C/86311/2023 — P D TRADELINKS vs COMMISSIONER OF CUSTOMS-NHAVA SHEVA

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
MUMBAI

REGIONAL BENCH - COURT NO. 01

Customs Appeal No. 86311 of 2023

(Arising out of Order-in-Appeal No. 502 (Gr.I&IA)/2023(JNCH)/Appeals /JNCH dated 10.05.2023 passed by Commissioner of Customs (Appeals), Mumbai-II)

P.D. Tradelink F-41, A.P.M.C. Market 1, Phase-II, Sector-19, Vashi, Navi Mumbai-400 705. …..Appellants

VERSUS Commissioner of Customs (NS-I) …..Respondent Mumbai – II Zone, Jawaharlal Nehru Custom House (JNCH), Nhava Sheva, Taluka Uran, District Raigad Maharashtra–400 707.

Appearance: Shri Sanjay Kalra, Advocate for the Appellant
Shri Ram Kumar, Authorized Representative for the Respondent

CORAM:
HON’BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) HON’BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL)

FINAL ORDER NO. A/85441/2024

                                                          Date of Hearing:             21.12.2023 

Date of Decision: 22.04.2024

PER : M.M. PARTHIBAN

This appeal has been filed by M/s P.D. Tradelink, Mumbai (herein after, referred to as ‘the appellants’), assailing Order-in-Appeal No. 502 (Gr.I&IA)/2023(JNCH)/Appeals /JNCH dated 10.05.2023 (herein after, referred to as ‘the impugned order’) passed by Commissioner of Customs (Appeals), Mumbai-II Zone, Mumbai.

The brief facts of the case are that the appellants had imported ‘Omani Dry Dates’ by classifying it under Customs Tariff Item (CTI) 0804 1030 under Bill of Entry (B/E) No.

-II Zone, Mumbai.

The brief facts of the case are that the appellants had imported ‘Omani Dry Dates’ by classifying it under Customs Tariff Item (CTI) 0804 1030 under Bill of Entry (B/E) No. 6964575 dated 05.01.2022 and self-assessed the same declaring the country of origin as Oman and paid applicable customs duty. Based on suspicion and intelligence that the subject goods might be of Pakistan origin and country of origin certificate might have been manipulated, said imported goods were examined by the officers of Special Intelligence and Investigation Branch (SIIB) of JNCH Customs Commissionerate under panchanama dated 18.01.2022. During such

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examination it was found that out of total 540 bags of imported goods i.e., dry dates, in 307 jute bags were found attached with tag/label mentioning that ‘Thal Limited (Jute Division), Manufacturers & exporters Eco friendly & good grade jute products’ and in some jute bags were found with stamp of ‘Bag made in Bangladesh’ and some more jute bags were found with no label. SIIB investigation had concluded that ‘Thal limited’ leading manufacturer of jute bags is based in Pakistan and prima facie the imported goods are also of Pakistan origin and not of Oman origin. The investigation also found that the declared value of the goods was found to be fair.

s is based in Pakistan and prima facie the imported goods are also of Pakistan origin and not of Oman origin. The investigation also found that the declared value of the goods was found to be fair. As a result of the investigation, the department had proposed for classification of impugned goods under CTI 9806 0000 attracting BCD of 200% and IGST/CVD of 18% instead of declared CTI 0804 1030 with applicable duty of 20% BCD and 12% IGST/CVD, and recovery of differential duty along with interest, confiscation of impugned goods under Section 111(m) ibid and for imposition of penalties under Section 112(a) and 114AA ibid. The original authority i.e., Joint Commissioner of Customs, Gr. I&IA, NS-I, JNCH had passed an Order-in-Original No.973/2022-23/JC/Gr.1&1A/NS-I/CAC/JNCH dated 13.12.2022 in rejecting the self-assessment made by the appellants and in passing a speaking order for re-assessment under Section 17(5) of the Customs Act, 1962. Further, the said original authority also confiscated the impugned goods and ordered the same for release against payment of redemption fine and imposed penalties on the appellants-importer under Section 112(a) and 114AA ibid. Being aggrieved with the above order, the appellants had preferred an appeal before the learned Commissioner of Customs (Appeals), who had rejected the appeal filed by the appellants. Feeling aggrieved against such order, the appellants have filed this appeal before the Tribunal.

