Customs Cannot Disregard Country of Origin Without Proper Verification: CESTAT Sets Aside Duty Demand [Read Order]

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that customs authorities cannot disregard a Certificate of Origin (COO) issued under a Free Trade Agreement without following the prescribed verification procedure under law.

Tech Zone Global Trading Company, the lead appellant, imported PVC flex banners purportedly of Malaysian origin and availed the benefits under the ASEAN-India Free Trade Agreement (AIFTA). The Directorate of Revenue Intelligence (DRI) initiated an investigation alleging that the goods were actually of Chinese origin and had been routed through Malaysia to evade anti-dumping duty (ADD).

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Based on this allegation, the department issued a show cause notice demanding differential duty, along with interest and penalties. The Commissioner of Customs passed an order confirming the demand and holding the appellants guilty of mis-declaration of country of origin, weight, and value.

Aggrieved by the order, the appellant challenged the same before the CESTAT, arguing that the COO certificates issued by the Malaysian authorities were valid and not proven to be false. They submitted that the customs authorities failed to follow the verification mechanism laid down under the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Member States of ASEAN and the Republic of India) Rules, 2009.

The counsel also argued that the DRI relied heavily on uncorroborated third-party statements and failed to establish a concrete link between the impugned consignments and the alleged Chinese origin.

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The revenue counsel argued that the goods originated in China and that importers misused the COO and IECs to evade ADD. They relied on statements obtained during the investigation and documents allegedly recovered from third parties.

The two-member bench comprising M. Ajit Kumar (Technical Member) and P. Dinesha (Judicial Member) found that the department failed to prove that the goods originated in China or that the COO certificates were fraudulently obtained. The tribunal held that without proper verification through the competent authorities in Malaysia as prescribed under the 2009 Rules, the COO could not be disregarded. The tribunal also observed that the investigation failed to establish any link between the containers referred to in the show cause notice and those imported by the appellants.

The tribunal held that the alleged mis-declaration of weight and value was not supported by credible or professional evidence. The re-assessment of value based on unrelated imports and flawed weighment processes lacked legal validity. The use of statements, uncorroborated by documentary evidence, was found insufficient to sustain the serious allegations made.

The tribunal set aside the order and allowed the appeals. The appellants were held entitled to consequential reliefs as per law.

To Read the full text of the Order CLICK HERE

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