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2019 (4) TMI 146 - HC - CustomsIssuance of DFIA licence - petitioner's entitlement for importing maize popcorn vide SION entry as E75 under DFIA scheme - export of maize starch powder under DFIA scheme - actual user condition - whether petitioner can be allowed to import maize popcorn against DFIA licence for export of starch powder under SION entry No. E75 when admittedly imported popcorn is not used to manufacture export product namely maize starch powder? Held that - The scheme itself is of transferable authorisation and therefore in that context different interpretation cannot be made. Moreover, Clause 4.27(iv) conveys that wherever SION prescribes 'Actual User' condition, it will prevail. Herein, no such actual user condition is specifically prescribed by SION for relevant entry. Chapter 9 of the FTP 2015 20 specifically defines the term 'actual user' as a person who utilizes imported goods for manufacturing in his own unit. It means that actual user condition relates to a person and not to a product. Therefore, the argument advanced by the petitioner regarding actual user condition would not sustain. It is not denied that popcorn maize has also similar starch contents as other varieties of maize, indicating that popcorn maize can be used to manufacture maize starch powder. The scheme never conveys that there is actual user condition attached to the import against the export obligation. It amounts to adding some conditions in the FTP when they never exist. Moreover, when the authorisation is made transferable under the scheme there is no question of actual user condition - It reveals that DFIA scheme is distinct than Advance Authorization Scheme where raw material is to be imported on authorization and to be used for manufacturing purpose. Basically, DFIA is post export scheme in which exporter has to first export goods and after realization of proceeds, exporter has to make an application to the authority, who after verification, grant DFIA certificate which is transferable. Therefore, there is no actual user condition inbuilt under the scheme. As per SION export item at serial No. E 75 is maize starch powder against which exporter is permitted to import maize without putting any condition or restriction as regards to variety, quality or characteristic in the said entry. Moreover, there is no such corresponding condition in licence. In its absence, any addition of words cannot be imported to change the equation. Precisely, import of popcorn maize is not excluded from the scope of term maize . The petitioner has imported maize which is capable of being used in the manufacturing of export goods namely maize starch powder. There is no actual user condition so as to restrict right of petitioner to import maize. So long as the export goods and the import item corresponds to the description given in the SION, it cannot be held to be invalid by adding something else which is not in the policy. The petitioner is entitled to import popcorn maize under DFIA scheme vide SION entry E75 - petition allowed - decided in favor of petitioner.
Issues Involved:
1. Entitlement to import popcorn maize under DFIA scheme. 2. Violation of Clause 4.12(i) of the FTP 2015-20. 3. Interpretation of the term "maize" in SION E75. 4. Actual user condition in the DFIA scheme. 5. Retrospective application of policy circulars. Detailed Analysis: 1. Entitlement to Import Popcorn Maize under DFIA Scheme: The petitioner, a Private Limited Company engaged in the export business, sought to import popcorn maize under the Duty Free Import Authorisation Scheme (DFIA) for exporting maize starch powder as per SION entry E75. The court examined whether the petitioner could import popcorn maize under this scheme. The court concluded that the petitioner is entitled to import popcorn maize under DFIA scheme vide SION entry E75, as there is no restriction on the variety of maize specified in the entry. The court emphasized that the scheme permits the import of maize without specifying the type, thus allowing the import of popcorn maize. 2. Violation of Clause 4.12(i) of the FTP 2015-20: The respondents argued that the petitioner violated Clause 4.12(i) of the FTP 2015-20 by not endorsing the specific input (popcorn maize) in the relevant shipping bills and bills of entry. Clause 4.12(i) mandates that when SION permits the use of generic inputs, the specific input must be endorsed in the shipping bill. The court, however, found that the term "maize" is specific and not generic, thus Clause 4.12(i) does not apply. The court held that maize is a specific class of cereal, and the petitioner did not violate Clause 4.12(i). 3. Interpretation of the Term "Maize" in SION E75: The court analyzed whether the term "maize" in SION E75 includes all varieties of maize, including popcorn. The petitioner argued that "maize" should be interpreted broadly to include all varieties as there is no restriction in the entry. The court agreed with the petitioner, citing precedents where terms in policies were interpreted broadly in the absence of specific restrictions. The court held that the term "maize" in SION E75 includes popcorn maize, allowing its import under the DFIA scheme. 4. Actual User Condition in the DFIA Scheme: The respondents contended that the petitioner misused the DFIA scheme by importing popcorn maize, which is costlier and not commercially viable for manufacturing maize starch powder. They argued that the scheme has an actual user condition, requiring the imported item to be used for manufacturing the export product. The court found no actual user condition in the DFIA scheme. The court emphasized that the scheme is post-export and transferable, meaning the imported item need not be used by the importer. The court ruled that there is no actual user condition in the DFIA scheme, thus the petitioner did not misuse the scheme. 5. Retrospective Application of Policy Circulars: The respondents relied on a circular dated 14.11.2017 to argue for an actual user condition. The petitioner countered that the circular applies to the Advance Authorization Scheme and cannot have retrospective effect. The court agreed with the petitioner, citing a precedent that policy circulars do not apply retrospectively. The court held that the circular cannot be used to deny the petitioner's entitlement to import popcorn maize under the DFIA scheme. Conclusion: The court concluded that the petitioner is entitled to import popcorn maize under the DFIA scheme vide SION entry E75. The court directed the respondents to issue the necessary authorizations, subject to the fulfillment of the rest of the policy conditions. The writ petition was disposed of accordingly.
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