Customs Appellate Tribunal Grants Relief to M/s. Softel Overseas in Duty Payment Dispute

Case Name:

Customs Appeal No.75195 of 2014 - M/s. Softel Overseas Private Limited v. Commissioner of Customs (Port), Kolkata

Key Takeaways:

1. Procedural lapses should not prevent the grant of a substantive benefit if there is no prejudice to the contents and intentions of the documents.
2. The language of the notification should be given a plain and clear meaning.
3. A clerical error in a certificate of origin should not result in the rejection of the entire certificate if it does not violate any provisions that would deny the exemption.
4. Where a more beneficial exemption is available, the party should not be precluded from seeking duty relief.
5. Procedural formalities should not impede the grant of a substantive benefit.

Case Synopsis:

This is a final order from the Customs, Excise and Service Tax Appellate Tribunal in Kolkata, India. The case number is Customs Appeal No.75195 of 2014. The appellant in this case is M/s. Softel Overseas Private Limited, and the respondent is the Commissioner of Customs (Port), Kolkata.

The appellant filed five Bills of Entry seeking the benefit of Notification No.12/2012-CUS dated 17.03.2012, as amended by Notification No.25/2013-CUS dated 08.05.2013. They paid duty at a rate of 7.5% at the time of clearance of the goods. However, they later realized that they had not sought the benefit of Notification No.46/2011-CUS dated 01.06.2011, which would have allowed them to pay duty at a rate of 5%. As a result, they had paid duty at a rate of 2.5% in excess.

The appeal was rejected by the Commissioner of Customs (Appeals) on the grounds that the certificate of origin issued by the Thailand Government did not fulfill all the conditions prescribed by the Thailand Government. The Ld. Commissioner (Appeals) pointed out that the certificate did not contain the five invoice numbers marked A, B, C, D, E, which corresponded to invoice No.1132103714.

The Customs, Excise and Service Tax Appellate Tribunal disagreed with the Ld. Commissioner (Appeals) and set aside the impugned order. They found that the appropriate invoice number was indicated in the certificate of origin at Sl.No.8. The appellants argued that the original consignment was split into five smaller imports, which is why the common invoice number had to be split into five sets. The Tribunal found this argument to be valid and meaningful. They also noted that the quantity of the five import invoices totaled up to the impugned quantity and that all other particulars of the import invoices were in sync with the details furnished in the certificate.

The Tribunal held that procedural lapses should not come in the way of disallowing a substantive benefit to the party, as long as there was no prejudice caused to the contents and intentions of the documents. They also emphasized that the language of the notification should be given plain and clear meaning. They concluded that the Ld. Commissioner (Appeals) order was bereft of any merit and set it aside. The appeal filed by the appellant was allowed with consequential relief, as per law.

Please note that this is a summary of the final order. For the full text of the order, including the operative part, please refer to the original document.

FAQ:

Q1: What was the dispute in Customs Appeal No.75195 of 2014?

A1: The dispute revolved around the duty payment made by M/s. Softel Overseas Private Limited. They initially paid duty at a rate of 7.5% but later realized they were eligible for a lower rate of 5% under a different notification.

Q2: Why was the appeal rejected by the Commissioner of Customs (Appeals)?

A2: The appeal was rejected due to procedural lapses in the certificate of origin issued by the Thailand Government. The certificate did not contain the five invoice numbers marked A, B, C, D, E, which corresponded to a specific invoice number.

Q3: What was the decision of the Customs, Excise and Service Tax Appellate Tribunal?

A3: The Tribunal disagreed with the Commissioner of Customs (Appeals) and set aside the impugned order. They found that the procedural lapses should not prevent the grant of a substantive benefit and that the certificate of origin should not be rejected in its entirety due to a clerical error. The appeal filed by M/s. Softel Overseas Private Limited was allowed with consequential relief.

The appellant M/s. Softel Overseas Private Limited have filed the impugned appeal assailing the Order-in-Appeal No. 259/Cus(Apprg)/Kol(P)/2013 dated 26/27.11.2013 passed by the Ld. Commissioner (Appeals).

2. Briefly stated the facts of the case are that the appellant filed five Bills of Entry seeking benefit of Notification No.12/2012-CUS dated 17.03.2012 (Sl.No.237), as amended vide Notification No.25/2013-CUS dated 08.05.2013 and paid duty @ 7.5% at the time of clearance of the said goods. It however subsequently came to the knowledge of the importer that by mistake they had not sought the benefit of Notification No.46/2011-CUS dated 01.06.2011 (Sl.No.440) as the imported goods were liable for ASEAN India Free Trade Preferential Tariff rate of duty and duty accordingly was leviable on the imported goods @ 5%, thus having paid duty @ 2.5% in excess.

