Purple Products Private Limited Vs Union of India (Bombay High Court)
Introduction: The Bombay High Court addressed a significant question of law concerning the jurisdiction of customs authorities under the Customs Act, 1962, vis-à-vis the ASEAN-India Free Trade Agreement (AIFTA) of 2009. The petitioners challenged show-cause notices issued for alleged misrepresentation of Regional Value Content (RVC) in the import of tin ingots from Malaysia, arguing that the dispute resolution mechanism under Article 24 of AIFTA should preclude domestic adjudication. The court dismissed the petitions, giving primacy to the customs authorities’ jurisdiction and reiterated the need of converting treaty provisions into municipal law for enforceability.
Background of the Case
The petitioners, two companies engaged in importing and trading various goods, including tin ingots, operated under the benefits of Customs Exemption Notification No. 46/2011, dated June 1, 2011, which offered preferential tariffs for imports from ASEAN countries, including Malaysia, provided the RVC exceeded 35%. These imports, sourced from the Malaysian Smelting Corporation (MSC) through intermediaries in Singapore and Europe, were supported by Certificates of Origin (COOs) issued by Malaysia’s Ministry of International Trade and Industry (MITI), which the petitioners relied upon to claim the notified exemptions.
The controversy arose when domestic industries lodged complaints, alleging that the petitioners had misrepresented the RVC to fraudulently secure these benefits, prompting an investigation by the Directorate of Revenue Intelligence (DRI). The DRI conducted a “Retroactive Check,” including a visit to Malaysia, and gathered evidence suggesting that the RVC was significantly below the required threshold, leading to the issuance of show cause notices under Section 28 of the Customs Act.