the learned Commissioner of Customs (Appeals), who had rejected the appeal filed by the appellants. Feeling aggrieved against such order, the appellants have filed this appeal before the Tribunal.

3.1 The learned Advocate for the appellant submits that on the basis of documents such as Bill of Lading, sales contract, commercial invoice, packing list, Certificate of Origin issued by the Oman Chamber of Commerce & Industry, Phytosanitary certificate issued by the Plant Protection Organization of Ministry of Agriculture & Fisheries, Oman clearly provide that the imported goods are of Oman origin and not of Pakistan Origin. The supplier M/s United Date Processing Company L.L.C., Sultanate of Oman had also vide their letter dated 16.03.2022 had explained to the Customs investigation that the imported goods are from Oman and they had only procured few jute bags from Pakistan and Bangladesh with supporting supply invoices. Learned Advocate had also stated that the Directorate of

hat the imported goods are from Oman and they had only procured few jute bags from Pakistan and Bangladesh with supporting supply invoices. Learned Advocate had also stated that the Directorate of

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Plant Quarantine, Mumbai had examined the imported dry dates and have also certified that the country of origin as Oman in their certificate dated 18.01.2022. On the above basis, learned Advocate pleaded that the impugned order of the Commissioner of Customs (Appeals) cannot be sustainable and prayed that the impugned order to be set aside.

3.2. In support of their stand, the learned Advocate had stated that on the basis of the documents quoted by him, the same original authority in his order dated 14.12.2022 in another case had dropped the proceedings holding that declared country of origin cannot be rejected merely on the basis of markings of some Pakistan based sugar mills found on inner gunny bags which is not a clinching evidence for determination of country of origin. He further relied upon the following decision of the Tribunal: (i) Doves International Vs. Commissioner of Customs, New Delhi – 2018-TIOL-2219-CESTAT-Del

(ii) Sukumar Mondal Vs. Collector of Customs (Preventive)- 1990 (48) E.L.T. 56 (Tri. - Cal.)

(iii) B.Lakshmichand Vs. Government of India - 1983 (12) E.L.T. 322 (Mad.)

On the other hand, learned Authorised Representative for Revenue supports the impugned order and submits that the learned Commissioner of Customs (Appeals) had passed a detailed order and hence the same is sustainable.

rned Authorised Representative for Revenue supports the impugned order and submits that the learned Commissioner of Customs (Appeals) had passed a detailed order and hence the same is sustainable. Therefore, he requested that the appeal filed by the appellants may be rejected.

Heard both sides and perused the records of the case.

On careful consideration of the submissions made by both the sides, we find that the issue of dispute for consideration before us is to decide whether the impugned order upholding the re-assessment under Section 17(5) of the Customs Act, 1962 by changing the declared country of origin and consequent classification, demand of additional duty, imposition of fine and penalties are legally sustainable.

In order to examine, whether the provisions of Section 17(5) ibid are applicable to the facts of the case, we would like to refer the relevant legal provisions of the Customs Act, 1962:

“Definitions. 2. In this Act, unless the context otherwise requires,—

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s of the case, we would like to refer the relevant legal provisions of the Customs Act, 1962:

