ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 27.11.2025
CESTAT Kolkata Quashes Customs Duty Demands Over Disputed Certificates of Origin
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379. ββ Β β β
In a landmark decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, has delivered a significant judgment in favor of M/s. United Sales Agency, setting aside two appeals related to customs duty demands. The case revolved around the authenticity of Certificates of Origin (COO) submitted by the appellant for availing preferential customs duty benefits under Notification No. β 46/2011-Cus. dated 01.06.2011. β
Background of the Case
M/s. United Sales Agency, a Kolkata-based importer, had imported bicycles from M/s. β Seawa Industries (M) SDN, BHD, Malaysia, availing preferential customs duty benefits based on Certificates of Origin. β However, discrepancies in the COO led to a Show Cause Notice issued by the Customs Department, alleging that the COO was inauthentic. β The adjudicating authority subsequently denied the exemption benefit and demanded differential customs duty of Rs. β 33,17,607/- for one consignment and Rs. β 1,02,94,248/- for six earlier consignments imported between 2021 and 2022. The appellant challenged these orders before the CESTAT. β
Key Arguments by the Appellant β
The appellant contended that the rejection of the COO was based solely on a letter from the FTA Cell, Directorate of International Customs, C.B.I.C., which referred to a verification report from the Malaysian authorities. β However, the appellant argued that this verification report was never provided to them, violating the principles of natural justice. β Without access to the report, the appellant was unable to defend their case effectively. β
Additionally, the appellant argued that the six earlier consignments were assessed and cleared on a self-assessment basis, and the Customs Department had not challenged these assessments. β They cited the Supreme Court judgment in ITC Ltd. v. Commissioner of Central Excise, Kolkata-IV [2019 (368) E.L.T. β 216 (S.C.)], which held that demands for differential duty cannot be sustained without challenging the original assessment. β
CESTATβs Observations and Final Order β
The Tribunal noted that the Department relied on the FTA Cellβs letter dated 27.01.2023, which itself was based on a verification report from the Malaysian authorities. However, the verification report was not provided to the appellant, making the Departmentβs reliance on the letter akin to hearsay evidence. β The Tribunal emphasized that the principles of natural justice were not adhered to, as the appellant was not given access to the verification report. β
In the case of the six earlier consignments, the Tribunal observed that the Department failed to verify the authenticity of the respective COOs and did not challenge the self-assessed Bills of Entry. β Citing the Supreme Courtβs judgment in ITC Ltd., the Tribunal held that the confirmed demand of Rs. 1,02,94,248/- was legally unsustainable. β
Furthermore, the Tribunal set aside the confiscation and redemption fine of Rs. β 25,00,000/- imposed by the adjudicating authority, as the imported goods were no longer available with the Revenue. β
Conclusion
The CESTATβs decision to set aside both appeals is a significant victory for M/s. United Sales Agency and a reminder of the importance of adhering to the principles of natural justice in adjudication proceedings. β The judgment underscores the necessity for the Customs Department to provide all relevant documents to the appellants and to follow due process when contesting self-assessed Bills of Entry.
This case serves as a precedent for importers facing similar issues and highlights the importance of transparency and fairness in customs assessments. M/s. United Sales Agency has been granted consequential relief as per law, marking a positive outcome for the appellant. β
Source: CESTAT Kolkata
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