TMI Blog2023 (9) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... rates are usually attended by comprehensive means of ascertainment and verification. Assigning of rates of duties chargeable on imported goods is a legislative function of the State. As the custodian of ways and means , it is the government that is responsible and accountable for dilution of such rates in public interest which reflects tax policy or exigency of international cooperation and the latter emerging from calibrated negotiations culminating in trade and economic agreements. In the present case, the issue is restricted to the rate chargeable under the authority of section 12 of Customs Act, 1962 without foraying at all into the classification and valuation aspects. It is of essence that, in such determination, the usual presumptions built into the assessment system are eschewed for strict adherence to the scheme of preferential rate else policy formulation at the governmental level will be held to ransom by the statics of administration of tax which is averted to the application of rules for classification incorporated in Customs Tariff Act, 1975 and that for valuation in Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The Operational Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of gold jewellery / diamond studded gold jewellery effected from Thailand under notification no. 85/2004-Cus dated 31st August 2004. We do not propose to detail the specifics of each of the impugned orders that have ordered recovery of differential duties of customs under section 28 of Customs Act, 1962 as well as imposition of penalties under section 114A of Customs Act, 1962 besides imposing penalty under section 112 of Customs Act, 1962 on the individual appellants. 2. It is common ground that the impugned goods had been imported from Thailand, over a span of time and, upon furnishing of certificate of origin, purportedly issued by the authorized person in that country, had been duly cleared under section 47 of Customs Act, 1962. It appears that the validity of the said certificate came under suspicion and, on completion of investigation by the Directorate of Revenue Intelligence (DRI), proceedings were initiated culminating in the orders now impugned before us. 3. The essence of the findings is that the certificates of origin so produced were not acceptable owing to apparent non-compliance with value addition requirement prescribed as threshold for deeming the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence of origin as prescribed in the Interim Rules of Origin is the certificate issued by the designated authority in Thailand and that the officer of customs referred to in the exemption notification has no option but to proceed with assessments accordingly. It was submitted that the investigation had not obtained any cogent and tangible evidence to counter the certification and neither are importers required to furnish any evidence in support. It was further submitted that the institutional mechanism prescribed in rule 15 of the interim Rules of Origin was the sole available recourse for ascertaining veracity of the certification and, in absence of thereof, it was not open to customs authorities to propose contrarily; he vehemently contested the reliance placed on estimation of value addition by a local expert. He referred to adjudication orders of Commissioner of Customs, Jaipur and of Joint Commissioner of Customs, Jaipur which, having been accepted in statutory review, foreclosed the option of taking a divergent stand vis- -vis the appellants herein. It was also contended that the computation set out in rule 6(d) of Interim Rules of Origin could not be worked out either a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual presumptions built into the assessment system are eschewed for strict adherence to the scheme of preferential rate else policy formulation at the governmental level will be held to ransom by the statics of administration of tax which is averted to the application of rules for classification incorporated in Customs Tariff Act, 1975 and that for valuation in Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. 9. In this context and sans any allegation of collusive arrangement of buyer and seller, statements and other documentation are not really evidentiary reference points for ascertainment of origin particularly in the absence of investigation carried out at supplier end. Furthermore, any perceived lack of rigor in the reporting system at the time of import probably has more to do with negotiation stance which tax administration need not necessarily be privy to or even inclined to appreciate. At the appellate level, it can clearly be asserted that the contents of the scheme as laid out in notification no. 85/2004-Cus dated 31st August 2004 and in notification no. 101/2004-Cus (NT) dated 31st August 2004 alone must determine the outcome of the appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terials which is markedly absent in the investigation as narrated in the show cause notices and impugned orders. Ascertainment through domestic agencies or purported admissions in statements recorded by investigation agencies cannot substitute for this essential foundation. Rule 14 of Interim Rules of Origin is again clear on the validity and sanctity of certificate of origin issued by designated Government Authority for determination of eligibility at the importer