Court finds public notice contrary to CBIC instructions; mandates reassessment under Free Trade Agreement rules
In a significant ruling, the Bombay High Court quashed an order by the Assistant Commissioner of Customs that denied Covestro India Private Limited the preferential rate of duty under the ASEAN-India Free Trade Agreement (AIFTA). The court found that the public notice used as the basis for the denial was issued without jurisdiction and contradicted instructions from the Central Board of Indirect Taxes and Customs (CBIC).
The decision was delivered by a division bench comprising Justices G.S. Kulkarni and Aarti Sathe in response to a batch of writ petitions filed by Covestro India. The petitions challenged the rejection of their claim for preferential duty rates on imports of polycarbonate resins and other materials originating from Thailand, under Notification No.46/2011.
The controversy stemmed from a public notice (No. 33/2024) issued by the Commissioner of Customs, which imposed additional documentation requirements for claims under the Free Trade Agreement. This notice was found to be contrary to the CBIC's guidelines, which emphasize that the CBIC holds exclusive authority under Section 151A of the Customs Act to issue instructions for the implementation of trade agreements.
The court's ruling highlighted that the preferential rates were denied based on a mechanical application of the public notice, which lacked legal standing. The court observed that the Commissioner of Customs issued the notice without proper jurisdiction, leading to unnecessary hurdles for importers like Covestro India.
The judgment also emphasized the importance of adherence to CBIC instructions and trade agreements, noting that public notices should not dilute or contradict these provisions. The court underscored that any changes to the procedures under the trade agreements must come from the CBIC to prevent disruption in trade practices.
In light of these findings, the High Court set aside the impugned order and remanded the matter back to the Assistant Commissioner of Customs for a fresh assessment. The court directed that the reassessment be conducted in accordance with law, considering the CBIC's instructions and the relevant trade agreement provisions, within eight weeks.
The ruling has significant implications for importers relying on Free Trade Agreements, reinforcing the necessity of CBIC's oversight in customs procedures to ensure compliance with international trade norms.
Bottom line:-
Customs law - Preferential rate of duty under Free Trade Agreement (FTA) denied based on public notice - Public notice issued without jurisdiction and contrary to CBIC instructions - Impugned order quashed and matter remanded for fresh assessment.
Statutory provision(s): Customs Act, 1962 Sections 28D, 151A; Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020