3. In appeal proceeding before the Ld. Commissioner (Appeals), the request of the appellants was rejected by the Ld. Commissioner (Appeals) inter alia stating as under:-

“5. I find from the certificate IAI2013-0008807 dated 3.5.2013 issued by Thailand Government that goods were Thailand made and country of origin was

Thailand but invoices were issued by UNIPLUS INTERNATIONAL EAST, Sharjah, UAE and goods were shipped/loaded from Bangkik, Thailand. The certificate issued by Thailand Government has no particulars about the invoices having marks ABCED on 5 invoices in addition to invoice number 1132103714 and does not have any tick marks showing that goods were invoiced by third country. The original copy of said certificate of origin was perused during personal hearing and on the overleaf (reverse) conditions NO.7 were stipulated that third country invoice would be ticked. The Appellant submitted with appeal memorandum only front page photocopy of said certificate. As per Notification 46/2011 dated 1.6.2011 laid down a condition that when goods are imported in republic of India from country listed in appendix I, the importer shall prove to eb satisfaction of Deputy/Asst Commissioner of Customs that goods are actually origin of country as mentioned in Appendix I but the said certificate issued by Thailand Government does not fulfill all

conditions as prescribed by Thailand Government therefore appellant is not entitled to avail the benefit of 46/2011 as amended by notification no.64/2012.”

4. Heard both sides and perused the case records.

5. The primary objection taken by the Ld. Commissioner (Appeals) while rejecting the appeal of the appellant was that the certificate issued by the Thailand Government did not contain the five invoice numbers having marked A,B,C,D,E to invoice No.1132103714 in respect of the goods under importation. Apart from this it was also pointed out by the Ld. Commissioner that the appropriate column in the said certificate of origin issued by the Thailand Government was not ticked and therefore he did not permit the grant of exemption Notification No.46/2011 dated 01.06.2011.

6. We are not in agreement with the view of the Ld. Commissioner (Appeals). It may be pointed out that the appropriate invoice number referred to (supra) is duly indicated in the said certificate at Sl.No.8.

The said invoice is scanned below to establish the fact of indication of the invoice number with the import invoice, but for sub-division into A, B, C, D and E.

7. The appellants have submitted that as the original consignment was split up into five smaller imports, therefore, common invoice number (supra) had to be split up into five sets as A, B, C, D and E. We find this argument of the appellant to carry substantive force and be meaningful. Particularly when collectively the quantity of the five import invoice (72 MTs each) total up to the impugned quantity (360 MTs) and all other particulars of the import invoices are in sync with the details furnished in the impugned certificate. It is settled law that procedural lapses, if any, cannot come in the way of disallowing a substantive benefit to the party, as long as there was no prejudice caused to the contents and the intentions of the documents (Food Corporation of India vs. Collector of Customs1). As long as the language of the Notification is clear and unambiguous, it is not for the courts to go behind its prescription. Further, in a taxing statute there is no room for any intendment and regard has to be given to the plain language and clear meaning of the words. In accordance with the provisions of Customs Tariff (Determination of Origin of Goods) Rules 2009 under the Preferential Trade Agreement between the Governments of member states of the Association of South East Asian Nations (ASEAN) and the (Republic of India), we note, that the appropriate authority has issued the certificate upended with the case records and referred to by the Ld. Commissioner (Appeals). A clerical error, if at best any, would not merit rejection of the said original certificate in its entirety and thereof deprive the benefit thereof to the person availing the same. We note that the omission as pointed out does not violate any of the provisions of the Rules referred to above which could entail denial of the exemption. It is also settled law that where a more beneficial exemption is available to the assessee, it cannot be precluded from seeking duty relief thereto (refer- Commissioner of Customs, Chennai vs. Suvarna Florex).

Moreover, procedural formality, if any cannot impede the grant of a substantive benefit as held by the Tribunal in the case of India Photographic Co. Ltd. vs. Collector of Customs, Bombay and Shree Krishna Polyurethane India Pvt. Ltd. vs. Commissioner.

8. For the reasons foregoing, we find that the Ld. Commissioner (Appeals) order is bereft of any merit and is liable to be set aside. We, therefore, set aside the impugned order and allow the appeal filed by the appellant with consequential relief, as per law.

(Operative part of the order was pronounced in the open Court.)

Sd/

(ASHOK JINDAL)

MEMBER (JUDICIAL)

Sd/

(RAJEEV TANDON)

MEMBER (TECHNICAL)