Benefit of concessional rate cannot be denied for technical error in Certificate of Origin: CESTAT Chennai

Devendran Coal International Pvt Ltd Vs Commissioner of Customs (Imports) (CESTAT Chennai)

CESTAT Chennai held that denying substantial benefits only for technical errors would not do justice to the appellant. Thus, technical error in Certificate of Origin cannot result in denial of concessional rate of Basic Customs Duty (BCD).

Facts- The appellant filed Bills of Entry for the clearance of goods declared as “steaming (non-coking) coal” in bulk. The bills of entry were provisionally assessed since the quantity of bulk cargo has to be verified. The goods were classified under CTH 2701.1920 and assessed to 5% basic customs duty in terms of Customs Notification No. 21/2002 Sl. No. 70. The provisional assessment was finalized on 23.3.2011.

The appellants filed an appeal before the Commissioner of Customs (Appeals) claiming the benefit of concessional rate of BCD at 3% in terms of Notification No. 153/2009 as amended by Customs Notification No. 135/2010 under the ASEAN FTA Preferential Tariff Agreement. The claim was rejected. Being aggrieved, the present appeal is filed.

Conclusion- Held that denying substantial benefits only for technical errors would not do justice to the appellant. While the authenticity of COO is doubted by revenue on this score, nothing concrete has been mentioned in the impugned order to justify the doubt, except for the correction made and the date of the COO certificate being after the date of shipment. Doubt is not a substitute for proof. There is no other taint on the validity of the certificate. The procedure mentioned in the Rules to check any doubt regarding the COO certificate was not followed. We find that Constitutional Courts have held the doctrine of substantial compliance to be a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the “essence” or the “substance” of the requirements. The said doctrine would apply to the error pointed out in the impugned order. Justice is the goal of jurisprudence.

FULL TEXT OF THE CESTAT CHENNAI ORDER

Both these appeals arise out of a common Order in Appeal C. Cus. No. 1841 & 1842/2014 dated 26.9.2014 passed by the Commissioner of Customs (Appeals), Chennai.

2. Brief facts of the case are that the appellant filed Bills of Entry No. 778381 and 778317 both dated 11.2.2011 for the clearance of goods declared as “steaming (non-coking) coal” in bulk. The bills of entry were provisionally assessed since the quantity of bulk cargo has to be verified. The goods were classified under CTH 2701.1920 and assessed to 5% basic customs duty in terms of Customs Notification No. 21/2002 Sl. No. 70. The provisional assessment was finalized on 23.3.2011. The appellants filed an appeal before the Commissioner of Customs (Appeals) claiming the benefit of concessional rate of BCD at 3% in terms of Notification No. 153/2009 as amended by Customs Notification No. 135/2010 under the ASEAN FTA Preferential Tariff Agreement. The Appellate Commissioner vide his order dated 25.8.2011 pointed out that the certificate of origin was not issued within 3 working days from the date of shipment of the cargo and the said certificate was not having the words ‘issued retroactively’ and set aside the final assessment and directed the lower authority to pass a speaking order. On remand, the lower authority observed that the country-of-origin certificate has not been submitted in accordance with the provisions of the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement) between the Governments of member States of the ASEAN and India. Hence the lower authority held that the 5% basic customs duty is not in order and the benefit of Notification No. 153/2009-Cus dated 31.12.2009 has not been claimed by the importer at the time of finalization and the country-of-origin certificate has not been submitted in accordance with the provisions contained in the said Notification as amended. Aggrieved by the said order, the appellants preferred appeals before Commissioner of Customs (Appeals) who vide the impugned order upheld the lower authority’s order. Hence these appeals before this forum.

3. Shri Ajay Kumar Gupta, learned Advocate appeared for the appellant and Smt. Anandalakshmi Ganeshram learned Authorized Representative appeared for the respondent-department.

