Legal principle

Unincorporated treaty provisions cannot override national law, and Customs authorities retain full jurisdiction under Section 28 of the Customs Act, 1962 to issue show cause notices alleging fraud, misrepresentation or suppression in preferential duty claims notwithstanding the AIFTA dispute-resolution mechanism under Article 24.

Court decision

The Delhi High Court dismissed all the writ petitions, holding there is no legal or jurisdictional infirmity in the issue of the show cause notices and that Article 24 of AIFTA does not deprive the Customs authorities of their powers or jurisdiction to issue them. The petitioners were granted liberty to raise all pleas before the adjudicating authority, which was directed to pass reasoned and speaking order(s). No costs were awarded. The decision went in favour of the Union of India/the Customs authorities.

Facts

Multiple importers (Rajasthan Metals, Havells India, Mardia Metals, and others) imported copper tubes and pipes claiming preferential rates of duty under the ASEAN-India Free Trade Agreement (AIFTA). Customs authorities issued show cause notices rejecting the AIFTA benefit on the sole ground that the goods did not satisfy the Regional Value Content (RVC) addition of 35%, alleging misrepresentation, suppression or fraud on the RVC claim. The importers also challenged a letter dated 05.07.2023 of the Additional Commissioner of Customs, Jaipur directing all imports of copper tubes and pipes to be cleared without AIFTA benefit on provisional basis upon furnishing bank guarantee and bond. The petitioners contended the show cause notices were issued wholly without or in excess of jurisdiction and with presupposed conclusions.

Key provisions

• Section 28DA, Customs Act, 1962 — Procedure regarding claim of preferential rate of duty
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Rule 6, Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — Verification request
• Rule 8(3), Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — Miscellaneous
• Rule 4, Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — Origin related information to be possessed by importer
• Section 5(1), Customs Tariff Act, 1975 — Levy of a lower rate of duty under a trade agreement
• Rule 3(c), Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — Preferential tariff claim
• Rule 5, Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — Requisition of information from the importer