“Definitions. 2. In this Act, unless the context otherwise requires,—

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(2)assessment" means determination of the dutiability of any goods and the amount of duty, tax, cess or any other sum so payable, if any, under this Act or under the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act) or under any other law for the time being in force, with reference to— (a) the tariff classification of such goods as determined in accordance with the provisions of the Customs Tariff Act; (b) the value of such goods as determined in accordance with the provisions of this Act and the Customs Tariff Act; (c) exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under this Act or under the Customs Tariff Act or under any other law for the time being in force; (d) the quantity, weight, volume, measurement or other specifics where such duty, tax, cess or any other sum is leviable on the basis of the quantity, weight, volume, measurement or other specifics of such goods; (e) the origin of such goods determined in accordance with the provisions of the Customs Tariff Act or the rules made thereunder, if the amount of duty, tax, cess or any other sum is affected by the origin of such goods;

oods determined in accordance with the provisions of the Customs Tariff Act or the rules made thereunder, if the amount of duty, tax, cess or any other sum is affected by the origin of such goods; (f) any other specific factor which affects the duty, tax, cess or any other sum payable on such goods, and includes provisional assessment, self-assessment, re-assessment and any assessment in which the duty assessed is nil;

Assessment of duty. 17. (1) An importer entering any imported goods under section 46, or an exporter entering any export goods under section 50 shall, save as otherwise provided in section 85, self-assess the duty, if any, leviable on such goods.

(2) The proper officer may verifythe entries made under section 46 or section 50 and the self-assessment of goods referred to in sub-section (1) and for this purpose, examine or test any imported goods or export goods or such part thereof as may be necessary: Provided that the selection of cases for verification shall primarily be on the basis of risk evaluation through appropriate selection criteria.

(3) For the purposes of verification under sub-section (2), the proper officer may require the importer, exporter or any other person to produce any document or information, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall produce such document or furnish such information.

le on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall produce such document or furnish such information.

(4) Where it is found on verification, examination or testing of the goods or otherwise that the self-assessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under this Act, re-assess the duty leviable on such goods.

(5) Where any reassessment done under sub-section (4) is contrary to the self-assessment done by the importer or exporter and in cases other than those where the importer or exporter, as the case may be, confirms his acceptance of the said reassessment in writing, the proper officer shall pass a speaking order on the reassessment, within fifteen days from the date of re- assessment of the bill of entry or the shipping bill, as the case may be.

Explanation.—For the removal of doubts, it is hereby declared that in cases where an importer has entered any imported goods under section 46 or an

ntry or the shipping bill, as the case may be.

Explanation.—For the removal of doubts, it is hereby declared that in cases where an importer has entered any imported goods under section 46 or an

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exporter has entered any export goods under section 50 before the date on which the Finance Bill, 2011 receives the assent of the President, such imported goods or export goods shall continue to be governed by the provisions of section 17 as it stood immediately before the date on which such assent is received.”

8.1 On careful consideration of the said provisions, we find that in case of any type of assessment, besides classification and assessable value of imported goods, the country of originis also required to be determined in accordance with the provisions of Section 14 of the Customs Act, 1962 and the Customs Tariff Act, 1975. In the present case, we find that the appellants had self-assessed the goods in terms of Section 17(1) ibid, by declaring the value of the imported goods as per invoice price which are based on specific contracts entered into with the foreign supplier M/s United Date Processing Company L.L.C., Sultanate of Oman. It is mentioned in the said contract that the goods contracted for supply of imported goods is ‘Omani Dry dates’.

the foreign supplier M/s United Date Processing Company L.L.C., Sultanate of Oman. It is mentioned in the said contract that the goods contracted for supply of imported goods is ‘Omani Dry dates’. It is also on record that on the investigation conducted by SIIB, JNCH Customs officers in verification of such self-assessment in terms of Section 17(2) and 17(3) ibid, the appellants had submitted to the department the relevant documents for the supply of imported goods from the supplier at Oman. These facts bring out clearly that the appellants did not confirm his acceptance for change in country of origin proposed by the proper officer of Customs for re-assessment of goods under Section 17(4) ibid. Thus, the proper officer of customs was required for passing of a speaking order on the re-assessment of imported goods under Section 17(5) ibid.

