FTA imports – Benefit not deniable merely because overseas supplier did not cooperate during verification

The CESTAT Kolkata has observed that there is no statutory provision which authorizes the Customs authorities to mechanically deny the benefit of every Certificate of Origin issued by a particular overseas supplier merely because such supplier did not cooperate during a verification exercise.

According to the Tribunal, non-cooperation by itself cannot automatically translate into wholesale invalidation of every Certificate of Origin previously issued in favour of importers.

The Tribunal in Balaji Niryaat Private Limited v. Principal Commissioner also observed that it was impermissible to adopt a sweeping approach by treating every Certificate of Origin issued in favour of the said exporter as automatically disentitled to preferential treatment without any independent examination of the individual Certificate or transaction.

The CESTAT was thus of the opinion that the Department’s attempt to reject, through one omnibus communication, all Certificates of Origin issued by a particular overseas supplier, irrespective of the importer, the consignment, the issuing authority or the attendant facts, was legally untenable.

Allowing the appeal filed by the assessee, the Tribunal also observed the following:

• No verification request from any field formation in respect of the Certificates of Origin was received.

• Neither the SCN nor the impugned order records any finding that the Certificates of Origin were forged, fabricated, cancelled or otherwise declared invalid.

• Subsequent exchange of communications between departmental authorities cannot, in the absence any formal determination affecting the validity of the CoO themselves, retrospectively deprive an importer of a benefit which had accrued on the basis of documents accepted by the proper officer.