The Delhi High Court has dismissed writ petition questioning denial of Association of Southeast Asian Nations-India Free Trade Agreement (AIFTA) benefit on copper imports and refused to quash the show cause notice issued by the customs department.
The bench of Justice V. Kameswar Rao and Justice Vinod Kumar has observed that Section 28 of the Customs Act confers ample powers upon the Customs authorities to investigate into and adjudicate upon violations due to misrepresentation, suppression or fraud. Based on the material collected by the Customs authorities, a show cause notice has been issued to the Petitioners giving them full opportunity to explain how there was misrepresentation, suppression or fraud on the issue of RCV. There is no legal or jurisdictional infirmity in the issue of such show cause notices.
The provisions of Article 24 of AIFTA do not deprive the customs authorities of their powers or jurisdiction to issue such show cause notices. The Petitioners virtually insist that the treaty provisions prevail over national laws, even though the treaty provisions on which they rely have not been incorporated into any national law. This is clearly impermissible, and the challenge of the lack of jurisdiction to issue the show cause notices cannot be sustained.
The petitioners have challenge to the show cause notices issued by the customs department wherein, the preferential rate of duties under the Association of Southeast Asian Nations-India Free Trade Agreement (AIFTA) on the import of copper tubes and pipes has been rejected on the sole ground that the impugned goods do not satisfy the condition of the Regional Value Content (RVC) addition of 35%.
The petitioners have challenged the show cause notices on the basis that the same have been issued wholly without or in excess of jurisdiction and with presupposed conclusions. They have also challenged the letter dated 05.07.2023 of the Additional Commissioner of Customs, Jaipur whereby, all imports of copper tubes and pipes have been directed to be cleared without granting the benefit of the AIFTA on provisional basis upon furnishing bank guarantee and bond.
The petitioners submitted that the dispute involves interpretation and application of an international treaty, and therefore falls within the jurisdiction of constitutional courts rather than departmental adjudication. It was argued that AIFTA is a complete code, and its provisions override domestic rules in case of conflict. Customs authorities failed to follow the mandatory verification procedure for COOs before denying benefits. The issuing authority in Vietnam had confirmed the genuineness of COOs, thereby binding Indian authorities. Authorities adopted an unauthorised method for computing RVC, deviating from prescribed direct/indirect methods. The show cause notices were pre-determined, vague, and issued without proper investigation, rendering them legally unsustainable.
The petitioners further argued that disputes relating to origin verification must be resolved through the inter-governmental dispute settlement mechanism under AIFTA, and not unilaterally by Indian customs authorities.
The customs authorities strongly defended their actions, asserting that the importing country retains the sovereign right to deny preferential tariff benefits, even where COOs are produced, if there are doubts regarding origin. Verification under AIFTA is not mandatory, as the treaty uses the term “may” and not “shall.” There was substantial evidence of possible circumvention, including routing of copper from non-ASEAN countries like China through Vietnam. Data indicated that Vietnam’s domestic copper production was insufficient to justify the scale of exports, raising suspicion of third-country routing and misdeclaration of origin. Authorities also highlighted findings suggesting that exporters sourced raw materials from non-ASEAN countries while falsely declaring ASEAN origin to avail duty benefits.
The Court clarified that merely alleging that the mandatory process under AIFTA was not followed before issuance of a show cause notice (SCN) does not automatically make a writ petition maintainable.
It was specifically observed that where the dispute is predominantly based on the Certificate of Origin (COO), the reliance on earlier judgments to claim writ maintainability is misplaced, as those rulings were confined to COO-centric issues.
The Court held that the precedent relied upon by petitioners (regarding treaty-based jurisdiction) does not apply in the present facts, since the issue here is not purely a treaty interpretation question but involves factual examination of origin and RVC compliance.
The Court emphasized that disputes involving verification of origin, RVC computation, and factual determination must be examined by the adjudicating authority under the Customs Act, rather than being directly entertained under writ jurisdiction.
The issuance of an SCN was held to be part of due process, giving the importer an opportunity to respond, and cannot be quashed at the threshold unless there is clear lack of jurisdiction or violation of natural justice.
The Court recognized that COO is not absolutely conclusive and customs authorities are empowered to verify its correctness and deny benefits where doubts exist.
The Court noted that AIFTA operates at a State-to-State level, and private parties cannot directly enforce treaty provisions unless incorporated into domestic law.
Case Details
Case Title: Rajasthan Metals Versus UOI
Citation: JURISHOUR-1055-HC-2026(DEL)
Case No.: 28.04.2026
Date: 28.04.2026
Counsel For Petitioner: Balbir Singh, Sr. Advocate
Counsel For Respondent: N Venkataraman
