Verification to be Initiated from Issuing Authority when Certification Suspected to be Faulty: CESTAT quashes Confiscation of Rough Diamonds [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed confiscation of rough diamonds and observed that the verification to be initiated from issuing authority when certification suspected to be faulty.

The appeals have been preferred by M/s Hari Darshan Exports Pvt Ltd and Dinesh Dhola against the order1 of first appellate authority which, on challenge to order of original authority, assessing the goods on value of ₹1,23,89,870 by recourse to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 after rejecting declared value of ₹2,48,95,371 under the authority of rule 12 therein, confiscating the imported goods under section 111 (m) of Customs Act, 1962 but allowing redemption under section 125 of Customs Act, 1962.

The appellant had imported 13278.23 carats of ‘rough diamonds’ against bill of entry from Belgium with declared value of US$ 345,769.04 and furnished invoice as well as Kimberly Process Certificate. Valuation, entrusted to ‘trade panel’, as per prevailing mechanism, elicited the allegation that the actual value was substantially lower leading to proceedings before the original authority that was found to be not legal and proper by the jurisdictional Commissioner of Customs.

The Counsel for appellant contended that, ‘rough diamonds’ being subject to ‘nil’ rate of duty on import, it was not open to customs authorities to take up value for ascertainment. He also contended that at no stage was there any allegation of the Kimberly Process Certification (KPC) being invalid except upon the post-hearing finding on re-valuation.

The Authorized Representative submitted that the procedure for clearance of ‘diamonds’ required ascertainment by ‘trade panel’ and that repetitive references had been made only at the instance of the appellant. It was further submitted that stipulation in Foreign Trade Policy (FTP) prohibited the import of ‘rough diamonds’ without corresponding Kimberly Process Certification (KPC) confirming prescribed details and the discrepancies cited in the impugned order were such as to discard the certificate and invoke the detriments following import of prohibited goods.

A Two-Member Bench comprising CJ Mathew, Technical Member and Ajay Sharma, Judicial Member observed that “If the certification was suspected to be faulty or not pertinent to the impugned goods, necessary verification should have been initiated with issuing authorities and taken to its logical conclusion. No such exercise was undertaken and thus the denial is to be tested solely on conformity of the re-determination with law.”

“It is not just the legality of the re-valuation that is relevant in the present dispute but even the legality of considering the certification, based on declaration of supplier in country of export to appropriate authorities there, as liable to be discarded on the basis of a finding, such as it is, of re-valuation undertaken by customs authorities, empowered restrictedly and in a context, for purpose so limited as not to extend to verification of one detail in a certificate prescribed by law for furnishing at the time of import” the Bench concluded.

To Read the full text of the Order CLICK HERE

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