By TIOL News Service

NEW DELHI, OCT 25, 2017: THE appellant imported CFL from Sri Lanka and claimed concession in customs duty in terms of the Notification No.26/2000-Cus dated 1.3.2000 read with notification no.19/2000-Cus(NT) dated 1.3.2000 as available for goods of Sri Lankan origin.

They filed the prescribed certificate of origin as issued by the designated competent authority in Sri Lanka in terms of India-Srilanka Free Trade Agreement (ISFTA).

Revenue entertained a doubt as to the correctness of the claim for concessional rate of duty for the impugned goods. It was viewed that the goods were manufactured in China and imported through Sri Lanka to India.

Based on this apprehension, the goods were detained but the appellant moved the Rajasthan High Court which ordered for provisional release of goods on payment of customs duty and on furnishing 20% of value of the goods as bank guarantee.

Not contended with this order, Revenue filed further appeal but the Supreme Court observed (on 07.05.2015) that since the show cause notice dated 22.07.2008 had already been issued by the Customs Authorities, the matter can be decided by the Adjudicating Authority after hearing the appellant.

Adjudication resulted in the impugned order and which is appealed by the importer before the CESTAT.

The Original Authority held that the country of origin certificates could not be accepted as the same have been obtained by filing incorrect declaration with the Sri Lankan Authorities; that impugned goods were declared as tube with plastic cover and shown as classified under CTH 7011.10 whereas the same was verified and reported by Sri Lankan Customs as classifiable under CTH 8539.

Moreover, the adjudicating authority rejected the proposal in the show cause notice that the goods were of Chinese origin. It was observed that there was no evidence to show that the goods have been imported into Sri Lanka from China in CKD/SKD condition, meriting classification as CFL.

Accordingly, the Original Authority held that the Anti-Dumping duty as applicable to the impugned goods, if imported from China, is not liable to be charged in the present case.

However, the Original Authority rejected the claim of the appellant for preferential treatment of customs duty under Notification No.26/2000-Cus stating that the importer has not fulfilled the conditions specified under Customs Tariff (Determination of origin of goods under the Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and the Republic of India) Rules, 2000.

Resultantly, the customs duty liability of Rs.46,21,917/- was confirmed. Demand for Anti-Dumping duty was dropped. The imported goods valued at Rs.2,02,85,701/- were ordered to be confiscated with option to redeem on payment of fine of Rs.30,00,000/-. Penalties were imposed.

The appellant is before the CESTAT.

After considering the submissions, the Bench inter alia observed -

+ Certificates of Origin issued by the competent Designated Authority in Sri Lanka have been filed for claiming preferential treatment for customs duty. The genuineness of the certificates is not in dispute. The certificates are valid and reiterated by the issuing authority even after specific queries were made by the Customs authorities in India.

+ Similar consignments have been cleared by the Customs authorities extending the preferential rate of duty in similar set of facts.

+ We note that there is a basic contradiction in the findings recorded. After careful examination of the available details, the Original Authority categorically held that the goods were not of Chinese origin and as such, anti-dumping duty cannot be levied on them, which is otherwise leviable if the goods are of Chinese origin. Having recorded thus, the Original Authority proceeded to hold that the appellant is not eligible for preferential rate though admittedly, the goods have originated from Sri Lanka. In other words, the goods were held to be of not Chinese origin and also not of Sri Lankan origin.

+ We note that it is clear that the question of country of origin of the present goods is left hanging without a finding by the Original Authority. The goods were neither of Chinese origin nor of Sri Lankan origin. We note that the same is not a tenable position.

+ The Original Authority has apparently exceeded the jurisdiction in going into the aspects of possible classification of inputs used by the supplier in the manufacture of impugned goods in Sri Lanka. Holding that one of the input and the final product fall under the same four digit classification, it was concluded that the provisions of the Rule 7 have not been fulfilled. More specifically, reference was made by the Original Authority to condition (b) and (d) of the Rule 7. This is based on the certain reports received from Sri Lankan Customs.

+ The Original Authority while conceding the point that the assessment made by Sri Lankan Customs at the time of import of non-originating goods from China cannot be put to question here in India, proceeded to consider certain reports given by Sri Lankan Customs with reference to classification of one of the non-originating inputs. The classification of such input is not in the domain of the assessing officer in India.

Concluding that denial of concession even when valid certificates of origin were submitted (and reiterated) is not legally tenable, the impugned order was set aside and the appeals were allowed.

(See2017-TIOL-3786-CESTAT-DEL)