Case Law Details
Vishwa Enterprise Vs Commissioner of Customs (Imports) (Madras High Court)
In the case of Vishwa Enterprise vs. Commissioner of Customs (Imports), the Madras High Court adjudicated on the release of 540 bags of Sri Lankan origin areca nuts. The petitioner sought exemption from customs duty under the Indo-Sri Lanka Free Trade Agreement. The court’s decision involved a meticulous analysis of the evidence and applicable rules.
The petitioner argued that the areca nuts were imported from Sri Lanka under the Indo-Sri Lanka Free Trade Agreement, which allows duty-free import subject to fulfilling Customs [Administration of Goods of Origin under Trade Agreements] Rules, 2020 (CAROTA Rules). They provided a certificate of origin and verification from the Department of Commerce, Sri Lanka.
However, the respondent countered, citing a communication from D.L.K. Spice Export, Sri Lanka, alleging fraudulent imports using their name. Despite verification, the respondent requested further information. The court scrutinized the evidence and rules.
The court found that the certificate of origin was authenticated by the relevant authorities and verified by the Department of Commerce, Sri Lanka. It noted the absence of the petitioner’s name in the communication from D.L.K. Spice Export and the lack of documented requests for additional information.
Considering the verified certificate of origin and the absence of specific allegations against the petitioner, the court directed the provisional release of the goods. However, to safeguard revenue interests, the petitioner was required to provide an indemnity bond and a bank guarantee. This judgment highlights the importance of adhering to trade agreements while ensuring proper verification procedures.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner seeks release of 540 bags of areca nuts of Sri Lankan origin imported under bill of entry No.6674847 dated 01.07.2023 by extending the benefit of customs duty exemption under the applicable notification.
2. The petitioner asserts that the above mentioned 540 bags of areca nuts were imported from Sri Lanka under purchase from D.L.K. Spice Export, Sri Lanka. As per the Indo-Sri Lanka Free Trade Agreement (ISFTA), it is stated that areca nuts may be imported without payment of duty subject to satisfying the requirements of the Customs [Administration of Goods of Origin under Trade Agreements] Rules, 2020 (the CAROTA Rules). Since the goods were released in spite of submitting a certificate of origin and providing a verification with regard to the authenticity of such certificate of origin, the present writ petition was filed.
3. Learned counsel for the petitioner submits that the goods were imported from an exporter called D.L.K. Spice Export, Sri In respect of such goods, he submits that the certificate of origin was issued on 22.06.2023. Upon request for verification, he submits that the Department of Commerce, Sri Lanka, issued a verification certificate on 31.10.2023. According to learned counsel, such certificate was issued after a chain of correspondence involving the High Commission of India in Sri Lanka.
4. In the above facts and circumstances, learned counsel submits that the petitioner is entitled to release of goods without providing a bank guarantee. At the highest, he submits that the petitioner may be called upon to provide an indemnity bond.
5. These contentions are countered by Mr. Sundareswaran, learned senior standing counsel. By placing on record a communication dated 14.09.2023 from D.L.K. Spice Export, he submits that the exporter from whom the petitioner allegedly procured areca nuts pointed out that many importers from India have fraudulently imported products by falsely claiming that such products were exported by D.L.K. Spice Export. He further submits that the certificate of origin was signed by an authorized signatory and not by the proprietor of D.L.K. Spice Export. With reference to sub-rule (2) of Rule 6 of the CAROTA Rules, he contends that the proper officer is entitled to request for additional information. Based on the letter received from D.L.K Spice Export, he states that additional information was called for. On this basis, he resists the request for release of goods.
6. Under the CAROTA Rules, the expression “verification” is defined in Rule 2(f) as under:
“2 (f) “Verification” means verifying genuineness of a certificate of origin or correctness of the information contained therein in the manner prescribed by the respective Rules of Origin; ”
7. The expression “verification authority” is also defined in Rule 2(g), which is as under:
“2(g) “Verification Authority” means the authority in exporting country or country of origin, designated to respond to verification request under a trade agreement. “
8. The record reflects that a certificate of origin was issued on 06.2023 by the Commercial Research Officer, Colombo. This certificate was issued under the ISFTA. In terms of Rule 6 of the CAROTA Rules, the proper officer requested that the authenticity of the certificate and the correctness of information provided therein be verified by the verification authority. Pursuant to such request, the certificate of origin dated 31.10.2023 was issued by the Assistant Director of Commerce by the Acting Director General of Commerce, Department of Commerce, Government of Sri Lanka. These documents indicate conclusively that, upon verification of the certificate of origin, it was certified that such certificate was digitally d by the authorized officer of the Department for signing certificates of origin under the ISFTA.
9. In spite of such verification, the respondents contend that further information is required in light of the communication dated 14.09.2023 from D.L.K. Spice Export. The communication from D.L.K. Spice Export specifies the names of certain importers, but the name of the petitioner is not mentioned therein although the bill of entry is prior to the communication. The request for further information has not been placed on record. No doubt, under sub-rule 2 of Rule 6, it is permissible for the proper officer to request for additional information pursuant to verification.
10. By taking into account the following: a certificate of origin was issued by the relevant Sri Lankan authority; such certificate was subsequently verified by the Department of Commerce, Government of Sri Lanka; the communication from D.L.K. Spice Export does not mention the petitioner; and the request for additional information is not on record, this is an appropriate case to direct the provisional release of goods, albeit subject to limited safeguards to protect revenue interest under the facts and circumstances.
11. Accordingly, this writ petition is disposed of with the following directions:
(i) the petitioner is directed to provide an indemnity bond for 100% of the duty payable in case it is concluded in the assessment proceedings that the petitioner is not entitled to exemption from Customs duty.
(ii) The petitioner is further directed to provide a bank guarantee for 10% of the customs duty from a nationalized bank, which shall be for an initial term of one year subject to renewal until conclusion of assessment.
(iii) Both the indemnity bond and bank guarantee shall be submitted within one week from the date of receipt of a copy of this order.
(iv) Subject to the fulfilment of the two conditions specified above, respondents 1 and 2 are directed to provisionally release the goods within one week from the date of fulfilment of the above conditions. Consequently, connected miscellaneous petition is closed. There shall be no order as to costs.
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