CESTAT Allows Nil Basic Customs Duty On Sterling Silver Jewellery Imported From Thailand

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) recently allowed a jeweller to claim nil basic customs duty on sterling silver jewellery imported from Thailand, ruling that customs authorities were wrong to deny the benefit just because the importer did not provide some information.

Nil basic customs duty refers to zero customs duty payable on certain imports under applicable trade agreements.

A Bench comprising Judicial Member Dr. Rachna Gupta was hearing appeals filed by Shri Gopal Jewellers challenging orders passed by the Commissioner of Customs (Appeals), New Delhi, which had denied the benefit under the ASEAN-India Free Trade Agreement.

Allowing the appeal, the Bench observed:

“The appellant has answered all the questions. It is only that the answers, 'not known to us' to a few questions therein, are being treated by the department as if no answer was given. This is absolutely wrong and an absurd interpretation on the part of the department.”

Gopal Jewellers had imported sterling silver earrings, bracelets, toe rings, and bangles from Thailand, claiming exemption from basic customs duty under Sl. No. 966(1) of Notification No. 46/2011-Cus dated 1 June 2011, on the basis of Certificates of Origin issued by the competent Thai authorities under the ASEAN-India Free Trade Agreement.

The Department raised doubts regarding the origin of the goods and invoked Rule 16(b) of Annexure III to Notification No. 189/2009-Cus dated 31 December 2009, read with Section 17(3) of the Customs Act, 1962, seeking further information through a detailed questionnaire. Alleging that the replies were incomplete, the Department denied the exemption and ordered reassessment of the Bills of Entry.

The Tribunal noted that the Certificates of Origin were undisputed and submitted with all requisite import documents. It held that once a valid Certificate of Origin is produced, the prescribed procedure under the ASEAN-India Rules requires customs authorities to refer the matter to the issuing authority of the exporting country in case of doubt, which was not done in this case.

The Bench further observed:

“Though all the questions were not answered by the appellant, perusal of the unanswered questions shows that the information was not feasible for the appellant to provide. Moreover, the appellant had handed over the original copy of the Country of Origin Certificate. The meaning of 'not answered the questionnaire' becomes irrelevant in light of the Certificate of Origin, specifically when the department had no evidence of it being forged.”

The Tribunal held that the importer could not be expected to furnish information about the source of raw silver, refineries, or suppliers used by the overseas manufacturer, as such information was beyond the appellant's knowledge or control.

It concluded that the Department had failed to conduct the verification process mandated under the rules. In the absence of any evidence to doubt the authenticity of the Certificates of Origin, the denial of exemption was unjustified.

Accordingly, the Tribunal allowed the appeal and held that the appellant was entitled to the benefit of nil basic customs duty.

For Appellant: Advocate, Vrinda Bagari

For Respondent: Authorised Representative, Rohit Issar