Transferred DFIA coverage for saffron as food flavour bars actual user restriction and onerous provisional release conditions.

A transferred DFIA covering saffron as "food flavour" did not carry an actual user restriction, so Customs could not insist that the transferee prove actual user compliance merely by relying on the SION entry or ITC heading. The transferred licence was sufficient to support clearance of the goods, and the departmental position in similar matters had accepted such imports. The demand for a 100% bond and 100% bank guarantee as a condition for provisional release was arbitrary and unsustainable because it was inconsistent with the licence and the settled appellate position. The consignment was therefore directed to be released on acceptance of the DFIA.

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Issues: Whether saffron imported under a transferred DFIA could be cleared as "food flavour" without insisting on an actual user condition, and whether the Customs authorities could insist on 100% bond and 100% bank guarantee as a condition for provisional release of the consignment.

Analysis: The goods imported were covered by the description in the DFIA as "food flavour" and no condition was attached to the transferred licence imposing an actual user restriction on the transferee. The transferee of a freely transferable DFIA was not required to establish actual user compliance merely because the SION entry or ITC heading was relied upon by the department. The Tribunal also noted that in similar matters involving the same goods, appellate orders allowing the import had been accepted by the department, and that prior judicial and departmental positions supported clearance of the goods without the stringent conditions imposed by the adjudicating authority. In these circumstances, insisting on a bond for 100% of the value and bank guarantee for 100% of the duty foregone was held to be arbitrary and unsustainable.

Conclusion: The import of saffron under the DFIA was held permissible as "food flavour" without an actual user condition, and the direction to furnish 100% bond and 100% bank guarantee was set aside.

Final Conclusion: The consignment was directed to be released by accepting the DFIA, and the Customs authorities were held not justified in imposing the impugned provisional release conditions.

Ratio Decidendi: Where a transferred DFIA covers the imported goods by description and no actual user condition is attached to the licence, Customs cannot deny the benefit or impose onerous provisional release conditions inconsistent with the licence and the settled appellate position.

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