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2022 (3) TMI 1002 - AT - CustomsRejection of claim for duty free benefits - import of Vital Wheat Gluten - It is submitted that the appellant has imported Vital Wheat Gluten Flour on the strength of a Transferable DFIA which clearly mentions Wheat Gluten Flour under the description of Wheat Flour in the said authorisation - applicability of Custom Notification No. 19 of 2015 - HELD THAT - Once the DFIA is made transferable, the Exporter is permitted to transfer the inputs to any third party as per the provisions of Para 4.29 of the FTP- 2015-2020. Both wheat gluten and wheat gluten flour is mentioned in the DFIA. Therefore, it can be fairly accepted that both wheat flour and wheat gluten is used for manufacturing Biscuits which is Exported. Since both the inputs are used in the resultant export goods, the licensing authorities have correctly issued the DFIA to that extent. The department is also not disputing this aspect except for the sole contention that the ITC (HS) Number of wheat gluten flour is not mentioned in the DFIA. Compliance of Para 4.12 (i) and (ii) of FTP - HELD THAT - It is fairly agreed that Wheat Flour/Wheat Gluten are specific items and not Generic or alternative inputs. A single quantity is mentioned in the DFIA. The provision of Para 4.12 (ii) of FTP can be applied only when SION prescribes alternative inputs with relevant quantities, which shall be allowed in proportion to the quantities actually used in export product. No such inputs or quantities are mentioned against the input item. Therefore the above provision cannot be applied in the present case. As per Board Circular No. 46 of 2007 and DGFT Circular 50 of 2008, no correlation is required for technical characteristics/quality and technical specification between imported goods and export goods unless item is specified under Para 4.55.3 of HBP (New Para 4.30 of FTP). Neither Wheat Flour nor Wheat Gluten Flour is a specified item under Para 4.30 of FTP. It is settled law that Board Circulars are binding on the department. Further DGFT Policy Circular 72 of 2008 allows import of alternative inputs either used or capable of using in the export goods. In this case, it is evident from the DFIA that the Exporter has used both Wheat Gluten as well as Wheat Gluten Flour in the Export goods i.e. Biscuits. Appeal allowed - decided in favor of appellant.
Issues involved:
Claim for duty free benefits for imported goods of Vital Wheat Gluten Flour under Custom Notification No. 19 of 2015. Detailed Analysis: Issue 1: Applicability of DFIA benefits for imported goods of Vital Wheat Gluten Flour The appellant imported Vital Wheat Gluten and claimed exemption from Basic Customs Duty (BCD) based on a Transferable DFIA License. The department contended that the appellant was not entitled to claim benefits for Wheat Gluten under the DFIA produced, which only allowed Wheat Flour. The Commissioner of Customs rejected the claim, citing that the DFIA mentioned Wheat Gluten Flour without specifying the CTH, and there was no evidence of Wheat Gluten being used in the export product as required by the Foreign Trade Policy (FTP). Issue 2: Arguments by the Appellant The appellant argued that the DFIA clearly mentioned Wheat Gluten Flour under the description of Wheat Flour, satisfying the conditions of the DFIA. They emphasized that the rejection was contrary to judicial precedents and that the ITC (HS) number not being mentioned in the DFIA was not a stipulated condition for claiming DFIA benefits. They also highlighted that specific inputs like Wheat Gluten did not require declarations as per FTP provisions. Issue 3: Revenue's Contention The Revenue argued that the benefit of the notification was only available if all conditions were met, placing the burden on the appellant to prove eligibility. They referenced a Supreme Court judgment emphasizing strict interpretation of exemptions. The Revenue contended that the appellant failed to meet the description of goods, justifying the denial of benefits under Notification No. 19 of 2015. Issue 4: Tribunal's Decision The Tribunal reviewed the case and found that both Wheat Flour and Wheat Gluten were used in manufacturing the exported Biscuits, as indicated in the DFIA. They noted that previous Tribunal decisions supported the inclusion of Wheat Gluten under Wheat Flour. The Tribunal emphasized that the appellant met the conditions specified in the DFIA and that the absence of the ITC (HS) number did not disqualify them from claiming benefits. They also clarified that specific items like Wheat Gluten did not require compliance with Generic or alternative input provisions. Conclusion The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal. They found that the appellant satisfied the conditions of the DFIA and Notification No. 19 of 2015, emphasizing the usage of both Wheat Flour and Wheat Gluten in the export product. The judgment was pronounced on 17.03.2022 by the Appellate Tribunal CESTAT Ahmedabad.
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