2022 (9) TMI 26 - HC - Customs

DFIA Scheme - Conditional provisional release of goods - in-shell walnut - whether the subject walnuts in-shell are covered under the description of input entries dietary fibre and therefore, whether same can be permitted for duty free clearance against the DFIA issued against the export under SION E5 which inter-alia permits duty free import of dietary fiber ? - time limitation. HELD THAT - In the case at hand, it is observed that the respondent-company has imported 791 bags of in-shell walnuts under Bill of Entry No.9878513 dated 31st January, 2019 and has claimed exemption under the said notification dated 11th September, 2009 on the strength of the DFIA against import item of dietary fibre under SION E5. The said goods as mentioned earlier were cleared without payment of duty and exemption benefit was allowed. The custom authorities have however seized the said 791 bags lying in the godown of Hemkunt Agro Care Private Limited on the pretext that in-shell walnuts do not fit into the description of dietary fibre . In our view, once the transferability of the DFIA having been approved and effected by the licensing authorities, customs authorities cannot impose restrictive condition on the transferee to deny the exemption sought. The technical opinion by JNCH Lab dated 8th August, 2018 suggests that in-shell walnuts can be used as dietary fibre. The usability of walnuts in biscuits is well known. It is settled law that it would not be open to any one to take a contrary stand unless and until such technical opinion is displayed by specific and cogent evidence in the form of technical opinion. Whether the impugned order passed after ten months from the date of conclusion of hearing is justified? - HELD THAT - It is observed that there is no ground taken with respect to the said question. Secondly, there is no statutory limitation prescribed under the Customs Act to pass any order within any certain period of limitation after the conclusion of the hearing. Therefore, the said question, does not raise any question of law let alone a substantial one. The adjudicating authority has discretion with respect to the security and conditions that he may require while provisionally releasing the seized goods. It is settled law that what power or discretion that is vested in an adjudicating authority can also be exercised by the appellate authority or the Tribunal. The Tribunal has exercised its discretion and in our view rightly so to unconditionally release the goods dispensing with the condition of bank guarantee and bond/undertaking imposed by the adjudicating authority for release of the subject goods. The order of unconditional release of the seized goods passed by the Tribunal cannot be faulted with. There is no error apparent or perveristy in the order of the Tribunal. The appeal does not raise any substantial question of law and is dismissed.

Summary

Issues Involved:
1. Whether the CESTAT was right in setting aside the condition imposed by the adjudicating authority for permitting provisional release of the seized in-shell walnuts.
2. Whether the impugned order passed after ten months from the date of conclusion of hearing is justified.

Detailed Analysis:

Issue 1: Setting Aside the Condition for Provisional Release
The appellant, Commissioner of Customs, challenged the CESTAT's order for unconditional release of 791 bags of in-shell walnuts imported by the respondent under DFIA, claiming exemption under Notification No. 98/2009-Cus. The adjudicating authority initially allowed provisional release upon fulfillment of bond and bank guarantee conditions. However, the CESTAT set aside these conditions, directing unconditional release and return of the bond and bank guarantee.

The Tribunal relied on previous decisions, including the Madhya Pradesh High Court in *Global Exim and ors. Vs. The Union of India and ors.* and the Tribunal's decision in *Uni Bourne Food Ingredients LLP Vs. Commissioner of Central Excise Hyderabad-II*. It was noted that in-shell walnuts were allowed to be imported under DFIA for export of assorted confectionery and biscuits under SION E1 and E5, which include dietary fiber.

The Tribunal also considered a technical opinion from the Joint Director, JNCH Lab, stating that walnuts could be used as dietary fiber in the manufacture of biscuits/cookies and confectionery. The appellant did not dispute this opinion but argued that the JNCH Lab lacked expertise in food and nutrition science.

The High Court observed that the respondent's import of in-shell walnuts under DFIA against dietary fiber was consistent with the DFIA scheme and previous judicial decisions. The court emphasized that once the transferability of DFIA is approved, customs authorities cannot impose restrictive conditions on the transferee. It was noted that the same type of walnuts imported under different DFIA descriptions were not liable for confiscation, highlighting inconsistency in the adjudicating authority's approach.

The court concluded that the Tribunal's decision for unconditional release was justified, as the technical opinion supported the respondent's claim and no contrary evidence was presented by the appellant.

Issue 2: Delay in Passing the Order
The appellant argued that the Tribunal's order, passed ten months after the conclusion of the hearing, was unjustified. However, the court noted that there is no statutory limitation under the Customs Act for passing an order within a specific period after the hearing. Therefore, the delay did not raise a substantial question of law.

Conclusion
The court found no substantial question of law in the appellant's claims. It upheld the Tribunal's decision for unconditional release of the seized goods, noting that the Tribunal exercised its discretion appropriately. The appeal was dismissed, and the interim application was declared infructuous.