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2020 (12) TMI 326 - AT - CustomsMaintainability of appeal before this Tribunal - Entitlement to DFIA benefit - import of Inshell Walnut covered under the description of Fruit/Food Flavour/Dietary Fibre - benefit in terms of Custom Notification No. 19/2015-Cus. dated 01.04.2015 denied on the ground that appellant has not produced evidence to show that Inshell Walnut is actually used in export product and the import goods Inshell Walnut is not mentioned in the DFIA against input item description Fruit /Food Flavour/Dietary Fibre - According to the revenue, only those inputs which are actually used in export product shall be allowed exemption from payment of customs duty in terms of Custom Notification No. 19/2015-cus. Maintainability of appeal before this Tribunal - HELD THAT - The decision against which this appeal was filed, was admittedly taken by the Principal Commissioner of Customs which was merely communicated by the lower officer. As per the Ld. Commissioner s decision it was categorically decided that the appellant is not entitled to clear import goods against the DFIA Licences and also directed to pay applicable custom duty. In this undisputed position, in our clear view the only remedy left with the appellant is to file appeal before this Tribunal - The appeal is maintainable in terms of Section 129 (1) of the Customs Act, 1962. The contention of the revenue that there is no legal obligation to follow the decision of higher authorities while discharging the quasi judicial powers vested in the Act is incorrect. In the present case, the Commissioner has decided to reject the claim of DFIA benefits by giving reasons in writing. It is also a fact on record that the appellant has been directed to pay applicable customs duty for clearance of goods - the appeal is maintainable and not premature. Merits of the case - HELD THAT - The DFIA s produced by the appellant are post export entitlements . The DFIA s are issued against Export of Biscuits as per SION E-5. As per the provision of Para 4.27 (ii) of FTP- 2015-20, DFIA is issued for products for which Standard Input output Norms are notified - It is settled law that a DFIA is governed by SION which is notified for the relevant export product. There is no provision either in the Policy or in the Hand book to say that DFIA benefits can be claimed on the basis of ITC (HS) numbers. Even SION does not prescribe any ITC (HS) Numbers. Chapter Heading 08020000 is the main chapter heading which covers the items of import under the said heading. Therefore the input item Inshell Walnut is correctly covered under the description of goods under Fruit/Flavour/Dietary Fibre as mentioned in the annexures annexed alongwith the DFIA s in question. Expert Technical Opinion given by technical qualified person from a reputed Institute like IIT cannot be brushed aside unless such technical opinion is displaced by specific and cogent evidence. The respondent has not provided any cogent evidence to show on the contrary in the instant case. The Hon ble Gujarat High Court in the case of Inter-Continental (India) Vs. Union of India, 2002 (2) TMI 129 - HIGH COURT OF GUJARAT AT AHMEDABAD is squarely covered in the present case. The revenue contended that vide notification no. 21 dated 05.12.2017, Central Government has notified FTP- (2015-20) and revised FTP by inserting the stipulations of Para 4.12 (i) and (ii) under Para 4.29 (iv) (v) which deals with validity and transferability of DFIA. Therefore it was contended that DGFT vide above amendment in FTP, has clearly spelled out that only specific inputs alongwith quantity will be permitted to be imported under DFIA Scheme - said Para 4.29 (iv) (v) refers to Para 4.12 of FTP while incorporating the provisions therein - However, the Hon ble Bombay High Court in the case of Shah Nanji Nagsi Exports Pvt. Ltd., Vs. UOI 2019 (4) TMI 146 - BOMBAY HIGH COURT (Bom) has already considered the provision of Para 4.12 for transferred DFIA and held that even though the popcorn maize is not used for manufacture of maize starch powder but since it is capable of being used, its import is permitted under DFIA. The present case is on a better footing that the Inshell Walnut is not only capable of being used but invariably used for manufacture of biscuits as fruit/flavor/dietary fibre - Moreover, as per the custom s lab report dated 08.08.2018 and various technical opinions, the Inshell Walnut is used as flavor or fruit/nut or dietary fibre in the manufacture of biscuits/cookies and confectionary. Therefore, there is no dispute that inshell walnut is correctly covered under the description of goods i.e, fruit/flavour/dietary