3.1 The learned Advocate for the appellant submitted date chart showing the chronology of events as below;

He further stated that;

a. There is no provision under the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement Between the Governments of Member States of the Association of South East Asian Nation (ASEAN and Republic of India Rules 2009 183/2009 (NT) which empower the customs authority of the importing country to reject without referring back to issuing authority.

b. There is no erasure or superimposition. It was a blank space in the COO which was later stamped with issued retroactively

c. The goods are wholly produced and are of Indonesian origin. These facts are not denied.

d. There is no mismatch. It is third party country invoice and it is permissible under the ASEAN Rules, 2009.

e. He referred to the following judgments in their favour;

i. TCP Ltd. Vs. Commissioner of Customs – 2023 (11) TMI 530

ii. R. K. Digital Solutions Vs. UOI – 2020 (2) TMI 1302 Telangana High Court

3.2 The respondent-revenue states the following:-

a. Appellant initially produced Country of Origin Certificate without an endorsement stamp / seal ‘issued Retroactively” and later produced COO with an endorsement stamp / seal ‘issued Retroactively”

b. COO later addition of ‘issued retroactively’ amounts to erasure or super imposition and as per the AIFTA – ASEAN Rules, 2009 and it has to be countersigned. No such signature is available on amended certificate of origin.

c. That authenticity of COO is doubtful, hence not accepted.

4. Having heard the rival contentions, perusing the record and after going through the relevant case law relied upon by the parties, we find that the Order in Original has merged with the impugned order which records the reason for rejection of the appeals below;

“I have carefully gone through the facts of the case. No erasures or superimpositions shall be allowed on the AIFTA Certificate of Origin. Any alteration shall be made by striking out the errors and making any required corrections. Such alterations and corrections shall be approved and certified by an official of the Issuing Authority authorized to sign the AIFTA Certification of Origin. Unused spaces shall be crossed out to prevent any subsequent addition.

According to the above, the stamp “issued retroactively” is an alteration / correction made in the certificates. The above procedure has shown the method to be followed in respect of corrections made in the Country of Origin Certificate. The correction / alteration made on the certificates should have been approved and certified by an official of the Issuing Authority authorized to sign the certificate. Whereas there is no authentication of the correction / alteration and the appellants could not produce even the correspondences made in respect of the request made before the Issuing authority for amendment. In view of this, the non-acceptance of the certificates by the LAA is correct. Therefore, the impugned goods have become ineligible for the benefit of Notification No. 153/2009-Cus dated 3.12.2009 (as amended by Notification No. 135/2010-Cus dated 31.12.2010)

In view of the above discussions, the Orders in Original are upheld and the appeals are rejected.”

5. The only issue raised in the impugned order is that there was an alteration / correction made in the COO certificate which was did not satisfy the provisions of procedure 9 of operational certification procedures for the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement Between the Government of Member States of the Association of South East Asian Nations (ASEAN) and the Republic of India) Rules 2009.

6. It is felt that denying substantial benefits only for technical errors would not do justice to the appellant. While the authenticity of COO is doubted by revenue on this score, nothing concrete has been mentioned in the impugned order to justify the doubt, except for the correction made and the date of the COO certificate being after the date of shipment. Doubt is not a substitute for proof. There is no other taint on the validity of the certificate. The procedure mentioned in the Rules to check any doubt regarding the COO certificate was not followed. We find that Constitutional Courts have held the doctrine of substantial compliance to be a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the “essence” or the “substance” of the requirements. The said doctrine would apply to the error pointed out in the impugned order. Justice is the goal of jurisprudence. The Constitution Bench judgment of the Apex Court reported as Sardar Amarjit Singh Kalra (Dead) by Lrs. Vs Pramod Gupta (Smt) (Dead) by Lrs. & Anr. [(2003) 3 SCC 272] held as under;

“26. Laws of procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice and not to foreclose even an adjudication on merits of substantial rights of citizen under personal, property and other laws. Procedure has always been viewed as the handmaid of justice and not meant to

hamper the cause of justice or sanctify miscarriage of justice. .”

7. In the circumstances the impugned order is set aside and the appeals are allowed, with consequential relief. The appeals are disposed of accordingly.

(Order pronounced in open court on 22.10.2024)