Pranav B Prem

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench comprising C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) has set aside a customs duty demand of ₹2.44 crore, confiscation orders, and penalties imposed by the Commissioner of Customs, Air Cargo Complex, Mumbai. The Tribunal ruled that authorities cannot deny preferential duty benefits under the ASEAN-India Free Trade Agreement (AIFTA) without verifying the authenticity of the Certificates of Origin through the procedure prescribed under law.

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Background

The case arose out of ten consignments imported by M/s Marvel Silver from Thailand between February 2018 and July 2018, for which concessional duty benefits were claimed under Notification No. 46/2011-Cus, as amended, applicable to goods originating from ASEAN member countries. The dispute began when customs authorities raised objections in a later consignment (August 2018), questioning discrepancies between the import documents and the Certificate of Origin (COO). The importer paid ₹37,99,601 as customs duty under protest for that shipment and subsequently faced a show-cause notice covering earlier consignments as well.

The Commissioner of Customs, in an Order-in-Original dated May 30, 2023, demanded ₹2.44 crore in differential duty, confiscated the goods under Section 111 of the Customs Act, 1962, imposed a redemption fine of ₹3.25 crore, and levied penalties under Sections 112, 114A, and 114AA on both the company and its proprietor Nilesh Pushpraj Jain.

Appellant’s Submissions

Appearing for the appellants, Dr. Sujay Kantawala and Ms. Aishwarya Kantawala argued that the de novo adjudicating authority exceeded the scope of remand granted by the Tribunal in an earlier round (2022-TIOL-1189-CESTAT-MUM), which had directed the Commissioner to re-examine the matter and pass a speaking order after considering all submissions.

They contended that the authority instead introduced new penal elements, such as the redemption fine under Section 125, even though the imported goods were not physically available for confiscation. The counsel relied on the Bombay High Court’s decision in Commissioner of Customs (Import) v. Finesse Creations [2009 (248) ELT 112 (Bom)], affirmed by the Supreme Court, to argue that such an imposition was legally unsustainable. It was further submitted that the Certificates of Origin issued by the competent Thai authority were never found to be fake or invalid, and the customs authorities failed to verify their authenticity through official channels as required under the Operational Certification Procedures annexed to the AIFTA Rules.

Findings of the Tribunal

The Tribunal found that the de novo adjudicating authority did not comply with the directions given in the earlier remand. Instead of evaluating the importer’s submissions, it issued a fresh order based largely on assumptions and the circumstances of a single later consignment, which could not be extrapolated to earlier imports. The bench observed that the adjudicating authority had “lost sight of the limits of de novo proceedings” and held that introducing a redemption fine when the goods were not available was without legal authority. It emphasized that “an appellant cannot be placed in a worse position merely because they exercised their right to appeal.”

On the issue of preferential duty, the Tribunal underscored that the AIFTA benefit cannot be denied without verifying the Certificates of Origin through prescribed procedures. The bench noted: “There is no finding that the impugned goods did not originate in Thailand. There is no allegation, let alone ascertainment, that the ‘Certificate of Origin’ corresponding to each consignment is not authentic or not issued by the competent authority.”  The Tribunal further found no evidence that the product descriptions in the Certificates of Origin differed from those in the import documents. Hence, the denial of concessional duty on the assumption that the certificates were invalid was without factual or legal foundation.

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Holding that the adjudicating authority’s conclusions were unsupported, the CESTAT set aside the impugned order in its entirety — including the demand of ₹2.44 crore, confiscation of goods, redemption fine, and penalties. By allowing the appeals of M/s Marvel Silver and Nilesh Pushpraj Jain, the Tribunal reaffirmed that customs authorities must adhere to verification procedures before denying treaty-based benefits and cannot rely on presumptions or analogies from unrelated shipments. The decision also reiterates that importers cannot be penalized merely for pursuing appellate remedies and that any adverse action must rest on verified and substantiated evidence.

Appearance

Counsel For  Appellant: Dr. Sujay Kantawala and Ms Aishwarya Kantawala, Advocates

Counsel For Respondent: Krishna Murari Azad, Assistant Commissioner (AR)

Cause Title: Marvel Silver Versus Customs Commissioner

Cas No: Customs Appeal No: 86363 Of 2023

Coram: Hon’ble Mr C J Mathew, Member (Technical), Hon’ble Mr Ajay Sharma, Member (Judicial)