[Order per : M.V. Ravindran, Member (J)]. - This appeal is filed by the Revenue against Order-in-Appeal No. HYD-CUS-OOO-APP-010-16-17, dated 13-11-2015.

2. ’The relevant facts that arise for consideration are that the respondent filed Bill of Entry No. 2999108, dated 20-10-2015 for import of 5.0244 kgs. of gold jewellery (Pendants of 22 carat purity) from M/s. PT. ANTAM TBK UBPP LogamMulia, Indonesia for declared value of Rs. 1,14,11,846/- as per invoice dated. 18-9-2015 claiming preferential tariff benefit of BCD @ ‘Nil’ vide Sl. No. 966(i) of Notification No. 46/2011-Cus., dated 1-6-2011 as amended read with Notification No. 189/2009-Cus. (N.T.), dated 31-12-2009 and 0% CVD vide Sl. No. 199(i) of Notification No. 12/2012-C.E. as amended. The assessing officer i.e. Deputy Commissioner of Customs, Air Cargo Complex, Hyderabad in the proceedings in Order-In-Original No. 69/2015, dated 13-11-2015 held that the impugned gold jewellery do not qualify as “originating goods” in terms of Rule 4 of Customs Tariff (Determination of origin of Goods under the Preferential Trade Agreement between the Government of Member States of the Association of Southeast Asian Nationals (ASEAN) and the Republic of India) Rules, 2009 (hereinafter referred ¡to as the Rules) and denied the exemption. Aggrieved by such an order, the respondent preferred an appeal before the first appellate authority. The first appellate authority after following due process of law, allowed the appeal filed by the importer with consequential reliefs. The said order was reviewed by the Committee of Commissioners.

3. Learned AR submits that there are major inconsistencies in the case in hand as the issuing authority of the exporting country i.e. Indonesia in response to retroactive check sought by the Department in respect of 4 randomly selected certificate of origin out of large number of certificates issued under FTA in terms of Rule 16(a) of the said Rules, forwarded a letter from the supplier (M/s. PT Antam) wherein it was informed that the supplier do not maintain any inventory to indicate the origin of gold ore or gold dore bars which were re-smelted for the purpose of producing refined gold (raw material/ input for the manufacture of gold jewellery) and their refinery annually produces 200 tonnes of refined gold; whereas the mining capacity of the Indonesia as per the information in the public domain is not more than 65 tonnes. It is also his submission that as per the information from the Indian Embassy in Jakarta, Indonesia, 37 tonnes (approximately 57%) of the gold mined in Indonesia is expprted in the form of gold powder, lumps and cast bars which raises a doubt as to origin of gold used for manufacturing of imported jewellery from Indonesia has been made from mixing gold dore bars of foreign origin along with domestic origin more so by the letter of supplier who stated they are not maintaining any inventory. It is his submission that as per Rule 12 of the Notification No. 189/2009, for the purpose of determining the origin of a product, the exporting party should have maintained generally accepted accounting principles of stock control applicable or inventory management practiced in the exporting country; it is an obligation on the pad of the exporting companies, purchasers, manufacturers to maintain records of materials in a manner so as to establish origin of materials or inputs used for manufacture of goods exported under preferential benefits. He would submit that in the absence of any accounting standards as admitted by the supplier, it is not possible to determine the origin of gold dore bar which has gone into manufacture of gold dore bar, which in turn has been refined into gold, used for the manufacture of gold jewellery Imported into India. Hence the goods imoorted cannot be determined as originating from Indonesia in terms of Notification No. 189/2009-Cus. (N.T.) and qualify for tariff benefits laid down under Notification No. 46/2011-Cus. as amended. It is his submission that the importer i.e. respondent is to discharge the burden of proof for claiming exemption and having failed to fulfil the condition of the Notification No. 46/2011 in respect of origin criterion of the goods, the benefit has been correctly denied and as per principle laid down in the case of Novopan India Ltd. v. Collector of C.Ex. and Customs, Hyderabad [ (S.C.)] which lays down that a person invoking an exception or an exemption provision ‘to relieve him of tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of must go to the state. It is his further submission that Central Government has noticed a sudden spurt in import of gold from Indonesia and the certificate of origin pertaining to similar importers of gold in Hyderabad were forwarded to the Indonesian authority for verification, however the verification reports received from Indonesian authorities with respect to import from M/s. PT. Antam are inconsistent with each other and the inconsistency has been communicated to the Director General of Foreign Trade (DGFT), Ministry of Trade, Republic of Indonesia and the reply from Indonesia is still awaited. It is his submission that in view of this, the appeal filed by the Department may be allowed to finalise the case as per the outcome of tile investigation.

