2026-VIL-1535-CESTAT-AHM-CU
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CUSTOMS CESTAT Cases

Customs - Invocation of Extended Period of Limitation under Section 28(4) of Customs Act in cases of alleged mis-declaration of Country of Origin - Mis-declaration of Country of Origin of imported polyester knitted fabrics – Appellant imported polyester knitted fabrics and submitted certificates of origin issued by Malaysian authorities. Departmental authorities alleged that the goods were actually of Chinese origin and the certificates of origin were fabricated. Show cause notice invoking extended period of limitation was issued alleging evasion of customs duty through mis-declaration of country of origin - Whether extended period of limitation under Section 28(4) can be invoked for alleged mis-declaration of country of origin when the appellant had no conscious knowledge of the infirmity in the certificates and was not instrumental in obtaining fabricated certificates – HELD – Extended period of limitation under Section 28(4) can be invoked only when there is specific and explicit averment in the show cause notice and credible evidence establishing that the appellant was involved in collusion, wilful misstatement or suppression of facts. The burden to prove mala fide conduct lies on the department - In the present case, the appellant consistently maintained throughout the proceedings that he had received the certificates of origin from the foreign supplier and had no reason to believe they were not genuine. Department failed to establish any positive act by the appellant to obtain fabricated certificates or that he had conscious knowledge of the inaccuracies in the certificates - Merely because goods were imported with certificates of origin later found to be fabricated does not render the importer liable to extended period unless it is established that the importer stepped into the shoes of the supplier and was instrumental in obtaining the fabricated certificate. The absence of any culpatory statement and the consistent non-committal stance of the appellant throughout multiple recorded statements cannot be interpreted as admission of involvement in fraud. Extended period cannot be invoked on the basis of bare assertions or suspicions arising from delayed overseas verification reports - The delay in conducting verification beyond the stipulated time period of two months and even thereafter obtaining verification response only after considerable inordinate delay further militates against invocation of extended period. The SCN having not specifically alleged the ingredients of Section 28(4) against the appellant, the invocation of extended period is not legally sustainable – The extended period of limitation is not invokable. The demand for differential duty on the basis of alleged mis-declaration cannot be sustained and set aside – The appeals are allowed - Country of Origin Certificates – Verification procedure under Rule 7(c) and Rule 7(d) of Customs Tariff Determination of Origin of Goods under Preferential Trade Agreement Rules 2009 – Appellant submitted country of origin certificates purportedly issued by Malaysian authorities - Department sought verification of certificates from Malaysian authorities but only 15 certificates out of 29 were verified - Whether the mandatory procedural requirements of Rule 7(c) and Rule 7(d) can be dispensed with on the ground that fraud is alleged and Rule 23 relating to fraudulent acts applies – HELD – Rule 23 merely provides for cooperation between member countries in taking action against persons involved in fraudulent acts and does not dispense with the procedural requirements of Rule 7(c) and Rule 7(d). These are duly incorporated domestic provisions forming part of the binding statutory framework and cannot be ignored. When a treaty provision has not been incorporated into domestic law, it cannot be enforced in derogation of municipal law. However, when Rules have been incorporated into domestic law and given statutory recognition, they must be followed by the customs authorities - Rule 23 may justify deeper investigation but cannot be read to dispense with requirements of Rule 7(c) and Rule 7(d). In the present case, only 15 certificates were verified and the verification report merely stated that certificates were not authentic and belonged to other company without providing detailed exhaustive clarification addressing the grounds raised by the importing authority or specifying to whom the actual certificates were issued. The procedure contemplated under Rule 7(c) and Rule 7(d) had not been properly followed - The verification process having not been followed in totality, the allegation of fraud cannot be held to be established - Confiscation of Imported Goods on Ground of alleged Mis-declaration of Country of Origin - Goods imported and cleared by Customs authorities as well as goods seized were proposed to be confiscated on ground of misdeclaration of country of origin. The department alleged that goods were of Chinese origin but declared to be of Malaysian origin - Whether goods already cleared by customs authorities can be confiscated on ground of subsequent allegation of mis-declaration of country of origin when the allegation of mis-declaration is not established through credible and authenticated evidence – HELD – Goods when already cleared by Customs after due examination and satisfying themselves as to the conditions for clearance cease to be imported goods as per Section 2(f) of Customs Act. Once goods have been imported and cleared for home consumption by the proper officer, it is not open for the revenue to subsequently propose confiscation on allegations not supported by credible authenticated evidence. Unauthenticated photocopies and bare unverified reports from overseas authorities are not sufficient to reject declared transaction value or country of origin. The evidence produced in the case consisting of printouts from overseas authority websites, unsigned documents and letters not bearing official stamps and seals do not possess evidentiary value - The goods were exported and imported on the basis of country of origin certificates purportedly issued by competent Malaysian authorities and samples drawn were not subjected to test analysis that was shared with appellant. The mere suspicion arising from delayed and incomplete overseas verification report is not sufficient to confiscate goods already cleared. The country of origin of goods cannot be held to be established as Chinese when proper verification procedure had not been followed – Confiscation of goods already cleared for home consumption cannot be upheld. The allegation of mis-declaration of country of origin not having been established through credible and authenticated evidence, the goods stand to be of Malaysian origin as declared.
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