AIFTA Exemption Cannot Be Denied Without Authenticating Certificate Of Origin: CESTAT Mumbai Sets Aside ₹2.44 Crore Customs Demand Against Marvel Silver
Pranav B Prem
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the benefit of exemption under the ASEAN-India Free Trade Agreement (AIFTA) cannot be denied without verifying the authenticity of the Certificate of Origin accompanying the imported goods. The bench comprising Ajay Sharma (Judicial Member) and C.J. Mathew (Technical Member) observed that the adjudicating authority had denied exemption merely on assumptions drawn from a single live consignment, without undertaking verification from the competent issuing authority, as required under the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020.
Background
The appellant, Marvel Silver, imported ten consignments of goods from Thailand between February and July 2018. For all these imports, the company claimed concessional customs duty under Notification No. 46/2011-Cus, as amended by Notification No. 96/2017-Cus, available for goods originating in ASEAN countries under the AIFTA framework. However, the Department issued a show-cause notice alleging discrepancies in one live consignment and, by extrapolating that instance, denied exemption for all eleven consignments. The adjudicating authority concluded that the certification of origin was inadequate, treating the earlier imports as irregular and thereby confirming a customs duty demand along with confiscation orders. The appellant contended before the Tribunal that the denial of exemption was legally unsustainable as there was no allegation or verification proving that the Certificates of Origin were fake, invalid, or not issued by the competent Thai authority. It argued that the adjudicating authority’s conclusion was based purely on assumption, without following the procedure prescribed for verification under the rules.
Findings and Observations
The Tribunal noted that the entire demand was founded on a “template of discrepancy” from one live consignment, which was impermissibly extended to earlier imports. The bench emphasized that the adjudicating authority had not established that the Certificates of Origin were inauthentic or wrongly issued. “There is no allegation, let alone ascertainment, that the 'certificate of origin' corresponding to each of the impugned consignments is not authentic or not issued by the competent authority,” the bench stated. The Tribunal further held that the adjudicating authority’s reasoning that the goods did not conform to the description in the certificate or packing lists was unsupported by evidence. It clarified that unless the prescribed procedure of verification through the issuing authority is followed, the denial of exemption under AIFTA cannot stand.
Decision
The bench observed that the benefit of AIFTA exemption hinges on the origin of goods from an ASEAN member country, and in this case, there was no evidence that the goods did not originate in Thailand. It noted that the adjudicating authority had gone beyond the scope of the de novo adjudication ordered earlier by the Tribunal, and the expanded findings were without jurisdiction. Holding that the denial of exemption and consequent duty demand lacked legal basis, the Tribunal set aside the impugned order and allowed the appeal in favor of Marvel Silver. “The denial of exemption for earlier consignments on such fragile assumption of modus operandi does not sustain in the absence of reference, as prescribed in relevant rules, for questioning validity of the accompanying certificate,” the Tribunal concluded.
Appearance
Shri Sujay Kantawala and Ms Aishwarya Kantawala, Advocates for the appellants
Shri Krishna Murari Azad, Assistant Commissioner (AR) for the respondent
Cause Title: Marvel Silver v. Commissioner of Customs
Case No: Customs Appeal No: 86363 Of 2023
Coram: Ajay Sharma (Judicial Member), C.J. Mathew (Technical Member)
