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2020 (12) TMI 327 - AT - CustomsMaintainability of appeal - appropriate Forum - section 129A of Customs Act - Entitlement to DFIA benefits - import of Wheat Gluten against the input product description Wheat Flour - DFIA s issued by DGFT gives the description of Wheat Flour with ITC (HS) classification shown as 11010000 whereas, the importer has imported all wheat gluten of having classification as 11090000 and declared the same in the Bill of Entry - case of Revenue is that DGFT Circular No.13 dated 31.01.2011 clarified that import of wheat gluten as alternative inputs against import item No. 1 of SION E-5 is not to be allowed under DFIA. Maintainability of appeal - HELD THAT - 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 - In the present case, the DFIAs produced by the appellant are post export entitlements. The DFIA s are issued for import of wheat flour against Export of Biscuits as per SION E5. 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. Under post transferability DFIA s, there is no actual user condition exists in the DFIA license issued under Custom Notification No. 19/2015-cus dated 01.04.2015. The issue is squarely covered by the Hon ble Bombay High Court (Nagpur Bench) in SHAH NANJI NAGSI EXPORTS PVT. LTD. VERSUS UNION OF INDIA, MINISTRY OF COMMERCE INDUSTRY, DIRECTORATE GENERAL OF FOREIGN TRADE AND JOINT DIRECTOR GENERAL OF FOREIGN TRADE 2019 (4) TMI 146 - BOMBAY HIGH COURT In the said judgement it was held that so long as the export goods and the import items 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. As regard the description of the goods in the said case the license was issued for input namely Maize against export product of Maize Starch Powder, whereas, the importer had imported Popcorn Maize. The revenue s contention was that the popcorn maize is not used for manufacture of Maize starch powder. The Hon ble court has decided that even though the popcorn maize is not used for manufacture of maize starch powder but since it is capable of being used, it s import is permitted under DFIA. The present case is on a better footing that the Wheat Gluten is not only capable of being used but invariably used for manufacture of biscuits. Moreover, as per various technical opinions, the Wheat Gluten is used in the manufacture of biscuits. Therefore, there is no dispute that Wheat Gluten is correctly covered under the description of goods i.e, Wheat Flour as mentioned in the annexures annexed along with DFIA Scheme as well as specified in SION. It cannot be said that if the specific name of input in the present case Wheat Gluten is not mentioned in the licence or in the export shipping bill, benefit of DFIA cannot be extended particularly when the broad description as wheat flour is specified in SION as well as in the annexure to the DFIA licence - The import goods Wheat Gluten or Wheat Flour 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 appellant is entitle for the benefit of DFIA for import clearance of Wheat Gluten - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Maintainability of the appeal before the Tribunal. 2. Entitlement to DFIA benefits for the import of Wheat Gluten against the input product description Wheat Flour post amendment of SION E-5. Issue-wise Detailed Analysis: 1. Maintainability of the Appeal: - The appellant argued that the appeal is maintainable under Section 129 (1) of the Customs Act, 1962, as the decision was taken by the Principal Commissioner of Customs and merely communicated by the Joint Commissioner. - The Tribunal agreed, citing precedents such as Commissioner of Customs (Import-I) Vs. S.S. Offshore Pvt. Ltd., and Unibourne Food Ingredients LLP Vs. Commissioner of Customs, Hyderabad, which establish that appeals against decisions of higher authorities communicated by lower officers are maintainable. - The Tribunal dismissed the revenue's contention that the appeal was premature, emphasizing that the Principal Commissioner had already decided to deny DFIA benefits and directed the appellant to pay applicable customs duty. 2. Entitlement to DFIA Benefits: - The appellant imported Wheat Gluten and claimed DFIA benefits under transferable DFIA licenses issued for the export of biscuits, arguing that Wheat Gluten is a type of Wheat Flour used in biscuit manufacturing. - The Tribunal noted that DFIA is governed by SION, which does not prescribe ITC (HS) numbers, and benefits can be claimed based on the description of goods. - The Tribunal referenced DGFT clarifications and technical opinions from reputable institutions like IIT Kharagpur, confirming that Wheat Gluten can be used as a functional flour in biscuit manufacturing. - The Tribunal highlighted that expert opinions cannot be disregarded without specific and cogent evidence to the contrary, which the revenue failed to provide. - The Tribunal cited the case of Uni Colloide Impex Pvt. Ltd. Vs. Commissioner of Customs, which established that import of Wheat Gluten as flour is permissible under DFIA. - The Tribunal addressed the revenue's argument regarding amendments in FTP and clarified that the terms "Generic" and "Alternative inputs" are not defined under Chapter 9 of the FTP. - The Tribunal concluded that there is no actual user condition in the DFIA license, supported by the Bombay High Court's judgment in Shah Nanji Nagsi Exports Pvt. Ltd. Vs. Union of India. - The Tribunal confirmed that the DGFT's amendment via Public Notice No. 41 dated 02.11.2016 has prospective application and does not affect exports made prior to the notice. - The Tribunal emphasized that the DFIA's annexures correctly listed Wheat Gluten under the description Wheat Flour, and the licensing authorities allowed its import within specified quantities and values. - The Tribunal referenced Policy Circulars No. 72/2008 and No. 22, which provide flexibility for importing alternative inputs and allow transferees to apply for amendments in ITC (HS) numbers. - The Tribunal concluded that Wheat Gluten is not a sensitive item under Para 4.30 of FTP-2015-2020, and the appellant is entitled to DFIA benefits for its import. Conclusion: - The appeal was allowed, granting the appellant the benefit of DFIA for the import of Wheat Gluten, as it falls under the description of Wheat Flour specified in SION and the DFIA license.
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