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  • Rajesh Audithyan

Competent authority to disallow FTA/PTA duty benefits & Binding effect of other port decisions

An importer named M/S. AABIS INTERNATIONAL imports Areca Nuts through various Indian ports. In present case they have imported under ISFTA duty benefits and produced COO. The petitioner also undertook to procure a no objection certificate (NOC) from the Food Safety and Standards Authority of India (FSSAI). Accordingly FSSAI examined the consignment and opined that the same conformed to the standards laid down under the applicable regulations and No objection was given for the release of the consignment from the port.


The claim for preferential duty has been rejected unilaterally and without assigning any reasons whatsoever by the Deputy Commissioner of Customs, an authority not competent to have rejected the claim as per the proviso to Section 28-DA(4) since such rejection could only have been by the Principal Commissioner or Commissioner and that too, for reasons to be recorded.


In the celebrated judgment of the Supreme Court in the case of Mohinder Singh Gill and Another Vs. The Chief Election Commissioner and Others (1978 AIR 851) to the effect that an order, to be valid, has to speak for itself, containing reasons to sustain the same. It has to stand or fall on its own merit. It cannot be bolstered or supported by reasoning supplied as an afterthought either by way of oral argument or by way of counter, as in the present case. To quote the Bench, ‘Orders are not like old wine becoming better as they grow older’.


The scheme of Section 28-DA does not permit raising of a demand for security for initiation of verification but only for release of the consignment. Circular No. 42 of 2020 to the extent to which it is transgresses the statutory scheme under Section 28- DA, particularly sub-Sections (4) and (5) thereof, is an excess of authority and is bad in law.

The timeline for response by the Verification Authority is set out in regulation 63B which is sixty days from date of request. In the present case, this request has not been initiated and the Department has been sitting pretty on the consignment despite requests for release, the petitioner repeatedly drawing attention to the fact that the consignment comprises perishable goods.


That apart and very relevantly, ‘Verification Authority’ is defined under Regulation 2(g) to mean the authority in the export country designated to respond to a verification request under a trade agreement. The certificate of origin in this case as well as the clarification obtained by the petitioner have been obtained from the Assistant Director acting for the Director General of Commerce in the Department of Commerce, Colombo.


Hon’ble MADRAS HIGH COURT Justice Dr. Anita Sumanth ordered as follows ;


1. I am of the view that the petitioner has satisfied the requirement of production of a valid COO in this case. I would hasten to add that the Department is not foreclosed from making further enquiry in regard to any apprehensions that they may still continue to harbour concerning the COO.


2. I also draw support from the fact that the importer has been relying on the very same documentation as in the case of the consignment in question, including the COO, in other ports not just in India, but in Tamil Nadu itself that is, the Tuticorin port and consignments are being released without demur. The response of the revenue to this submission is that such actions will not ‘bind’ the Chennai authorities. This position is not appreciated as authorities under a Central enactment are expected to adopt consistent views in regard to similar/identical transactions, especially when they relate similar/identical fact and legal patterns. Diametrically opposite conclusions are not expected to be drawn on identical questions of fact and law by statutory authorities.


M/S. AABIS INTERNATIONAL VERSUS THE COMMISSIONER OF CUSTOMS, THE DEPUTY COMMISSIONER OF CUSTOMS GROUP I, CHENNAI CUSTOMS II, CHENNAI W.P. No.10913 of 2021 And WMP. Nos.11550 & 11547 of 2021 order dated 17 June 2021


Key Takeaways from this case ;

a. Principal Commissioner or Commissioner are the only competent authority as per The Customs Act Section 28DA (4) proviso

b. Customs Circular No. 42 of 2020 to the extent to which it is transgresses the statutory scheme under Section 28- DA is an excess of authority and is bad in law

c. Central enactment are expected to adopt consistent views in regard to similar/identical transactions hence customs authorities can not say other port customs field formation actions will not bind on them

The scheme of Section 28-DA does not permit raising of a demand for security for initiation of verification but only f

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