily involves determination of whether such verification of value addition lies upon the importer or within the domain o....
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....in issued by the designated authority constitutes the foundational document for determining eligibility and cannot be disregarded without invoking the verification mechanism prescribed under the Interim Rules of Origin. The Tribunal further held that unilateral re-computation of value addition by the Department, without determining the value of non-originating materials in terms of Rule 6(d), is not legally sustainable. The ratio of the said decision, being directly applicable to the facts of the present case, is relied upon. 9.6 We find that the Appellant has also rightly relied upon the decision of the Tribunal in Keyur Shah & Ors. v. Commissioner of Customs, 2025 (6) TMI 546 - CESTAT MUMBAI wherein it was held that Customs authorities cannot substitute the statutory formula prescribed under the Interim Rules of Origin by adopting alternate methodologies such as reliance on making charges alone, nor can they assume the role of the issuing authority in determining origin. It was further held that in the absence of invocation of the verification procedure under Rule 15, denial of exemption is unsustainable. The ratio of the said decision, being directly applicable to the facts o....
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....e of prescribed verification, strikes at the very root of the statutory scheme. 9.11 In view of the above, we hold that the rejection of the Certificate of Origin and re-computation of LVAC by the Department is contrary to the Interim Rules of Origin and is legally unsustainable. Accordingly, issue (i) is answered in favour of the Appellant. Issue (ii): Sustainability of demand, extended period and penalties 10.1 Once it is held that the denial of exemption is not sustainable, the consequential demand of duty also fails. Even otherwise, the invocation of extended period is not justified in the facts of the present case, as the Appellant had disclosed all relevant documents, including the Certificates of Origin, at the time of import, which were duly accepted by the Department. We find that the Hon'ble Supreme Court in M/s. Uniworth Textiles Ltd. v. Commissioner of Central Excise Raipur 2013(288) ELT 161 (SC) has categorically held that suppression must be wilful and with an intent to evade duty and that mere omission or failure does not constitute suppression. 10.2 Further, the Appellant has relied upon the judgment of the Hon'ble Supreme Court in Aban Loyd Chiles Offsh....