Legal principle

A treaty provision such as AIFTA Article 24 that is not transformed into municipal legislation cannot be invoked or enforced in Indian courts, and procedural time limits under Operational Certification Procedures stand subordinate to the substantive provisions of the Customs Act, 1962.

Court decision

The Court dismissed all four Special Civil Applications and upheld the Orders-in-Original (dated 29.05.2020, 24.06.2020 and 20.12.2019) and the Order-in-Appeal, holding that the demands, confiscation and penalties were passed under a competent and valid exercise of powers under Section 28(4) of the Customs Act, in favour of the Revenue (Union of India).

Facts

Trafigura India Pvt. Ltd., Lykos India Pvt. Ltd. and Talin International Pvt. Ltd. imported Tin Ingots from Malaysia (manufactured by Malaysia Smelting Corporation) and claimed 0% concessional Basic Customs Duty under Notification No. 46/2011 (India-ASEAN preferential tariff) on the strength of Certificates of Origin. Investigation revealed that the Regional Value Content (RVC) shown in the COOs, though required to be above 35%, was actually much less and had been misstated and misrepresented to wrongfully project eligibility. Show-cause notices issued in 2018-2019 culminated in Orders-in-Original under Section 28(4) read with Section 46(4) of the Customs Act, 1962, confirming differential/short-levied duty, ordering confiscation under Sections 111(m) and 111(o), imposing penalties under Sections 112(a) and 114A and interest under Section 28AA, with penalty amounts including Rs. 25,90,825 on Trafigura and equivalent-duty penalties on the others. The importers challenged these orders and the confirming Order-in-Appeal before the Gujarat High Court under Article 226.

Key provisions

• 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 114A, Customs Act, 1962 — Penalty for short-levy or non-levy of duty in certain cases
• Section 28AA, Customs Act, 1962 — Interest on delayed payment of duty
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 111(m), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 25, Customs Act, 1962 — Power to grant exemption from duty
• Section 47, Customs Act, 1962 — Clearance of goods for home consumption
• Section 45, Customs Act, 1962 — Restrictions on custody and removal of imported goods
• Section 5(1), Customs Tariff Act, 1975 — Levy of a lower rate of duty under a trade agreement