Legal principle

Preferential/FTA duty benefit cannot be denied, nor duty, confiscation or penalty confirmed, on suspicion or third-party verification alone — the department must verify the importer's own Certificate of Origin from the issuing authority under Article 16 AIFTA/Section 28DA/CAROTAR 2020, and retracted statements without independent corroboration cannot sustain the case.

Court decision

The Tribunal (Members Somesh Arora, Judicial, and A.K. Jyotishi, Technical) allowed the appeal of Vrunda International with consequential relief, holding that on overall appreciation of evidence and existing case law the department's case could not be upheld — i.e., the denial of the notification benefit, duty demand, confiscation and penalties could not stand.

Facts

M/s. Vrunda International imported Cold Rolled Stainless-Steel Coils of Grade-J3 (Chapter 72) from M/s. Megah Maju Entreprises (MMME), Malaysia and claimed concessional duty under Notification No. 46/2011-CUS (ASEAN-India FTA) on the strength of Certificates of Origin. Acting on DRI intelligence that importers were wrongly availing the notification, the department held and examined the goods at ICD Tumb (panchnama 20.08.2020), seized them (memo dated 05.02.2021) and later provisionally released them against a bank guarantee of Rs.24,98,572 and bond of Rs.51,22,851. Investigation showed MMME's website indicated only aluminium trade, that payment was made only after DRI's investigation began despite '100% advance' proforma terms, and MITI confirmed it never received a CoO application from MMME nor had it registered on the ePCO system. The proprietor's initial statement admitted the goods were intentionally routed through Malaysia to bypass CVD on Chinese-origin goods and wrongly avail the FTA benefit. The Principal Commissioner (Order-in-Original dated 21.12.2023) denied the notification benefit, confirmed differential duty with interest, held the goods liable to confiscation with a redemption option, and imposed penalties under sections 114A and 114AA.

Key provisions

• Section 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 28(4), Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 46(4), Customs Act, 1962 — Entry of goods on importation
• Section 138(b), Customs Act, 1962 — Offences to be tried summarily
• Section 28DA, Customs Act, 1962 — Procedure regarding claim of preferential rate of duty