8.2. The order dated 3.12.2022 passed by the original authority had relied on the evidences gathered during the investigation such as press report that after withdrawal of Most Favoured Nation status to Pakistan and hiking customs duty to 200% on all imports from Pakistan, the dry dates exports from Pakistan to UAE, Kuwait, Oman, Bangladesh, Turkey have increased; similarly, there has been shift in the volume of imports of dry dates from UAE and Oman to India having increased and on the contrary imports from Pakistan reduced;

gladesh, Turkey have increased; similarly, there has been shift in the volume of imports of dry dates from UAE and Oman to India having increased and on the contrary imports from Pakistan reduced; there were no marks indicating the origin of the goods as Oman except a loosely stitched paper containing details of FSSAI, product name, exporter, importer, net weight, gross weight, production date, expiry date, country of origin as Sultanate of Oman. The original authority also noted that incidentally, the papers were loosely stitched on each jute bag which could be removed easily; further, as the dry dates (yellow coloured) popularly known as Rangkat Chuara is mostly produced in Pakistan using

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colouring agent; in view of the above and on the basis of evidence in the form of packing material found during SIIB examination, the original authority had come to the conclusion that the impugned goods are of Pakistan origin.

It is also revealed from the factual matrix of the case that out of the total 540 bags of imported goodsi.e., dry dates, in 307 bags of dry dates, the jute bags were found attached with tag/label mentioning that ‘Thal Limited (Jute Division), Manufacturers & exporters Eco friendly & good grade jute products’ and in some other bags of dry dates, the jute bags were found with stamp of ‘Bag made in Bangladesh’ and some more jute bags were found with no label.

ters Eco friendly & good grade jute products’ and in some other bags of dry dates, the jute bags were found with stamp of ‘Bag made in Bangladesh’ and some more jute bags were found with no label. SIIB investigation had concluded only on the basis of label of the packaging material and that ‘Thal limited’ being a leading manufacturer of jute bags based in Pakistan, the imported dry dates are also of Pakistan origin and not of Oman origin. The findings of the learned Commissioner of Customs (Appeals) that the investigating unit has reasonably established that the goods are of Pakistan origin, is factually incorrect, as part of the goods also contain the bags made in Bangladesh and some bags were without any markings. The packing material or the label of the packing material, that too found in part of the consignment, cannot be a reasonable basis to decide the country of origin for the material contained in the packaging and it is factually incorrect to treat the material is also originating from that country of origin of packing material. The press reports published in public domain without any specific reference to the present imports cannot be taken to be a basis, when various documents such as Bill of Lading indicating the port of shipment as Sohar, Oman; commercial invoice, sales contract, packing list were produced by the appellants importer showing the evidence of country of origin of imported dry dates as Oman.

port of shipment as Sohar, Oman; commercial invoice, sales contract, packing list were produced by the appellants importer showing the evidence of country of origin of imported dry dates as Oman. The purchase bills of the supplier abroad for procurement of empty jute bags also support that packing material have been purchased only to pack the goods of Oman origin by the supplier. Further, the Certificate of Origin issued by the Oman Chamber of Commerce & Industry and Phytosanitary certificate issued by the Plant Protection Organization of Ministry of Agriculture & Fisheries, Oman clearly provide that the imported goods are of Oman origin and not of Pakistan Origin. We also find that the imported goods upon arrival in India, have also been subjected to Plant quarantine procedure in terms of Plant Quarantine (Regulation of Import into India) Order, 2003 issued in accordance with Sub-section (1) of Section 3 of the Destructive Inspects & Pests Act, 1914; and the Directorate

in terms of Plant Quarantine (Regulation of Import into India) Order, 2003 issued in accordance with Sub-section (1) of Section 3 of the Destructive Inspects & Pests Act, 1914; and the Directorate

