2017 (11) TMI 438 - AT - Customs

Maintainability of appeal - claim of benefit under DFIA scheme - import of Apple Juice Concentrate - Held that - the appeal is maintainable as per the ratio laid down in the case of Swiber Offshore Construction Pvt. Ltd. Vs. Commissioner of Customs, Kandla 2013 (11) TMI 1232 - CESTAT AHMEDABAD , where it was held that there is no reason to justify rejection of request made by the appellant to the adjudicating authority in light of section 138B of the Act, to summon witnesses for examination and to offer them for cross-examination if their statements were to be considered as relevant and admitted in evidence in the interest of justice. DFIA Benefits - duty free import - benefit of N/N. 98/2009-Cus dated 11.09.2009 - Apple Juice Concentrate - usability of Apple Juice Concentrate in the export product - Held that - There is no reason given as to why Apple Juice Concentrate is not covered under the description Relevant Fruit Juice/Pulp/Puree permitted in the DFIA. Ld. DR could not justify as to how Apple Juice Concentrate would not be covered under the description Relevant Fruit Juice/Pulp/Puree, when the fact that Apple Juice Concentrate can inter alia be used in the manufacturing of export product in DFIA Assorted Confectionary and Biscuits, is not in dispute, and the Ld. Advocate has produced evidence to show that the imported product can be used in manufacturing of various products which includes candies and confectionary applications and pies and bakery goods - There is no dispute that the quantity and value of goods Apple Juice Concentrate is within the maximum permitted quantity of Relevant Fruit Juice/Pulp/Puree and CIF value endorsed on the Transferrable DFIA. The issue before the Adjudicating Authority was whether documentary evidence is required to show that imported Apple juice concentrate is actually used in the exported product, and further whether to extend DFIA benefit apart from actual use, the quantity actually used is also required to be established in terms of DGFT N/N. 31 dated 01.08.2013. Fulfillment of conditions of DFIA exemption N/N. 98/2009-Cus dated 11.09.2009 - the said notification provides exemption subject to the condition namely that the description, value and quantity of materials imported are covered by the said authorisation and the said authorisation is produced before the proper officer of customs at the time of clearance of debit - Held that - in the instant case imported goods described as Apple Juice Concentrate and value &quantity thereof, is covered under the description, value and quantity of inputs permitted in the DFIA - We do not find any condition in the N/N. 98/2009-Cus dated 11.09.2009 (as amended) to the extent that only those inputs and to the extent of their quantity actually used shall be available for claiming the exemption benefits. The impugned decision to the extent it denies exemption is erroneous. The appellant is entitled for duty free import of the goods Apple Juice Concentrate under the Transferable DFIA presented by it - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Eligibility of duty-free import under DFIA.
2. Requirement of actual usage proof for imported inputs.
3. Validity of conditions imposed by DGFT Notification No. 31 dated 01.08.2013.

Detailed Analysis:

1. Eligibility of Duty-Free Import under DFIA:
The appellant, M/s. Unibourne Food Ingredients LLP, imported Apple Juice Concentrate under a transferable DFIA and sought duty-free clearance. The customs authorities raised a query stating that the imported Apple Juice Concentrate was not listed in the DFIA License. The appellant argued that the DFIA, once endorsed for transferability, permits the import of Relevant Fruit Juice, which includes Apple Juice Concentrate. The tribunal found that Apple Juice Concentrate falls under the description of Relevant Fruit Juice/Pulp/Puree as permitted in the DFIA and is eligible for duty-free import.

2. Requirement of Actual Usage Proof for Imported Inputs:
The customs authorities required proof that the imported Apple Juice Concentrate was actually used in the exported products. The appellant contended that once the licensing authority endorses the DFIA for transferability, no further proof of actual usage is required. The tribunal agreed, citing the precedent set by the Bombay High Court in A.V. Industries Vs. UOI, which held that customs authorities cannot question the licensing authority's endorsement. The tribunal also referenced the case of Hico Enterprises Vs. Commissioner of Customs, Mumbai, which supported the view that customs officers cannot question the decisions of the licensing authority.

3. Validity of Conditions Imposed by DGFT Notification No. 31 dated 01.08.2013:
The appellant argued that the conditions imposed by DGFT Notification No. 31 dated 01.08.2013, which required proof of actual usage of inputs, were quashed by the Punjab & Haryana High Court in Pushpanjali Floriculture Ltd. Vs. UOI. The tribunal noted that the High Court found the requirement of proving actual usage to be "manifestly absurd" and reflective of non-application of mind by the authorities. Consequently, the tribunal held that the appellant need not prove the actual quantity and use of the input in the exported product to avail of the DFIA benefits.

Conclusion:
The tribunal concluded that the appellant is entitled to duty-free import of Apple Juice Concentrate under the transferable DFIA. It found the customs authorities' decision to deny exemption erroneous and allowed the appeal with consequential reliefs. The tribunal also emphasized the need for FSSAI clearance for the imported goods, being a food item. The appeal was allowed, and the order was pronounced in open court on 06/11/2017.