end. 14. The Operational Certification Procedure is not only elaborate but also sets out details that can lead to rejection of certificate for non-conformity. It is not the case of Revenue that these are a remote possibility. Rule 15 of Interim Rules of Origin is unambiguous about the procedure for retroactive check of the certificates and the circumstances prompting the same. We, therefore, turn to the response of the Department of Foreign Trade, Thailand dated 31st July 2014 that has been referred to in the arguments of Learned Authorized Representative. This is categorical in stating that Having conducted a cross-examination, we confirm the authenticity of these Forms FTA Thai-India. They were truly issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation of incorrect data submitted by the Sri Lankan supplier. We note that there is no such admission by the Director in his statements. Even otherwise, we note that certificate of origin and the data submitted to get such certificates cannot be questioned based on statements of the importers. We find no record to the effect that the country of origin certificates issued by the Sri Lankan Government has been questioned by the Indian Authorities and follow up after import was done in order to cancel or recall the same. We note that the issue regarding country of origin certificate and questions of bonafideness was discussed in the bilateral meeting of working group between the two countries on 5-6-2002 it was agreed that no detention or hold up of cargo is to be ordered on the question of bonafideness of certificates. Verification, if any, can be done post-facto with the concerned local nodal focal points at the respective headquarters. This much has been recorded in the letter dated 5-10-2004 of Department of Commerce, Government of Sri Lanka addressed to Commissioner of Customs (Imports), JNPT. 7. In view of the above discussion and analysis, we find that in the presenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. No opinion or conclusion can be formed based on the assessment, if any, carried out by Sri Lankan Customs. Denial of concession even when valid certificates of origin were submitted (and reiterated) is not legally tenable. 16. In re BDB Exports Pvt Ltd, it has been held that 4. Heard both sides and perused the records of the case. The issue involved in the present appeal is whether the main appellant is eligible to avail partial exemption under Notification No. 105/99-Cus., dated 10-8-1999 when read with SAPTA Rules. As per the first proviso to this Notification, the Assistant Commissioner/Deputy Commissioner/Joint Commissioner has to be satisfied that imported goods are in accordance with the Customs Tariff (Determination of Origin of Goods under the Agreement on SAARC Preferential Trading Arrangement) Rules, 1955 (SAPTA Rules). As per R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the exemption notification. We may add that, the essentiality certificate is also a proof that an item like Captive Power Plant in a given case could be treated as a capital goods for the fertilizer project. It would depend upon the facts of each case. If a project is to be installed in an area where there is shortage of electricity supply and if the project needs continuous flow of electricity and if that project is approved by the Sponsoring Ministry saying that such supply is needed then the Revenue cannot go behind such certificate and deny the benefit of exemption from payment of duty or deny nil rate of duty. To the said effect is the judgment of the Calcutta High Court in the case of Asiatic Oxygen Ltd. (supra) in which it was held that the object behind the specific Heading 98.01 in Customs Tariff Act, 1975 was to promote industrialization and, therefore, the heading was required to be interpreted liberally. It was further held that, once an essentiality certificate was issued by the Sponsoring authority, it was mandatory for the Revenue to register the contract. 4.2 Karnataka High Court in the case of Yellamma Dasappa v. Commissioner of Customs, Bangalore (supra) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority for re-examining all the facts, material, evidence, furnished by both the sides to certify the installed capacity. As per the direction of this Tribunal the Director of Industries was addressed by the Adjudicating Authority on 5-9-2002 along with copies of 11 documents (Para 12 of the impugned order) which are relied upon by the Revenue to contest the correctness of certificate issued by the competent authority. In response, the Commissioner of Industries vide his letter dated 17-6-2003 categorically stated that the installed capacity of the appellant unit is 1,98,000 T.P.A. during the impugned period. He also observed that with reference to the various evidences submitted by the Revenue his office is in agreement with the clarification given by the appellant that their annual installed capacity was 1,98,000 M.T. and they were capable to produce 25% extra, which comes to 2,47,500 T.P.A., for which there was no restriction from the Government end. We have noted that all the evidences available with the Department have been submitted to the Commissioner of Industries who reiterated the certificate already issued. In spite of such confirmation by Commissioner of Industries, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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