Tin Ingot Imports Eligible for AIFTA Concession; Customs Demand Set Aside: CESTAT
Sangeetha Prathap
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, has set aside a differential customs duty demand raised against M/s Vikas Ecotech Ltd., holding that the company was entitled to claim preferential duty benefits under the ASEAN-India Free Trade Agreement (AIFTA). The Tribunal concluded that the customs department failed to prove that the Certificates of Origin (COOs) issued by Malaysian authorities were false or invalid, and therefore the exemption under Notification No. 46/2011-Cus could not be denied.
The dispute arose following multiple consignments of Tin Ingots imported by Vikas Ecotech from Malaysia through the Inland Container Depot (ICD), Tughlakabad. The company claimed concessional duty by producing COOs issued by the Malaysia Smelting Corporation (MSC), the designated certifying body under the AIFTA framework. However, following an investigation by the Directorate of Revenue Intelligence (DRI), the customs department alleged that the goods did not meet the mandatory Regional Value Content (RVC) requirement of 35% prescribed under the AIFTA Rules of Origin notified vide Notification No. 189/2009. The Principal Commissioner of Customs (Import), New Delhi, thereafter confirmed a differential duty demand of ₹49.69 lakh, alleging misuse of FTA benefits based on “false declarations”.
Challenging the order, the appellant argued that all imports were supported by valid COOs issued by the Malaysian authorities, and that the Indian customs officers cleared the consignments after due verification. It was further submitted that MSC had indeed manufactured and exported the goods, and the department failed to produce any admissible evidence indicating falsification or non-fulfilment of the RVC requirement. They emphasised that procedural lapses, if any, during cost-sheet preparation in Malaysia could not be attributed to the importer, especially when the COOs remained valid on their face.
The Tribunal examined the verification reports and noted that although certain procedural discrepancies were flagged by the visiting officers in Malaysia—especially the use of older cost sheets by MSC—there was no indication that the COOs were fabricated or that the goods were not of Malaysian origin. The bench also relied on a communication issued by the Malaysian Ministry of International Trade and Industry (MITI) in July 2018, which categorically informed the Government of India that there was “no reason to deny the preferential benefit” to importers in cases involving MSC. The Tribunal emphasised that, unless the COO is proved false through concrete evidence, denial of preferential benefits is legally unsustainable.
The bench held that Vikas Ecotech satisfied both key conditions of Notification No. 46/2011-Cus—namely, submission of a valid COO and proof of origin—and that the customs department failed to discharge its burden of proving ineligibility. The Tribunal criticised the adjudicating authority for relying on unverified assumptions rather than material evidence, and noted that a procedural lapse at the exporter level cannot be a ground to penalise the importer.
Accordingly, the Tribunal set aside the impugned order and allowed the appeal, restoring Vikas Ecotech’s entitlement to AIFTA exemption on the Tin Ingot imports. The ruling, passed on November 6, 2025, reinforces the principle that FTA benefits cannot be withdrawn unless the customs authorities conclusively establish mis-declaration or non-compliance with Rules of Origin through verified and reliable evidence.
Appearance
Counsel For Appellant: Priyadarshi Manish
Counsel For Respondent: Kuldeep Rawat
Cause Title: M/s Vikas Ecotech Ltd. vs. Principal Commissioner of Customs (Import), New Delhi
Case No: Customs Appeal No. 50105 of 2020
Coram: Hon’ble Dr. Rachna Gupta, Member (Judicial)
