TaxTMI 
TaxTMI 
2026 (9) TMI 212
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.... 2. However, during the pendency of the present Petition, this Court was apprised that, pursuant to the aforesaid SCNs, the Office of the Principal Commissioner of Customs had proceeded to pass adjudication Orders, namely, the Order-in-Original (OIO) dated 27.09.2019 in respect of SCN dated 07.12.2018, and OIO dated 05.07.2019 in respect of SCN dated 11.12.2018. Consequently, the lis, in the present proceedings, stands crystallised around the aforesaid OIOs, which now constitute the subject matter of challenge. BRIEF BACKGROUND: 3. The controversy in the present proceedings arises out of the availment of preferential customs duty on High Grade Tin Ingots manufactured in Malaysia by MSC. The dispute, at its core, concerns the validity and correctness of the Certificates of Origin (COO) issued by the Ministry of International Trade and Industry, Malaysia [hereinafter referred to as 'MITI'], the methodology adopted for computation of the Regional Value Content (RVC) of the goods, and, consequently, the Petitioner's entitlement to the preferential tariff benefit extended under the ASEAN-India Free Trade Area framework [hereinafter referred to as 'AIFTA']. 4. The relevant fact....
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....er alia, in the import and trade of Tin Ingots, imported High Grade Tin Ingots manufactured by MSC in Malaysia, on the basis of COO issued by the DA, namely, MITI. It is on the basis of the said COO that the Petitioner claimed the benefit under subject Notification and cleared the imported Tin Ingots by availing BCD at the rate of NIL. Investigation 10. Subsequently, the Directorate of Revenue Intelligence (DRI), Mumbai, initiated an investigation into the availment of preferential benefit by the Petitioner. Since the validity of origin claims reflected in the COOs had come under scrutiny, the DRI, vide its letter dated 06.04.2018, requested Central Board of Indirect Taxes and Customs (CBIC) to undertake a retroactive check of the COO, in terms of Article 16 of Annexure III to RoO, 2009, by forwarding the same to the competent authorities in Malaysia for verification. 11. However, since no response was received from Malaysian authorities to the aforesaid request, the matter moved to next stage of verification. A team of officers from DRI, Mumbai, under Article 17 of Annexure-III of the RoO, 2009, undertook a verification visit to the premises of MSC. The purpose of the vis....
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....erefore, not eligible for the preferential rate of customs duty claimed on the strength of the COO. Accordingly, the Impugned SCNs came to be issued against the Petitioner, demanding differential custom duty under Section 28(4) of the Customs Act, 1962 [hereinafter referred to as 'Act of 1962'], along with penalty under Sections 112(a)/114A and 114AA as well as directing confiscation of imported goods under Sections 111(m) and 111(o) thereof. 17. Aggrieved by the issuance of the Impugned SCNs, the Petitioner approached this Court by way of the present Petition. Notably, no reply was filed to the SCNs and, despite being granted various opportunities of personal hearing, the Petitioner failed to avail same. 18. During the pendency of the present Petition, the parties, by way of CM Appl. 6825/2020 and Short Affidavit filed to the unamended Petition, apprised this Court that the proceedings initiated pursuant to the Impugned SCNs had, in the interregnum, culminated in Impugned OIOs passed by the Commissioner of Customs. 19. Insofar as SCN dated 11.12.2018 is concerned, the same came to be upheld by way of the OIO dated 05.07.2019. By this OIO, the benefit of concessional duty ....
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.... Gujarat in Trafigura India Pvt. Ltd. v. Union of India (2023) 13 Centax 9 (Guj.). The aforesaid judgment also arose out of import of Tin Ingots allegedly manufactured by MSC, which were declared in the BoE as being of Malaysian Origin and in respect of which a COO was produced, leading to availment of concessional rate of NIL-BCD under subject Notification. Adjudicating upon the aforesaid factual matrix and upon hearing the parties therein, the Division Bench of the Court dismissed the Petition therein, upholding the OIO. 25. The High Court of Gujarat answered the following questions: "(i) whether it was necessary to go for dispute resolution under the Article 24 of AIFTA. (ii) Whether the customs authorities were not entitled to exercise their powers under the Customs Act, without the importing party/country first taking recourse to AIFTA Article 24 mechanism; Whether on that count the proceedings under the Customs Act, 1962, were rendered without jurisdiction or bad in law. (iii) whether the customs authorities in India had the jurisdiction to proceed against the petitioners in wake of provisions of AIFTA provisions and the Rules of Origin transform....
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....rafigura India Pvt. Ltd. (Supra) and submitted that the Customs Authorities were, even prior to the 2020 amendment, vested with the requisite statutory powers under Section 28 of the Act of 1962. It was contended that the subsequent amendment was merely clarificatory and introduced by way of abundant caution and did not confer any new or substantive power upon the Customs Authorities. ANALYSIS AND FINDINGS: 29. The submissions advanced on behalf of the Petitioner arise in the backdrop of the decision of the Gujarat High Court in Trafigura India Pvt. Ltd. (Supra), which came to be followed by the Bombay High Court in Purple Products Pvt. Ltd. (Supra), on facts that are, in all material particulars, indistinguishable from those obtaining in the present case. The aforesaid decisions, also concerned Tin Ingots manufactured by MSC in Malaysia, cleared on the strength of a COO issued by MITI, and the subsequent proceedings under Section 28 of the Customs Act, 1962. While the first ground raised herein, came to be considered by the Gujarat High Court, answering Question (ii) noted in the preceding paragraph of this judgment. The second ground urged in the present case came to be con....
