Supreme Court Seeks Union's Stand On Customs' Power To Question AIFTA Benefit Claims Despite Valid Origin Certificates

The Supreme Court on Monday sought the Union Government's stand in a dispute where importers have challenged customs authorities' jurisdiction to question preferential duty claims under the ASEAN-India Free Trade Agreement (AIFTA) despite valid Certificates of Origin issued by the exporting country.

The Court also directed that no final adjudication order be passed in the matter for now.

A Bench of Justices K.V. Viswanathan and Manmohan was hearing special leave petitions filed by importers, including Rajasthan Metals, against a Delhi High Court order.

The High Court had declined to interfere with show cause notices issued to them and instead directed them to raise all objections before the adjudicating authority, which was asked to pass a reasoned and speaking order.

The dispute concerns denial of preferential customs duty treatment on imports of copper tubes and pipes. The allegation is that the goods did not satisfy the Regional Value Content (RVC) requirement of 35%, which is one of the conditions for being treated as originating goods under the applicable rules.

Before the Supreme Court, the petitioners contended that they possessed valid Certificates of Origin issued by the originating country. They argued that if those certificates were to be questioned, customs authorities were required to follow the procedure prescribed under the treaty framework and the Customs Tariff (Determination of Origin of Goods) Rules, 2009.

The Court reproduced Article 24 of the treaty, which deals with disputes concerning origin determination, classification of products, and related matters. It also extracted provisions of the 2009 Rules dealing with retroactive checks and verification visits in cases where doubts arise regarding the authenticity of documents or the true origin of goods.

The petitioners argued that the show cause notices were without jurisdiction. According to them, the authorities could not go behind the Certificates of Origin except through the mechanism prescribed under the treaty read with the Rules.

Opposing the plea, Additional Solicitor General Raghvendra P. Shankar submitted before the Supreme Court that the petitioners' reliance on Article 24 was misplaced because that provision operated at the inter-governmental level.

He also relied on Section 28DA of the Customs Act, 1962, to contend that issuance of the show cause notices was within jurisdiction.

The Supreme Court also reproduced portions of Section 28DA. These included the provision stating that submission of a Certificate of Origin does not absolve an importer of the responsibility to exercise reasonable care.

The provision also permits customs authorities to undertake further verification consistent with the trade agreement or temporarily suspend preferential tariff treatment pending verification.

Issuing notice returnable on July 27, 2026, the court directed the Union Government to file an affidavit setting out its stand in the matter. As interim protection, it ordered that while the adjudicating authority may proceed with all steps anterior to the passing of the final order pursuant to the High Court's remit, no final adjudication order shall be passed until a further hearing.

For Petitioner: Senior Advocate Mukul Rohatgi, Senior Advocate Balbir Singh, Advocate Chirag Shetty, Advocate Ayushi Agarwal, Advocate Anam Khan, Advocate Disha Jham, Advocate Karan Sachdev, Advocate-on-Record Naman Tandon, Advocate Shivali Shah.

For Respondent(s): Additional Solicitor General Raghvendra P. Shankar, Advocate-on-Record Gurmeet Singh Makker, Advocate Pallavi Mishra, Advocate Bhuvan Kapoor, Advocate Udit Dediya, Advocate Seema Bengani.