2019 (3) TMI 1449 - AT - Customs

Duty free benefits under a transferable duty free import authorization (DFIA) - Export of Biscuits as per Standard Input/output Norms (SION E-5) for the import of Wallnuts in Shell - Held that - There is no dispute that goods exported are Biscuits and are covered by SION E-5. The said SION E-5 inter alia permit duty free import of relevant food flavor/flavouring agent/flavor improvers (Sl No. 6) and dietary fibre (Sl No.11). The Ld. Advocate has produced IIT Certificate and technical reference books and several wrappers to show that Walnuts are indeed used as relevant food flavor/flavouring agent/flavor improvers and dietary fibre in biscuits manufacturing. We agree with the contentions of the Ld. Counsel in this regard - The usability of Walnuts in Biscuits is beyond doubt. It is settled law that it would not be open to any one to take contrary stand, unless and until such technical opinion is displaced by specific and cogent evidence in the form of another technical opinion. As regards, the mismatching of ITC (HS) Numbers, we find that the Hon.Tribunal (Mumbai) in the case of USMS Saffron Co 2015 (11) TMI 820 - CESTAT MUMBAI has held that the ITC (HS) number is not a criteria for extending DFIA benefit under custom notification No. 98/2009. We further find that neither SION nor the relevant notification specifies that relevance of ITC (HS) numbers for claiming DFIA benefits. We therefore accept the contentions of Ld. Counsel for the appellant in this regard. Thus, the imported goods walnut in shell is covered under the description of relevant food flavor/flavouring agent/flavor improvers and dietary fibre as claimed by the appellant. The denial of exemption is not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is eligible for duty free benefits under a transferable duty free import authorization (DFIA) for importing Walnuts in Shell under the description of Food Flavour/Flavouring Agent/Flavour improvers or Dietary Fibre.

Analysis:
The appellant, a transferee of DFIA against export of Biscuits, imported Walnuts in Shell seeking DFIA benefits under Custom Notification No. 98/2009-Cus. The assessing officer questioned the eligibility of Walnuts in Shell under the DFIA description. The Commissioner (Appeals) denied duty free clearance, stating Walnuts did not match the DFIA description. The appellant cited precedents and technical evidence supporting Walnuts as food flavor/flavouring agent/flavor improvers and dietary fibre. The Ld. Counsel emphasized the usability of Walnuts in biscuits and relevant legal definitions. The Tribunal found the Walnuts fell under the DFIA description, citing technical evidence and legal precedents. The judgment of the Hon'ble MP High Court in a similar case supported the appellant's position.

The Ld. Counsel's arguments focused on the technical usability of Walnuts in biscuits, supported by an IIT Certificate and technical references. The Tribunal agreed with the Ld. Counsel, emphasizing that Walnuts could be used as dietary fibre and flavor in biscuits. The judgment in the case of Commissioner of Customs, Kolkotta Vs. G.C. Jain was cited to support the appellant's position. The Tribunal also noted that ITC (HS) numbers were not a criterion for DFIA benefits under the relevant notification. The judgment of the Hon'ble MP High Court further supported the appellant's case.

In conclusion, the Tribunal ruled that Walnuts in Shell fell under the DFIA description of food flavor/flavouring agent/flavor improvers and dietary fibre as claimed by the appellant. The denial of exemption was deemed unjustified, and the appeal was allowed with consequential reliefs. The Tribunal suggested the revenue consider revalidation of the DFIA upon application by the appellant, leaving the decision to the licensing authorities.

(Order pronounced in open court on 25/03/2019)