Customs Can’t Deny ASEAN AIFTA Preferential Duty Benefit Solely for Importer’s Inability to Answer Origin Questionnaire: CESTAT

The New Delhi Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that preferential customs duty benefits under the ASEAN–India Free Trade Agreement (AIFTA) cannot be denied merely because an importer is unable to furnish upstream manufacturing or raw material details beyond its knowledge, particularly when a valid Certificate of Origin (CoO) issued by the exporting country is on record. Allowing two appeals filed by a Delhi-based silver jewellery importer, the bench of Dr. Rachna Gupta (Judicial Member) set aside the reassessment orders and held that Customs authorities wrongly invoked Section 17(3) of the Customs Act, 1962 and Rule 16(b) of the AIFTA Rules, 2009 without undertaking mandatory verification with the issuing authority in Thailand. The appellant had imported sterling silver jewellery—earrings, bracelets, bangles and toe rings—from Thailand during 2017–2018 and claimed nil basic customs duty under Notification No. 46/2011-Cus, which grants preferential treatment to goods originating from ASEAN countries. The imports were supported by Certificates of Origin issued by the Department of Foreign Trade, Government of Thailand. However, Customs raised doubts regarding the true origin of the goods and issued a detailed questionnaire seeking information such as source of refined silver used in manufacturing, details of refineries and suppliers of raw materials used by Thai manufacturers. As the importer responded that such information was not within its knowledge, Customs denied the exemption and ordered reassessment. The Commissioner (Appeals) upheld the denial, prompting the appeal before CESTAT. The central question before the Tribunal was can preferential duty benefits under an international trade agreement be denied solely because an importer cannot provide manufacturer-level or raw material sourcing details, despite submitting a valid Certificate of Origin. The Tribunal categorically answered the issue in the negative, making several important observations certificate of Origin Issued by Competent Authority Is Primary EvidenceUnder Rule 13 of the ASEAN–India Rules, 2009, eligibility for preferential duty is supported by a Certificate of Origin issued by the exporting country’s designated authority. In this case, the CoO issued by Thailand was never alleged to be forged or fraudulent. The tribunal noted that Annexure III of Notification No. 189/2009-Cus mandates that if Customs doubts the authenticity of a CoO, it must return the certificate to the issuing authority, communicate reasons for denial and seek clarification from the exporting country. The Tribunal found that no such verification was ever initiated, rendering the denial arbitrary. The Tribunal rejected Customs’ approach of treating answers such as “not known to us” as non-compliance. It held that an importer cannot be compelled to furnish refinery-level or raw material procurement details of a foreign manufacturer, especially when trade rules do not impose such an obligation. The tribunal noted that Rule 16(b) only permits Customs to seek information from an importer; it does not authorize denial of benefits without conducting prescribed verification. Similarly, Section 17(3) cannot override international treaty obligations without due process. The Tribunal emphasized that preferential trade arrangements are designed to facilitate free movement of goods, and denying exemptions on assumptions would defeat the very purpose of such agreements. The tribunal held that the Customs authorities cannot go beyond the framework of exemption notifications or trade agreements to deny benefits on conjectures. The CESTAT held that the importer was entitled to nil basic customs duty under Notification No. 46/2011-Cus. The denial of exemption was illegal and unsustainable. Both impugned appellate orders were set aside. Case Details Case Title: M/s. Shri Gopal Jewellers Versus Commissioner of Customs– New Delhi Case No.: Customs Appeal No. 50045 of 2023 Date: 29.01.2026 Counsel For Appellant: Vrinda Bagari, Advocates Counsel For Respondent: Rohit Issar, Authorized Representative Click Here To Read Order Read More: Mumbai Customs Busts Multiple Smuggling Rackets at Airport; NDPS, Gold, Diamonds, Foreign Currency Seized Worth Over Rs. 35 Crore

Customs Can’t Deny ASEAN AIFTA Preferential Duty Benefit Solely for Importer’s Inability to Answer Origin Questionnaire: CESTAT

Membership Required

Latest articles

SCN Too Vague to Establish Regulatory Violations By Customs Broker: CESTAT Quashes Licence Revocation

10% Basic Customs Duty Applicable On LED Modules Without Driver Circuitry: CESTAT

Whether RERA Registration Can Determine GST Classification of ‘Ongoing Project’? Rajasthan HC Issues Stay Notice

CESTAT Upholds Customs Duty Demand Against Telecom Importers

More like this

SCN Too Vague to Establish Regulatory Violations By Customs Broker: CESTAT Quashes Licence Revocation

10% Basic Customs Duty Applicable On LED Modules Without Driver Circuitry: CESTAT

Whether RERA Registration Can Determine GST Classification of ‘Ongoing Project’? Rajasthan HC Issues Stay Notice

About us

Company

Categories