2015 (11) TMI 1498 - AT - Customs

Revalidation of Duty Free Import Authorization (DFIA) Licenses - failure of the appellant to produce an import permit from the Central Insecticide Board & Registration Committee (CIB &RC) under the Insecticide Act 1968 - Held that - Lower authorities have misread the provisions of law. As per Para 2.13.1 of the Handbook of Procedures, only the licensing authorities can permit the revalidation of freely transferable DFIAs. There is no dispute on this. But it should be fairly understood that adequate justification for revalidation has to be made available to DGFT. And this information can only be made available by Customs. The appellant has merely sought a statement to be issued by Customs to the DGFT certifying that the admissibility of import of Boric Acid against the DFIAs licenses remained in litigation. In fact, the Commissioner (Appeals) acknowledges this position regarding the litigation. - request made by the appellant to the Customs Department is very legitimate. The request is not for revalidation of Licenses by Customs, but only a certificate to be issued to DGFT confirming the sequence of events from the date of first refusal of duty free clearances of imported Boric Acid till the date when the Customs started finding Bills of Entry and releasing PD Bonds/Bank Guarantees. This factual certificate will enable the appellant to approach the DGFT who can consider the appellants case on merits for revalidation of such expired licenses. - Decided in favour of assessee.

Summary

Issues:
Revalidation of Duty Free Import Authorization (DFIA) Licenses.

Analysis:
The appellant, an importer of chemicals, faced rejection of duty free clearance for Boric Acid under DFIA due to failure to produce an import permit from CIB & RC. Commissioner (Appeals) ruled in favor of the appellant, but the Revenue challenged it before CESTAT. The High Court allowed provisional release, but CESTAT dismissed the appeal. Another consignment faced rejection, leading to prolonged litigation. The Mumbai CESTAT Bench favored the appellant, citing a Kerala High Court decision. Despite the expired validity of licenses due to ongoing litigation, the department rejected the appellant's request for revalidation. Commissioner (Appeals) held that revalidation is under DGFT's jurisdiction, not the Customs office. The appellant sought confirmation of the litigation's impact on license utilization, which was denied by the department.

The appellant argued that the licenses could not be utilized due to ongoing litigation, seeking a confirmation statement from Customs for revalidation. The AR contended that revalidation requires physical custody with the department and raised doubts on license transfer evidence and validity. The Tribunal noted misinterpretation by lower authorities, emphasizing that only licensing authorities can permit revalidation, with Customs providing necessary justification to DGFT. The AR's doubts on license transfer and validity were rejected for lack of evidence.

The department rejected the appellant's request for revalidation, citing pending litigation and refusal to debit licenses for duty-free imports. The Tribunal emphasized that denial of benefits due to non-utilization from Customs refusal would be unjust, considering the substantial investment in licenses. The AR argued for physical custody with Customs for revalidation, but the Tribunal held that DGFT should decide, noting that licenses were not debited due to ongoing litigation.

The Tribunal agreed with the appellant, directing the department to issue a factual certificate to DGFT within two weeks for revalidation under Para 2.13.1 of the Handbook of Procedures. The appeal was allowed in favor of the appellant.