DFRC and SION authorisation supported customs exemption where no positive evidence disproved the declared input linkage.

A valid DFRC certificate and the corresponding SION entry permitting import of hydroxy ethyl cellulose were treated as sufficient to support duty exemption under Notification No. 46/2002-Cus. Customs could not deny the benefit on a mere inferred absence of nexus where the export goods were not tested at export and there was no positive finding that the exported product lacked the stated input. A Joint DGFT clarification also supported permissibility, and analogous DFIA/DFRC practice accepted the authorization specifications for customs purposes. The importer was therefore entitled to the exemption and the revenue challenge failed.

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Issues: Whether hydroxy ethyl cellulose imported under the DFRC certificate was eligible for duty exemption under Notification No. 46/2002-Cus. when the relevant SION entry specifically permitted import of that item.

Analysis: The DFRC certificate and the corresponding SION entry expressly permitted import of hydroxy ethyl cellulose against the described export product. The export goods were not tested at the time of export, and there was no positive finding that the exported product did not contain the stated input. In such circumstances, the customs authorities could not deny the benefit merely on an inferred lack of nexus, especially when the Joint DGFT's clarification supported the permissibility of the import. The same approach had already been accepted in analogous DFIA/DFRC matters, where the specifications in the authorization were treated as sufficient for customs purposes.

Conclusion: The importer was entitled to the benefit of Notification No. 46/2002-Cus., and the departmental appeal failed.

Final Conclusion: The order allowing the importer's claim was sustained and the revenue's challenge was rejected.

Ratio Decidendi: Where a valid DFRC certificate and SION entry expressly permit import of a specified item, exemption cannot be denied in the absence of positive evidence that the exported product did not conform to the declared input pattern.

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