2014 (1) TMI 1169 - AT - Customs

Notification 90/2004-Cus - Import of saffron - Revenue contends that item imported is too expensive a material to be used in the manufacture of the goods exported - Held that - From condition 2(c) of Notification 46/2002-Cus. it is very clear that the need to ensure that the goods imported under a DFRC is of the same technical characteristics, quality and specification as the inputs used in the goods exported applied only to goods specified in para 4.31 of Hand Book of Export Import Procedures. Admittedly saffron is not one such item. That being the case all what is required to be ensured is the goods imported fits into the description, value and quantity of materials specified in the license. We see that no case is made out that such requirements are not met. The Revenue s objection that saffron is a high value item is of no consequence because when the per unit value is high the quantity that can be imported gets restricted on account of the value restriction of the license. Further when the matter stands clarified by both DGFT and C.B.E. & C. supporting the case made out by the Respondent - Decided against Revenue.

Summary

Issues:
Import of saffron under DFRC License claiming exemption, interpretation of Para 4.31 of Handbook of Procedures, classification of goods for import, nature of saffron as a flavouring agent, flexibility in importing alternative inputs, technical characteristics of imported goods, validity of Revenue's objections.

Analysis:

1. The Respondent imported saffron under a DFRC License seeking exemption under Notification 90/2004-Cus. The Revenue contested the exemption, arguing that saffron was too expensive for the exported goods. The Commissioner (Appeals) ruled in favor of the Respondent based on technical opinions and DGFT clarifications.

2. The Revenue cited Para 4.31 of the Handbook of Procedures, stating that imported material should match the quality and specifications of exported material. They highlighted a different classification for saffron compared to another exporter's license, questioning the intention to allow saffron import for the present appellant.

3. Referring to Food Adulteration Rules, the Revenue argued that saffron is categorized as a natural color, not a flavoring agent. The Respondent's Counsel pointed to Policy Circular allowing flexibility in importing alternative inputs under SION, supported by a letter from a chemistry expert regarding saffron's use as a flavoring material.

4. The Counsel relied on Circular No. 24/2002-Cus., emphasizing changes in the DFRC Scheme and the relaxation of quality matching requirements. The Tribunal noted that saffron was not listed in Para 4.31, thus quality matching was not mandatory for its import under DFRC License.

5. After considering both sides' arguments, the Tribunal upheld the Commissioner (Appeals)'s decision, stating that as saffron was not a specified item in Para 4.31, the focus was on fitting the imported goods into the license's description, value, and quantity. The Tribunal dismissed Revenue's appeal, emphasizing the support from DGFT and C.B.E. & C. for the Respondent's case.

6. The Tribunal dismissed the Revenue's appeal and upheld the impugned order, finding no merit in the Revenue's objections. Additionally, a cross objection filed by the Respondent was disposed of as it supported the impugned order without seeking separate relief.

This comprehensive analysis of the judgment addresses the issues involved in the import of saffron under a DFRC License and the interpretation of relevant regulations and policies, providing a detailed overview of the arguments and decisions made by the Tribunal.