Delhi High Court Dismisses Pleas Against Customs SCNs On AIFTA Benefits For Copper Imports

The Delhi High Court has dismissed as premature petitions challenging show cause notices denying duty benefits under the ASEAN-India Free Trade Agreement on copper imports from Vietnam for allegedly failing the 35% value addition requirement.

A Division Bench of Justices V. Kameswar Rao and Vinod Kumar held that the petitions were not maintainable at this stage, noting that the challenge was to show cause notices which initiate adjudicatory proceedings and do not conclusively determine rights

The petitions were filed by several importers, including Rajasthan Metals, Havells India Limited, Micro Coils and Refrigeration Pvt Ltd and Pallavi Copper Pipes Pvt. Ltd., among others.

Petitioners had contended that the customs authorities had unlawfully denied AIFTA benefits by questioning valid Certificates of Origin (COOs) and by adopting an impermissible method for determining Regional Value Content (RVC), contrary to the treaty framework.

It was argued that once COOs issued by the competent authority in the exporting country are valid and unrevoked, the Indian authorities cannot disregard them without following the verification procedure prescribed under AIFTA and the Rules of Origin.

They further submitted that the dispute involved interpretation and implementation of an international treaty and therefore warranted interference under Article 226 of the Constitution, notwithstanding the availability of an alternative remedy.

Opposing the petitions, the customs authorities argued that the writ petitions were not maintainable in view of the efficacious statutory remedy.

It was submitted that the AIFTA framework permits the importing country to scrutinise claims of preferential tariff and to deny benefits where there is reasonable doubt regarding the origin of goods. The respondents also contended that issuance of SCNs is a procedural safeguard affording the importers an opportunity to respond before any final determination is made.

Accepting the preliminary objection, the High Court reiterated that writ jurisdiction ought not to be exercised against show cause notices except in cases of patent lack of jurisdiction or violation of principles of natural justice. The Court found that no such exceptional circumstances were made out in the present case.

The bench observed that all contentions raised by the petitioners, including those relating to the interpretation of AIFTA, validity of COOs, and the methodology adopted for RVC determination, can be urged before the adjudicating authority.

Accordingly, the Court dismissed the petitions, granting liberty to the petitioners to respond to the notices and pursue remedies in accordance with law.

For Petitioners: Senior Advocate Balbir Singh with Advocates Chirag Shetty, Udit Jain, Ayushi Agarwal and Anam Khan, among others.

For Respondents: Additional Solicitor General N. Venkataraman with Senior Standing Counsel Aditya Singla and a team of Central Government Standing Counsels appearing for the Union of India and CBIC.