2026-VIL-1329-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Verification Procedure Under Rules of Origin under Free Trade Agreement - Country of origin certificates for jewellery - The Appellant imported diamond-studded gold jewellery from the exporting country and filed bills of entry claiming benefit under Notifications dated 31.08.2004 read with notification (NT) dated 31.08.2004 for goods under CTH 711319. The goods were duly assessed and cleared by the customs authority without any query. Subsequently, the department's investigation wing conducted an investigation alleging that the Certificates of Country of Origin were improper as they showed inflated local value content and that the Appellant had wrongly availed the benefit of the free trade agreement - Whether the benefit of a notification based on country of origin certificates can be denied based on investigations conducted within the importing country without following the prescribed procedure for verification with the issuing authority of the exporting country - HELD - The Interim Rules of Origin notified by the Central Government prescribe a specific mechanism for handling doubts regarding country of origin certificates. Rule 14 requires certificates to be issued by a government authority designated by the exporting party and notified to the importing party. Rule 15 provides the procedure for retroactive verification when there is reasonable doubt. The importing party must request a retroactive check from the issuing authority of the exporting country, specifying the reasons and additional information suggesting inaccuracy. The issuing authority must respond within three months - The proper procedure when there was reasonable doubt about the value addition in the certificates should have been to take up the matter with the issuing authority of the certificates in the exporting country as per Rule 15. Instead, the department recorded statements of various persons and obtained a letter from another jeweller and based on these investigations conducted within the country, denied the benefit of the notification. This procedure was contrary to the law. The impugned proceedings and demand based on a procedure contrary to the prescribed law cannot be sustained. The benefit of the notification cannot be denied. The demand is dropped and no penalty is imposable on the Appellant – The appeal is allowed
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