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TMI Blog2015 (11) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... signments of lactose against DFIA license No 0310597347 dated 18.10. 2010 issued against the export of biscuits and against DFIA License No 0310662287 dated 25.10.2011 against export of Metamitron and filed ex-bond Bills of Entry filed in April 2013. Sugar is permissible as one of the inputs allowed to be imported against the export of biscuits under SION norm E-5. Under DGFT circular No 013/2011 dated 31.1.2011, import of lactose/Maltose/ sodium saccharine and other artificial sweetening agents is not allowed under SION E-5 against the input item no 2, that is sugar. The appellants plea before the adjudicating authority that the license had been issued to M/s Parle Products Private Limited (original manufacturer exporter) prior to the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that Sugar in the SION norms refers to cane sugar alone. The circular of 2011 merely says that only cane sugar is permitted without explaining why other forms of sugar are not permitted. And the amended SION norms E 5 which substituted the entry Sugar by the entry cane sugar was issued only under DGFT Public notice No 93 dated 1.2.2012. Therefore prior to this date the policy circular relied upon by Revenue does not have the effect of amending the SION. He relied on the decision of the Madras High Court in the case of Hoeweitzer Organic Chemical Co Ltd versus DGFT 2013 (294) ELT (Mad) which held that Policy circular no 13 dated 31.01.2011 will have no effect in respect of licences already issued. The para 4.2.2b of the Policy la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4.2 The ld counsel referred to para 4.32.2. of the policy for the DFIA scheme which mentions that for 22 items the licensing authority, while issuing DFIA, shall mention the technical characteristics, quality and specifications in respect of such inputs. Sugar not being specified in the list of 22 items, it is therefore permissible to import forms of sugar such as lactose. 5 The ld AR appearing on behalf of Revenue stated that the DFIA was issued on 18.10.2010 and therefore the conditions of public notice 84/2009 dated 23.7.2010 are applicable. Therefore the appellant must show the actual use of lactose in the export product to be eligible to import lactose against the exports of biscuits and confectionery. Lactose cannot be imported un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import of lactose is not allowed as a substitute input against import item number 2, that is cane sugar. However there was no such restriction prior to 1.2.2012. The SION norms prevalent at the time of issue of the DFIA were laid down under public notice 127 dated 7.1.2009 which described the import item no 2 as sugar without any restriction on import of lactose. There is merit in the contention of the appellant that the policy circular no 13 dated 31.1.2011 did not amend the SION norms otherwise there was no need to amend the same on 1.2.2011. Therefore it stands to reason that sugar did not refer to cane sugar alone but also referred to alternative inputs. This interpretation is supported by the DGFT letter number 1/94/1 8 0/1 5 1/A.M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. Support is had from the Madras High Court judgement in the case of Hoewitzer Organic Chemical Ltd (supra) holding that "the clarification dated 23.9.2010 and the Policy Circular dated 31.1.2011 is concerned, the same may not apply to a valid license, the transferability of which is endorsed. It is to be noticed that the clarification issued by the Ministry of commerce dated 31.7.2008 and the DGFT policy circular dated 24.3.2009, which were enforced prior to issuance of license in question dated 15.4.2010, will be made applicable to the license, as it extends the benefits of flexibility to import the alternative input/product mentioned in the SION and that appears to be the main tenor of the petitioners seeking release of the lactose sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... license has to be accepted as it is. And Customs cannot deny the benefit unless the DFIA is amended. Significantly, till date, the DFIA licenses have not been cancelled nor has any evidence been produced that the Customs have approached the DGFT for the same. The ld AR tried to distinguish the facts in the present case from those in the Madras High Court judgement case where the license was issued prior to the change in policy. However in the present case the license was transferred after the change in policy on 18.2.11. We find that the Madras High Court judgement speaks about the date on which the license is issued and not the date on which the license is transferred. Further the export obligation was discharged in April /May/ June 2010. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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