2023 (11) TMI 574 - AT - Customs

Eligibility for benefit under DFIA Scheme as per Notification No. 25/2023-Cus dated 01.04.2023 - import of Extra Virgin Olive Oil Denial of exemption on the ground that in terms of Para 4.12 of FTP (2015-20) 2023 only input together with quantity which has been used in manufacturing the export product shall be allowed for import of DFIA - It further stated that there is no evidence to show that Extra Virgin Olive Oil is used in Export goods. HELD THAT - The appellant has relied upon two technical opinions of IIT, Kharagpur. The one opinion dated 23.02.2023 confirms that Olive Oil can be considered for usage in edible purpose like cooking, in salads and in the preservation of food like specific pickle items , the other opinion dated 05.09.2023 inter alia confirms that It may be seen from the above referred list of edible vegetable oils the consumers are free to choose the fats and oils as per easy availability and affordability for the consumption in food as well as baked products such as biscuits/cookies/crackers and savoury items. In view of the potential health benefits of different olive oils on account of its composition as the richest source of monosaturated vegetable oil alongwith its minor constituents like polyphenols and tocopherols . In the face of the aforesaid technical opinions and facts as recorded, it is found that the imported goods viz., Extra Virgin Olive Oil is fully covered by the Transferable DFIA s produced by the appellant. On a conjoint reading of Para 4.12 (i) and 4.12 (ii) and para 4.29 of the FTP(2023) as specified in Custom Notification No. 25/2023-Cus dated 01.04.2023, it reveals that it is only in respect of inputs specified in para 4.29 that the material permitted in the authorization shall be of the same quality and technical characteristics and specifications as the materials used in the resultant product are permitted for import - neither the imported goods viz., Olive oil nor Salad oil/Vegetable Oil are specified as sensitive input under Para 4.29 of FTP. Therefore as per Board Circular No. 46 of 2007 and DGFT Policy Circular No. 50 of 2008, no correlation is required to be established for technical specification, quality and characteristics of inputs used in export goods and imported goods. The appellant is entitled to claim exemption from Basic Customs Duty under Notification No. 25/2023-Cus dated 01.04.2023 for their import of Extra Virgin Olive oil under the Transferable DFIA s against Export of Vegetable Pickles and Biscuits. As regards the revalidation of DFIA s in question, we direct the lower authorities to issue a certificate in terms of Para 2.20 (c ) of Hand book confirming the period of dispute , in case such a request is made by the appellant. Appeal allowed.

Summary

Issues involved:
The appellant imported Extra Virgin Olive Oil and claimed exemption from basic customs duty under DFIA Scheme. The lower authority denied the exemption on the ground that there was a mismatch in the production description and CTH numbers in the authorization. The appellant contended that the imported goods were capable of being used in the export products and fulfilled all requirements of the Notification No. 25/2023.

Issue 1: Denial of exemption under DFIA Scheme
The appellant imported Extra Virgin Olive Oil and sought exemption under DFIA Scheme. The lower authority denied the exemption citing Para 4.12 of FTP (2015-20) & 2023, stating that there was no evidence to show the use of Extra Virgin Olive Oil in export goods. It was also noted that there were discrepancies in the production description and CTH numbers mentioned in the authorization. The lower authority further argued that the goods being packed in smaller packs made them ineligible for DFIA benefit under Notification No. 25 of 2023.

Issue 2: Applicability of previous judgments
The appellant relied on a previous case involving Pace Ventures Ltd., where the Tribunal held that specific names of inputs were not necessary as long as the goods were covered by the description. The appellant argued that the imported goods were capable of being used in the export products, as established by technical opinions. The appellant contended that the three issues raised by the revenue were already addressed in the Pace Ventures case, and there was no need to remand the matter back to the lower authorities.

Issue 3: Interpretation of DFIA Scheme requirements
The appellant argued that the requirements for extending benefits under DFIA notification were met, as the description, quantity, and value of the imported goods matched the details in the authorization. The appellant emphasized that there were no restrictions on importing goods in smaller packs under the notification. The appellant also referenced a judgment of the Bombay High Court which clarified the post-export nature of the DFIA scheme, without any actual user condition.

Judgment Summary:
The Tribunal found that the issues raised by the revenue were already addressed in previous judgments, particularly the Pace Ventures case. It was established that the imported goods were covered by the description and technical characteristics required for DFIA benefits. The Tribunal held that there was no need to remand the matter back to the lower authorities as the issues were conclusively settled.

The Tribunal also emphasized that specific names of inputs were not essential for claiming DFIA benefits, as long as the goods were covered by the description. The technical opinions provided by IIT, Kharagpur supported the appellant's claim that the imported Extra Virgin Olive Oil was suitable for use in the export products. The Tribunal further clarified that there were no restrictions on importing goods in smaller packs under the DFIA Scheme.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned Order-In-Appeal and allowing the appeal with consequential reliefs. The appellant was entitled to claim exemption from Basic Customs Duty under Notification No. 25/2023 for the import of Extra Virgin Olive Oil against Export of Vegetable Pickles and Biscuits. The lower authorities were directed to issue a certificate for the revalidation of DFIA's if requested by the appellant.