4. Learned counsel appearing on behalf of the respondent draws our attention to the Notification No. 189/2009 and No. 46/2011-Cus. and submits that in the entire notification, therè is nothing which indicates that the lower authority has to assume things and deny the benefit. He would submit that the respondent/importer has complied the conditions of both the notifications in toto and there is no doubt as to the certificate of origin issued by the Indonesian authorities. He would submit that the imported goods were put to 100% check and the examination’ report clearly indicates that the goods which were imported were, complying with the description, quantity, value as mentioned in the documents and the purity of the gold is also as declared as has been tested by the approved jewellery valuer as pointed out by the customs authority. It is also on record that the jewellery which is imported by the respondent is unbranded and the specimen signatures that is circulated by the Commissionerate for ascertaining the authenticity of certificate of origin was also verified and it was found tallied. He would submit that an importer cannot go beyond this much to justify the genuinety of the goods imported by them.

5. Considered the submissions made by both sides and perused records.

6. The issue involved is whether Respondent herein is eligible for preferential rate of duty in terms of Notification No. 46/2011-Cus., dated 1-6-2011 as amended read with Notification No. 189/2009-Cus. (N.T.), dated 31-12-2009 for import of gold jewellery of 5.0244 kgs. or otherwise.

7. Undisputed, facts are that the respondents herein have complied with all the relevant legal provisions as is expected out of them as provided  under Notification No. 46/2011-Cus., dated 1-6-2011 and No. 189/2009-Cus. (N.T.) dated 31-12-2009. The respondents have produced the certificate of origin from the Government authorities issuing authority of the exporting country) which is not disputed in the entire proceedings before the lower authorities and even before us. The bone of contention of the Revenue in this case is regarding the non-maintenance of records by the supplier M/s. PT. Ajntam. It is also the Revenue’s case that they sought retroactive check as per Rule 16 of the said Rules which communicated that the supplier M/s. ‘PT. Antam has not maintained any acceptable inventory records to ascertain the origin of gold used for manufacturing of imported jewellery.

8. We find ¡that the first appellate authority while setting aside the Order-in-Original, allowed the appeal of importer by recording the following:

7. The Conclusion drawn by lower adjudicating authority; that as information in public domain is that Indonesia has mining capacity of not more than 65 tonnes, out of which 37 tonnes is exported, therefore, gold produced by supplier in the instant case, is made of mixing gold bars of foreign origin with domestic origin, is not backed by any evidence. In the instant case, even if Indonesia has a capacity of 65 tonnes, apd after abating said 37 tonnes exported, there are balance stocks of 28 tonnes, sufficient enough to export disputed quantity of 5.0244 kgs to appellants. The ratio of instant export to stock is 0.018% and therefore, indicates a clear possibility of fulfilling the conditions. Further, the origin of product cannot be decided based on mere assumptions and presumptions: When the subject imports are backed by valid certificate of origin, any doubt or verification with regard to the same can be resolved as per the mechanism provided in Notification No. 189/2009-Cus. (N.T.), dated 31-12-2009, and the lower adjudicating authority has no authority to travel beyond the said provisions. The said notification provides for detailed verification process in case of any reasonable doubt as to authenticity or accuracy of information in certificate of origin, which include retroactive check within prescribed time limit, verifications visit to the exporting party. The department has not placed on record any evidence to refute the documents submitted by appellant. The lower adjudicating authority raises another contention that as per Rule 12 of Customs Tariff Rules, 2009, the supplier has not maintained accounts. A reading, of said rule would reveal that it is meant for a product which is manufactured out of both originating and non-originating materials, and not applicable to a product which is wholly produced or obtained products, as in the present case. The cases relied upon by lower adjudicating authority are not relevant to the facts and circumstances of the present case, as there is no ambiguity in law in respect of present imports, and moreover, the subject imports are properly backed by certificate of origin and the supplier is a state owned company in Indonesia. Accordingly, I hold that the appellant/importer herein ineligible for preferential rate of duty in terms of Notification No. 46/2011-Cus., dated 1-6-2011, as amended, read with Notification No. 189/2009-Cus. (N.T.), dated 31-12-2009 (i.e. “Customs Tariff Rules, 2009”), for import subject Gold jewellery of 5.0244 kgs.