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....ly identical facts. Applying the foregoing reasoning, Article 24 of AIFTA, not having been transformed into or incorporated as part of domestic law, cannot operate to oust the jurisdiction of the Customs Authorities to proceed against the Petitioner under the substantive provisions of the Act of 1963. Accordingly, the first submission made on behalf of the Petitioner, does not merit acceptance and is rejected. Re: Submission (ii)-Absence of enabling power prior to Section 28DA of the Act of 1962 35. As regards the argument based specifically on the insertion of Chapter V-AA, it may be noted that Section 28 read with Section 46, of the unamended Customs Act, 1962 already conferred sufficient power to recover duties that were short-lived or short-paid by reason of suppression of facts, independent of any COO specific verification mechanism. The relevant portion of Sections 28 and 46 of the Act of 1962, as they stood at the relevant time, are extracted below: "28. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) Where any duty has not been levied or not paid or has been short-levied or short-paid or erroneou....
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.... upon a COO-specific verification mechanism. 37. The insertion of Chapter V-AA and Section 28DA was, as rightly submitted by learned counsel for the Respondents, in the nature of an additional and more elaborate procedural mechanism specifically calibrated to preferential-tariff/COO-verification disputes; it did not create a power that was, until then, altogether absent, nor did it curtail or impliedly repeal the pre-existing general power under Section 28 of the Act of 1962. 38. The submission pertaining to insertion of Chapter V-AA and Section 28DA to the Act of 1962, was also answered by the Bombay High Court in Purple Products Pvt. Ltd. (Supra). Dealing with the aforesaid submission the following finding was recorded, which reads as under: "58. The argument based on the introduction of Chapter VAA in the Customs Act, effective from 27 March 2020, cannot be accepted. Based on the provisions of Section 28DA, we cannot infer that the pre-amended provisions of the Customs Act, 1962, prevented the Customs Authorities from exercising powers under Section 28 of the Customs Act and investigating cases of misrepresentation, suppression, or fraud. Certain additional powers....
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....tement or (c) suppression of facts by the importer or exporter or agent or employee of the importer or exporter, the competent officer may act within five years from the relevant date and serve notice on the person chargeable with duty or interest, which has not been paid. In other words, the provisions of sub-section (4) contemplates extended period of limitation for taking duty proceeding for non-payment or short-levy of customs duty. 16.5 Section 28 of the Customs Act is pari materia with Section 11A of the Central Excise Act. In the context Section 28 of the Customs Act as it existed prior to amendment by Act 8 of 2011, the Supreme Court, in Aban Loyd Chiles Offshore Limited v. Commissioner of Customs, Maharashtra [2006 (200) ELT 370 SC/2006 taxmann.com 1790 (SC)), observed that there was material difference between the provisions in the Customs Act and that of in Central Excise Act. It was observed that the word 'fraud' and words 'with intent to evade payment of duty' occurring in Proviso 2 Section 11A of the Central Excise Act missing in Section 28(1) of the Customs Act and the Proviso in particular. It was further observed by the Apex Court that Proviso of Section 2....
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.... Bill of Entry has to subscribe and make a declaration regarding the truth of the contents of the Bill of Entry. In the present case, the Origin Certificate containing the RVC value details was part and parcel of the documents for which truthfulness was declared. 16.8 Sub-section (4) of section 46 reads as under, "(4) The importer while presenting a bill of entry shall make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, and such other documents relating to the imported goods as may be prescribed." 16.9 The documents relating to the calculation of RVC remained part of the documents including the Bill of Entry submitted to claim exemption from Customs duty under the Notification No. 46/2011. The petitioners who were engaged in the import in their normal course of business could not have been disclaimed the knowledge that on factual calculation and the criteria adopted, the RVC was wrongly stated. The petitioners were importers engaged in similar Import business, were well aware and conversant with the affairs. When the RVC cont....
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....verification mechanism under Chapter V-AA and Section 28DA. 45. In so far as the present controversy is concerned, the analysis of Gujarat High Court, while dealing with the interplay between Sections 28 of 46 of the Act of 1962, assumes considerable significance. The Court treated Section 46(4) as imposing a substantive obligation upon the importer to truthfully disclose the particulars forming the basis of its claim for preferential treatment, and Section 28 as supplying the corresponding statutory machinery for recovery where duty had escaped levy or payment by reason of suppression. 46. Therefore, the later insertion of Chapter V-AA and Section 28DA, cannot by itself be construed as having created, for the first time, the power of the Customs Authorities to act upon an incorrect or suppressed declaration made in a BoE. At the same time, the finding of the Gujarat High Court that suppression simpliciter suffices under the Section 28(4) must necessarily be understood in the context of the statutory language applicable to that provision and cannot, without further examination, be mechanically transposed to the post-amended provision as argued by the Petitioner. Accordingly, ....