By TIOL News Service

NEW DELHI , OCT 24, 2017: THE appellants imported Zinc anodes and claimed exemption from customs duty under Notification No. 26/2000-CUS dated 01/03/2000.

The said notification allows exemption for goods originating from Sri Lanka in terms of Customs Tariff Rules, 2000, under Notification 19/2000-CUS(NT) dated 01/03/2000. The appellants filed relevant certificates of origin issued by Designated Competent Authority of Government of Sri Lanka.

The Revenue held a view that the appellants did not fulfil the condition of Rule 7 of the said Origin Rules, 2000 as the value addition in Sri Lanka had not met the minimum requirement of 35%.

The Original Authority denied the exemption claimed and confirmed the differential duty of Rs. 18,49,761/-. Confiscation of the goods imported was ordered and a redemption fine of Rs. 13,15,000/- was levied. Penalties equal to duty was imposed along with further penalty of Rs. 2,50,000/- each on Managing Director and the Director of importing company.

The importer is before the CESTAT and submits that there is no evidence to the effect that the certificate of origin issued by the Competent Authority was not bonafide or based on incorrect information or the said certificate has been withdrawn or amended later. And, therefore, the order is required to be set aside.

The AR contested the appeals on the ground that verifications have been done by the Sri Lankan customs and reports are available on record; thatthe comparison with the LME Metal price during the relevant time will indicate that the value has been grossly mis-declared, apparently to avail ineligible certificate of origin based on incorrect value addition; that such certificate obtained on incorrect information cannot form basis of claiming exemption; that the importer knowingly colluded the Sri Lankan supplier in order to avail the exemption.

The CESTAT inter alia observed -

++ We note that the certificates of origin have been issued by Competent Authority of Sri Lankan Government. The same is not in dispute. We already note that the certificate were not recalled or cancelled by the issuing authority. The only ground for denial of exemption is, the Zinc Ingots value subjected to assessment by Sri Lankan customs appears to be low. For this, support was drawn from LME price. We note that assessment of import of ingots was made by Sri Lanka Customs. The same cannot be varied here . We find it is not open to counterpart in India to re-assess the goods which are not imported into India.

++ We note that none of these reports by Sri Lankan Customs give any indication about the value addition not being fulfilled by the Sri Lankan supplier . To this extent, there is no factual support for the observation made in the impugned order.

Concluding that in the presence of valid certificates of origin issued by Competent Authority, the assessing authorities in India are not right in denying the benefit of exemption notification, the impugned order was set aside and the appeals were allowed.

(See 2017-TIOL-3774-CESTAT-DEL)