9. We have gone in detail the provisions of the said Rules, 2009 as notified by Notification No. 189/2009-Cus. (N.T.) and as also Notification No. 46/2011-Cus. We find that the conclusion drawn by the first appellate authority are unassailable in this case. In the case in hand, undisputedly, all the documents as required under Notification No. 46/2011-Cus. has been provided and they aire accepted as genuine. It is also on record that the said documents were sent to the issuing authorities and the issuing authorities have categorically recorded that the documents i.e. certificate of origin are genuine and issued by the Government authorities. On the face of such clarity on the documents accompanying the imported consignments, it was not for the assessing officer to hold that the importer/respondent is not eligible for the benefit of notification, based upon the assessment as to the capacity of the exporting country to mine gold and the capacity of thé supplier to refine the gold in his plant, that also based on unsubstantiated evidences. Further we notice and recorded by both the lower authorities that the exporter/supplier M/s. PT. Antam is a reputed gold mining state owned company in Indonesia; source of gold for the consignment is from their own mines in Indonesia and the gold ore was sourced from one of their own mines; the names of the mines i.e. Pongkor Gold Mines and Cilpaliung Sumber Daya and the addresses of the said mines were intimated to the adjudicating authority with a specific mention that the gold ore mined from these mines is refined and jewellery has been manufactured by thè exporter in their own plant/factory. As against such categorical averment by the respondent’s counsel before the lower authorities, the lower authority seems to have misinterpreted the provisions of Rules 3 and 4 of the Rules concerned and came to a unsustainable conclusion. Sub-rule (e) of Rule 4 specifically provides that minerals and other naturally occurring substances are considered as wholly obtained or produced if the same are extracted or taken from the exporting countries soil, water, seabed or beneath the seabed and sub-rule (i) of Rule 4 provides that products obtained or produced for the party solely inter alia sub-rule (e) are also considered as wholly obtained or produced. The factual position as to that PT Antam is a mining company, having two mines having not been disputed and specific claim of the appellant the imported goods were manufactured out of the gold refined from the gold ore procured from their gold mines not controverted has more credentials, the benefit of the Notification No. 46/2011-Cus. needs to be extended to importer/respondent. In yet another angle, we have to see what is the requirement of the AIFTA. The requirements of the AIFTA is that the item should be of origin wherein preferential treatment treaty has been signed with and the value addition is done at the place the goods are exported. In the case in hand, it is accepted fact that the jewellery was produced in Indonesia and out of the gold refined from the ore of the supplier M/s. PT. Antam.

In our considered view, the adjudicating authority, as rightly held by the first appellate authority, cannot go beyond the provisions of notifications and come to a conclusion based upon an assumption and presumption that the gold mined by the exporting country could not have been used by the supplier/manufacturer for producing the imported gold jewellery. We find that the first appellate authority was correct in recording that notification provides for detailed verification process in case of reasonable doubt. It is on record, as stated by the Departmental representative that verification report received from the Indonesian authorities were inconsistent with each other, but there is no denial as to the fact that the said verification report clearly indicates that all the documents with imported consignments were genuine. In the absence of any suspicion on documents, in our view, the adjudicating authority could not have gone beyond the provisions of notifications. It is also to be recorded that this kind of preferential trade agreement between the Member State of ASEAN and the Republic of India is a reciprocal arrangement between the countries in order to facilitate free movement of trade, will be hampered if the exemption sought under the said Rules is denied on some pretext which are based on assumptions and presumptions and is uncalled for and would render the entire exemption notification otiose, more so when on the face of the records the documents like certificate of origin is not disputed. In our view, the findings of the first appellate authority are correct and legal and does not require any interference. In view of this, we find no merits in the appeal filed by the Revenue. The impugned order is upheld and the appeal is rejected. The adjudicating authority/the assessing officer shall assess the Bill of Entry by extending the exemption as claimed by the importer, within one week from the date of communication of this order.

(Order pronounced in Court on 9-8-2017)