MULTI THIRD COUNTRY BACK TO BACK INVOICING UNDER AIFTA – INTERESTING CESTAT CASE UPHELD DUTY BENEFIT
The facts of the case are that M/s. Olam Enterprises India Pvt. Ltd. had imported Teak Round Logs on commercial invoices issued by M/s. Panasia International Limited, Dubai. At the time of assessment, the importer did not claim any duty exemption and the Warehousing Bills of Entry were assessed on merit.
Subsequently, appellants filed three ex-bond Bills of Entry claiming duty exemption under Notification No. 46/2011-Cus. and produced two AIFTA (ASEAN-India Free Trade Area) certificates certifying that the goods consigned are from Myanmar Timber Enterprises, Myanmar. The original customs authority has rejected the claim of duty exemption on the grounds inter alia that the goods had been exported by M/s. Panasia International Limited, Dubai who however are in no way connected with the AIFTA certificates. On appeal, the Commissioner (Appeals) upheld the order of the original authority and rejected the appeal.
Originally teak logs had been invoiced by the Myanmar Timber Enterprises, Myanmar to Concorde Commodities Pte. Ltd. Singapore. Subsequently, Concorde Commodities, Singapore invoiced the goods to M/s. Panasia International Limited, Dubai, who in turn issued an invoice for the same goods to the Indian importer.
Article 22 of AIFTA agreement allows for issue of sales invoice by third party. The said Article is reproduced as under:-
The Customs Authority in the importing party shall accept an AIFTA Certificate of Origin where the sales invoice is issued either by a company located in a third country or an AIFTA exporter for the account of the said company, provided that the product meets the requirements of the AIFTA Rules of Origin.
Hon’ble CESTAT CHENNAI order’s content as follows ;
The original commercial invoice referred to in Article 20(C), when read with provisions of Article 22, will mean that such invoice need not be only issued by the exporter in the originating country but that it can be issued even by a company located in a third country or even by the exporter for the account of the said third country company, so long as the product meets the other requirements of the AIFTA Rules of Origin.
It is interesting to note that the same invoice number of the Myanmar Timber Enterprises invoice has also been followed by Concorde Commodities. The identical number of pieces, quantity in HT and paint marks Red X 193 have been indicated in this invoice also.
We find that the appellants have adduced sufficient proof to establish that the impugned goods, though invoiced by Panasia International, UAE, to the appellant, are of very same ones which have been originally invoiced by Myanmar Timber Enterprises, Myanmar to Concorde Commodities, Singapore and then to M/s. Panasia Agro India Limited. The Importers have been also able to sufficiently establish the seminal connection and linkage with the imported goods invoiced at M/s. Panasia International Limited, Dubai and the AIFTA certificates submitted by them.
We are of the considered opinion that the AIFTA certificates very much covers the impugned goods which have been imported by the appellant and in view of Article 22 of the Procedures, issue of invoice by party in third country will not negate the benefit of the AIFTA certificate and the benefit of Notification No.46/2011-Cus.
M/S. OLAM ENTERPRISES INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, TUTICORIN Appeal No. C/40587/2017 Final Order No. 40459 / 2018 CESTAT CHENNAI Dated: - 19 February 2018
Key takeaway of the case:
1. From the preferential COO of AIFTA format it is clear that the third country invoicing is allowed
2. There has to be a through Bill of Lading issued from Country of Origin to the country of importer
3. The AIFTA Certificate of Origin should be issued by a relevant Issuing Authority with a copy of original commercial invoice in respect of the goods
4. Marks and numbers of all such overseas invoices should be same and POD also should show Indian port