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2015 (9) TMI 973 - AT - CustomsDuty free import authorisation - Transferable DFIA - Respondent filed Bill of Entry for clearance of Phosphoric Acid 85% technical grade and claimed duty free clearance against DFIA in terms of Notification No 98/2009-cus By impugned Order, Commissioner (Appeals) allowed claim of Respondent Held that - DFIA was originally issued by exporters and after fulfilment of export obligation, same was transferred to Respondent Notification No 90 provides declaration of actually used quantify of Inputs in export goods Adjudicating Authority directed exporter to intimate actual quantity of phosphoric acid used in export of goods, who did not provide information to department As exporter fulfilled export obligation, licence were transferred to respondent/importer as endorsed by Licensing Authority Exporter cannot be compelled to furnish any information in respect of said DFIA, which was already transferred to respondent In present case, Phosphoric Acid had specific entry mentioned in DIFA Licence Once license was endorsed for transferability by licensing authority, nexus between import goods use in export goods, was not required to be established afresh by transferee Decided against Revenue.
Issues Involved:
1. Denial of exemption notification benefit due to lack of evidence of actual quantity of Phosphoric Acid used in export goods. 2. Applicability of DGFT Notifications No. 31 dated 1.8.2013 and No. 90 dated 21.8.2014. 3. Validity of DFIA transfer and the requirement to establish the nexus between imported material and export product. Detailed Analysis: 1. Denial of Exemption Notification Benefit: The respondent filed Bill of Entry No 6920788 dated 25.9.2014 for duty-free clearance of "Phosphoric Acid" 85% technical grade against DFIA as per Notification No 98/2009-cus. The Assessing Officer denied the exemption benefit, arguing that the exporter did not provide the actual quantity of Phosphoric Acid used in the export goods, which is mandatory as per DGFT notifications. The Commissioner (Appeals) set aside this decision, leading to the Revenue's appeal. 2. Applicability of DGFT Notifications: The Revenue argued that DGFT Notification No 31 dated 1.8.2013 and Notification No 90 dated 21.8.2014 require the actual quantity of inputs used in export products to be declared. The respondent countered that the DFIA, issued on 17.10.2012, predated these notifications and thus should not be subject to their requirements. The Tribunal supported this view, referencing the case of Uni Colloids Impex Pvt Ltd, which held that DFIA issued before the notifications are not bound by their stipulations. 3. Validity of DFIA Transfer and Nexus Requirement: The Tribunal found that once the DFIA was transferred by the Licensing Authority, it was not necessary for the importer to establish the use of imported material in the export product. This principle was upheld in various judicial precedents, including the Supreme Court's decision in CC (Imports), Mumbai v. Hico Enterprises, which stated that the Customs Department cannot compel the transferee to prove that the export obligation was fulfilled by the original license holder. Tribunal's Decision: The Tribunal upheld the Commissioner (Appeals)'s decision, stating that the DFIA was issued and transferred before the relevant DGFT notifications came into effect, and therefore, the requirements of these notifications did not apply. The Tribunal reiterated that the Customs authority cannot override the Licensing Authority's decision and that the importer is not required to prove the nexus between the imported material and the export product once the DFIA is transferred. The appeal by the Revenue was rejected, and the order by the Commissioner (Appeals) was upheld. Conclusion: The Tribunal's judgment emphasizes the non-retrospective application of DGFT notifications and reinforces the principle that once a DFIA is transferred, the transferee is not required to establish the nexus between the imported material and the export product. The Customs authority cannot impose additional requirements beyond the scope of the license issued by the DGFT.
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