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of Plant Quarantine, Mumbai had examined the imported dry dates and have also certified that the country of origin as ‘Oman’ in their certificate dated 18.01.2022 recommending release of the imported goods for consumption purpose only. Thus, we find that these evidential documents placed on record which have been issued specifically declaring that the imported goods are of Oman origin forms sufficient reason to conclude that the imported goods are of Oman Origin. Thus, we do not find any merits in the impugned order for holding that the imported goods are of Pakistan origin, without any proper support of documents for confirmation of adjudged demands and for imposition of redemption fine and penalties on the appellants importer. Further, it is not the case of Revenue that the imported goods did not comply with the Food Safety and Standards (Packaging and labelling) Regulations, 2011 and therefore the action for confiscation and penalties were proposed.

10.1 In this regard, we find that the Co-ordinate Bench of the Tribunal in the case of Doves International (supra) had held that merely because of use of gunny bags showing that these bags are products on one country, cannot by itself enable that the imported goods also should be treated as though of the same country of origin which the packaging materials belongs to.

that these bags are products on one country, cannot by itself enable that the imported goods also should be treated as though of the same country of origin which the packaging materials belongs to. The relevant paragraph of the said Order is extracted below: “5. After hearing the lengthy arguments and on perusal of the material available on record, it appears that the main allegation of the Department is that, a few gunny bags were found having the marks ‘Produce of Indonesia’, but the fact remains that in para 5.4 of the impugned order, the adjudicating authority has observed that :

“5.4 ...... I agree with the argument of the Noticee that merely markings on packing material cannot be the clinching evidence for determining the country of origin of the goods contained therein especially when laboratory tests are inconclusive......”

We also agree with the arguments advanced by the learned counsel for the assessee-Appellants that for packing of the material, old gunny bags can be reused and it is not a ground to deny the benefit of country of origin. The Hon’ble High Court of Kerala vide order dated 28.01.2015 (Writ Petition (C) No. 2275/2015) directed that the seized goods be released provisionally within three days, so the goods were released as per the terms and conditions of the High Court decision.”

10.2 In the case of Sukumar Mondal (supra), the Co-ordinate Bench of the Tribunal had also held the country of origin of the imported goods cannot be decided on the basis of marks found in some of the imported goods.

Sukumar Mondal (supra), the Co-ordinate Bench of the Tribunal had also held the country of origin of the imported goods cannot be decided on the basis of marks found in some of the imported goods. The relevant paragraph of the said order of the Tribunal is extracted below:

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“15. We have said earlier that the appellants have contended that the marks of foreign origin as communicated by the department to them were there in some of the garments. There was no indication that they were there in all the garments. We feel that where the only basis on which the garments were confiscated was the marks of foreign origin it would not be in order to confiscate all the garments as if all of them were of foreign origin, when admittedly such marks were found in only some of them. Further, the thrust of the judgements cited by the learned JDR regarding the effect of the marks of foreign origin is only that they were of foreign origin or that they had been imported. That does not mean that these goods had been smuggled into the country rendering them liable to confiscation.”

Since there are no evidences to prove that the imported goods are of Pakistan origin and on the other hand there is substantial proof to show that the goods are of Oman origin, we consider it appropriate to set-aside the impugned order in the light of the discussions in the preceding paragraphs.

here is substantial proof to show that the goods are of Oman origin, we consider it appropriate to set-aside the impugned order in the light of the discussions in the preceding paragraphs.

In view of the foregoing discussions and analysis and on the basis of the decisions of the Tribunal, we are of the considered view that the impugned order passed by the learned Commissioner of Customs (Appeals) cannot be sustained. Therefore, the impugned order is set aside and the appeals are allowed in favour of the appellants.

In the result, by setting aside the impugned order dated 10.05.2023, the appeal filed by the appellants is allowed.

(Order pronounced in open court on 22.04.2024)

(S.K. Mohanty)

Member (Judicial)

(M.M. Parthiban) Member (Technical)

Sinha