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2017 (9) TMI 686 - HC - CustomsDFIA licence - transfer of license - Whether CESTAT is right in law in holding that the Respondents are liable to import Lactose against DFIA licence when the same was admittedly not used as an ingredient in the export product? Held that - In a recent judgment of this Court in Commissioner of Customs (Export) V/s. USMS Saffron Co. Inc. 2016 (2) TMI 1032 - BOMBAY HIGH COURT , it was held it is the DFIA Licence in question is material and where the DFIA does not contain any entry restricting saffron and the Licence Authority did not deem it proper to impose any liability, there was no violation of any of the conditions of the DFIA and the N/N. 98/2009 allowing the duty free import is applicable - In the present case it is an admitted fact that the DFIA Licence bearing endorsement of transfer was issued prior to the issuance of the Circular dated 31st January 2011 and hence, the N/N. 98/2009 dated 11th September 2009 was applicable in the case of the import of lactose. The CESTAT upon considering the facts of the present case is justified in arriving at the finding that the change in Policy would not be applicable to the licence issued prior thereto and hence the Respondents are entitled to the benefit of N/N. 98/2009 CUS, in terms of the DFIA present to the Customs. Appeal dismissed - decided against appellant.
Issues:
1. Interpretation of Policy Circular dated 31st January 2011 regarding import of lactose against DFIA license. 2. Applicability of Policy Circular issued after the grant of license. 3. Entitlement to benefit of Notification No.98/2009 for duty-free import authorization. Analysis: Issue 1: Interpretation of Policy Circular The primary issue in this case was the interpretation of the Policy Circular dated 31st January 2011 regarding the import of lactose against a DFIA license. The Respondents contended that the circular did not restrict the import of lactose against the DFIA license issued prior to its issuance. The CESTAT relied on the Madras High Court judgment and held that the circular did not apply to a valid license issued before its issuance. The Respondents justified their claim based on prior circulars and flexibility provided by DGFT policies. Issue 2: Applicability of Post-License Circular The Appellant argued that the change in policy, known to the Respondents at the time of import, rendered their import of lactose against DFIA unauthorized. The Appellant contended that the Madras High Court judgment cited by CESTAT was not applicable as the circular in question was issued after the license transfer. However, the CESTAT upheld the Respondents' entitlement to duty-free clearance based on the timing of the circular vis-a-vis the license issuance. Issue 3: Entitlement to Notification No.98/2009 The Respondents sought the benefit of Notification No.98/2009 for duty-free import authorization. The CESTAT, supported by the Division Bench of the Bombay High Court and Supreme Court judgments, concluded that the change in policy post-license issuance did not affect the entitlement to duty-free import under the Notification. The CESTAT's decision was based on the timing of the circular relative to the license issuance and the absence of restrictions in the DFIA license. In conclusion, the High Court upheld the CESTAT's decision, dismissing the appeal and affirming the Respondents' entitlement to duty-free import authorization under Notification No.98/2009. The judgment emphasized the significance of the timing of policy changes in relation to license issuance and the absence of restrictions in the DFIA license.
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