fibre as mentioned in the annexures annexed along with DFIA Scheme as well as specified in SION. The imported goods In shell Walnuts are not specified under Sensitive items under Para 4.30 of FTP- (2015-2020) of DFIA s. Therefore the exporter is not required to give a declaration of the technical specification, quality and characteristics of inputs used in the resultant product. The Central Board of Excise Customs vide Circular No. 46 of 2007 had earlier clarified the above provisions which existed under the previous policy period under Para 4.55.3 of HBP) - It is settled law that Board Circulars are bindings on customs authorities - As per Policy Circular No. 72/2008 dated 24.03.2009, flexibility has been given to import alternative inputs or goods which are capable of using in the export product. Therefore inputs which are covered under the description are entitled for DFIA exemption for claiming DFIA benefits by either exporter or transferee or the importer under the Transferable DFIA Scheme. As per Policy Circular No. 22, even a transferee of the license can apply for amendments in ITC (HS) Numbers of the inputs from the regional licensing authorities. Therefore it cannot be said that if the specific name of input in the present case In shell Walnut is not mentioned in the licence or in the export shipping bill, benefit of DFIA cannot be extended particularly when the broad description is specified in SION as well as in the annexure to the DFIA licence - he appellant is entitle for the benefit of DFIA for import clearance of in shell walnut - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Maintainability of the appeal. 2. Entitlement to DFIA benefit for the import of Inshell Walnuts under the description of Fruit/Food Flavour/Dietary Fibre against the export of Biscuits. Issue-wise Detailed Analysis: 1. Maintainability of the Appeal: The appellant contended that the appeal is maintainable under Section 129(1) of the Customs Act, 1962, as the final decision was taken by the Principal Commissioner of Customs and communicated by the Joint Commissioner of Customs. The Tribunal agreed, referencing judgments such as *Sterlite Optical Technologies Vs. Commissioner of Customs* and *Unibourne Food Ingredients LLP vs Commissioner of Customs*, establishing that appeals against decisions by higher authorities communicated by lower officers are maintainable. The Tribunal rejected the revenue's argument that the appeal is premature and not maintainable, confirming that the Commissioner’s decision to reject the DFIA benefits and demand customs duty was final and appealable. 2. Entitlement to DFIA Benefit: a. Description and Classification of Goods: The Tribunal found that the DFIA licenses were issued against the export of Biscuits as per SION E-5, which does not prescribe ITC (HS) numbers. The appellant argued that Inshell Walnuts fall under the description of Fruit/Flavour/Dietary Fibre as per the DFIA and SION norms. The Tribunal agreed, referencing the case of *USMS Saffron Co. vs Commissioner of Customs*, which held that ITC (HS) numbers are not a criterion for DFIA benefits as long as the items fall under the described goods. b. Technical Opinions and Expert Evidence: The Tribunal considered various technical opinions and expert evidence, including those from IIT Kharagpur and JNCH Lab, which confirmed that Walnuts could be used as dietary fibre and flavour in the manufacture of biscuits. The Tribunal emphasized that such expert opinions cannot be disregarded without contrary evidence, which the revenue failed to provide. c. Actual User Condition: The Tribunal referred to the judgment in *Shah Nanji Nagsi Exports Pvt. Ltd. vs Union of India*, which clarified that the DFIA scheme is a post-export scheme with no actual user condition, meaning the imported goods need not be used in the manufacture of export goods. The Tribunal confirmed that Inshell Walnuts, being capable of use in biscuit manufacturing, are eligible for DFIA benefits. d. Board Circulars and Policy Flexibility: The Tribunal noted that Board Circulars, such as Circular No. 46 of 2007 and Policy Circular No. 72/2008, allow flexibility for importing alternative inputs under the DFIA scheme. It emphasized that these circulars are binding on customs authorities and support the appellant’s claim for DFIA benefits. Conclusion: The Tribunal concluded that the appellant is entitled to DFIA benefits for the import of Inshell Walnuts under the description of Fruit/Flavour/Dietary Fibre against the export of Biscuits. The appeal was allowed, and the decision of the revenue to reject the DFIA benefits was set aside.
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