AIFTA Duty Exemption For Scrap Cannot Be Denied To Jindal Aluminum For No Country of Origin Markings: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently granted relief to Jindal Aluminium Ltd., holding that exemption under the ASEAN–India Free Trade Agreement (AIFTA) cannot be denied merely due to the absence of country-of-origin markings on imported scrap goods.

The Bench comprising Judicial Member Ajayan T.V. and Technical Member M. Ajit Kumar allowed the appeal filed by Jindal Aluminium Ltd. and set aside the order of the Commissioner (Appeals) which had denied the benefit of Notification No. 046/2011-Cus dated 01.06.2011.

The appellant imported “Aluminium Scrap Tread” from Singapore and claimed exemption from Basic Customs Duty under the ASEAN–India Free Trade Agreement (AIFTA) based on a valid Certificate of Origin.

However, during the first check examination, customs officers observed that the goods did not bear any markings indicating the country of origin.

On this ground alone, the Department denied the exemption and reassessed the goods at the normal rate of duty. The appellant cleared the goods under protest, and the denial of benefit was upheld by the Commissioner (Appeals), leading to the present appeal.

The Tribunal noted that the customs authorities had verified all relevant documents, including the Certificate of Origin, pre-shipment inspection certificate, sales contract, and weighment records, and no discrepancies were found.

The Tribunal observed that the absence of physical country-of-origin markings cannot override documentary evidence, particularly when there is no allegation of fraud, misdeclaration, or tampering.

The bench opined that "the absence of country-of-origin markings on the goods could not have impeded their identification, particularly when all accompanying documents were verified by the Customs Officer and no discrepancies were found. There was also no evidence of tampering with the container or any other blameworthy act reported to have been done by the importer."

The Tribunal held that the appellant was entitled to exemption under Notification No. 046/2011-Cus and set aside the denial of benefit. It ruled that minor procedural lapses, such as absence of markings on scrap goods, cannot be a ground to deny FTA benefits when the origin is otherwise established.

The bench stated that "the imported goods have satisfied the requirements of law and merit to be granted the benefit of exemption from Basic Customs Duty under Notification No. 046/2011-Cus dated 01.06.2011. Even otherwise procedure is merely a means to enforce the law, not an end in itself. Treating every procedural lapse alike ignores the purpose of the requirement. The doctrine of substantial compliance prevents undue hardship where obligations are essentially met and any deficiency is only minor and non-essential."

The appeal was allowed with consequential relief.

For Appellant: B. Aditya Sundar, Chartered Accountant

For Respondent: Vineeth Goel, Authorised Representative