The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi Principal Bench, has upheld a customs duty demand arising from the alleged mis-declaration of the country of origin of imported brass scrap, holding that the goods covered by ten Bills of Entry had actually originated from Pakistan rather than the declared country, UAE.
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) sustained their classification under Customs Tariff Heading (CTH) 98060000, attracting customs duty at the rate of 200% under Notification No. 05/2019-Customs dated February 16, 2019.
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The proceedings originated from an investigation initiated after the National Customs Targeting Centre (NCTC), New Delhi, alerted the Customs Preventive Branch about a high-risk consignment imported by M/s Bright Metals (India) Pvt. Ltd. The consignment had been declared as brass scrap originating from and shipped from the UAE.
However, container tracking information obtained from the Pakistan International Container Terminal (PICT) indicated that the container had actually originated from Pakistan. Importantly, the seal number appearing in the PICT records matched the seal number recorded in the Indian Customs EDI system, providing a link between the Pakistani-origin movement and the Indian import documentation.
The investigation was subsequently extended to earlier imports. Customs found that ten Bills of Entry filed in respect of earlier consignments showed a similar pattern: container tracking through PICT indicated Pakistan as the actual point of origin, while the import documentation declared UAE as the country of origin.
The ten Bills of Entry covered imports made during 2020 and 2021. The goods had initially been self-assessed by applying basic customs duty of 2.5%, along with Social Welfare Surcharge and IGST.
According to the table reproduced in the Tribunal’s order, the aggregate assessable value of the consignments was approximately ₹1.71 crore, while the duty self-assessed and paid was ₹22.36 lakh. Applying the 200% basic customs duty applicable to goods originating in Pakistan resulted in a total correct duty liability of approximately ₹22.36 crore and a differential duty demand of ₹20,65,37,318.
The substantial difference arose because Notification No. 05/2019-Customs dated February 16, 2019 had inserted tariff item 98060000 prescribing a 200% customs duty rate for goods originating in or exported from Pakistan.
A key aspect of the case was the evidentiary value of the container-tracking records.
The Commissioner had examined printouts and screenshots obtained from the PICT website and compared them with the information contained in the Indian Customs EDI system. The Tribunal noted that the container numbers and seal numbers appearing in the respective records matched.
The Tribunal therefore observed that the finding regarding Pakistani origin was not based merely on an isolated online tracking record. Instead, the tracking information was corroborated by the matching container and seal details appearing in the Indian Customs records.
This distinction was significant because the Revenue’s case rested on multiple pieces of evidence connecting the imported goods to their movement from Pakistan.
The Commissioner also relied upon statements recorded under Section 108 of the Customs Act, 1962.
According to the findings reproduced by the Tribunal, the Senior Manager of the logistics company stated during investigation that the brass scrap, described as “Pallu”, had been loaded into containers at Karachi Port and transported to Jebel Ali before being sent onward to Indian ports. The goods allegedly remained in the same containers and were not unloaded at Jebel Ali.
The statement further recorded that, apart from a change in the Bill of Lading date, important particulars such as the Bill of Lading number, description of goods, quantity, container number and seal number remained unchanged.
The Commissioner also relied upon statements of the directors and an agent involved in arranging the imports. As recorded in the order, they acknowledged that the goods covered by the disputed Bills of Entry may have originated from Pakistan.
Another significant finding concerned the Pre-Shipment Inspection Certificates (PSICs).
The Commissioner concluded that the certificates relating to the ten disputed Bills of Entry had been issued without actual inspection of the goods and without the goods being unloaded and reloaded in the UAE. The finding was based on the evidence indicating that the same consignments had been loaded at Karachi and subsequently transported through Jebel Ali to India without the goods being unloaded there.
The Tribunal relied upon the earlier decision in the importer’s own case, where a live consignment involving the same alleged modus operandi had already been adjudicated.
The classification dispute was closely linked to the country-of-origin issue.
The importer had declared the goods as brass scrap under CTH 74040022. The Commissioner, however, held that once the Pakistani origin of the goods was established, the goods attracted the special tariff treatment under CTH 98060000 in terms of Notification No. 05/2019-Customs.
The order specifically recorded that Notification No. 05/2019-Customs inserted tariff item 98060000 prescribing customs duty at 200% on all goods originating in or exported from the Islamic Republic of Pakistan. Consequently, goods established to have originated from Pakistan could not continue to be assessed under the ordinary classification declared by the importer.
A major factor in the Tribunal’s decision was its earlier Final Order dated September 26, 2023 in the importer’s own case, concerning the live consignment that triggered the subsequent investigation.
The department pointed out that the modus operandi involved in the earlier consignment was identical to that found in relation to the ten past Bills of Entry. The present proceedings were described as an offshoot of the earlier case, since the investigation into the live consignment had led Customs authorities to examine the earlier imports.
The Tribunal noted that the appellant’s counsel did not object to the Revenue relying upon the earlier decision. The Bench thereafter treated the reasoning and findings contained in the earlier Final Order as applicable to the present proceedings.
The Tribunal had concluded that the country of origin of the containers was Pakistan and that the goods were therefore covered by Notification No. 05/2019.
The earlier decision also recorded findings concerning the use of allegedly fake Pre-Shipment Inspection Certificates and held that the goods were liable to confiscation under Section 111(m) of the Customs Act. The Tribunal had further upheld the imposition of penalties on the importer and its director under the relevant provisions of the Customs Act.
The Tribunal expressly stated that, to avoid repetition, the reasoning contained in the earlier Final Order would be treated as part of the present order.
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