2019 (3) TMI 55 - AT - Customs

Benefit of N/N. 40/2006-Cus dated 1st May 2006 - duty free import authorisation (DFIA) - Held that - The impugned order has held that the original authority had wrongly surmised that it is only unbleached, bleached and dyed fabrics that are used for printing. The description given by the original authority, though inadequate, is further qualified with the expression made of yarn of different colours with distinct of 'check and self-design . This, in our view, is not contested and would render the fabric incapable of being subjected to further printing of any pattern in the normal course from an aesthetic or from commercial standpoint. The present dispute is not of classification but compliance with the licence condition. The description of the goods, based upon examination, amply evidences the negligible scope for printing and hence unusable in furtherance of the purpose for which authorisation was issued. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against order-in-appeal setting aside original authority's decision on imports by M/s Royal Robe Corporation under DFIA scheme.
- Interpretation of Foreign Trade Policy and notification no. 40/2006-Cus regarding import conditions.
- Compliance with licence conditions for import eligibility.
- Dispute over fabric's suitability for printing and eligibility for duty-free import.

Analysis:
1. The appeal was filed by Revenue against the order-in-appeal setting aside the original authority's decision on imports by M/s Royal Robe Corporation under the DFIA scheme. The original authority had denied the benefit of duty-free import authorization, directing the bill of entry to be finalized on merit. The first appellate authority, however, noted that necessary compliances were applied by the adjudicating authority and held that the conditions for import eligibility were met as per the Foreign Trade Policy and relevant notification.

2. The interpretation of the Foreign Trade Policy and notification no. 40/2006-Cus was crucial in determining the compliance requirements for duty-free import authorization. The first appellate authority highlighted that there were no specific requirements in the policy or notification regarding the preservation of fabric samples or additional specifications at the time of import. The decision of the Tribunal in a similar case was cited to support the argument that additional conditions beyond the recorded specifications were not mandated for import compliance under the scheme.

3. The dispute arose over the fabric's suitability for printing and its eligibility for duty-free import. The Authorized Representative contended that the fabric was not amenable to further printing based on a report from the Textile Committee. However, the Tribunal found that the fabric's description indicated it was incapable of being printed further due to its composition of yarn of different colors with distinct check and self-design patterns, rendering it unsuitable for printing from both aesthetic and commercial perspectives.

4. The Tribunal emphasized that the dispute was not about classification but about compliance with the license conditions for import eligibility. The fabric's description, as examined, demonstrated its limited potential for printing, making it unsuitable for the intended purpose of the authorization. Therefore, the impugned order was set aside, and the original authority's decision was restored, allowing the appeal in favor of the Revenue.

In conclusion, the judgment addressed the issues of compliance with import conditions under the DFIA scheme, interpretation of relevant trade policies, and the fabric's suitability for printing in detail, ultimately upholding the original authority's decision over the order-in-appeal.