DFIA entitlement follows the policy in force at issuance, allowing lactose as an alternative input under the then-applicable norms.

DFIA entitlement was governed by the policy and SION norms in force on the date the authorisation was issued, and those norms described the input as sugar without limiting it to cane sugar. A later policy circular did not amend the SION, and the restriction on lactose arose only under a subsequent public notice. Earlier DGFT communications also treated lactose as a permissible alternative input. On that basis, lactose remained importable against the DFIA licences, and exemption under Notification No. 98/2009-Cus. was available.

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Issues: Whether lactose could be imported as an alternative input against the sugar entry in the DFIA licences in view of the policy circulars and public notices in force, and whether the appellant was entitled to exemption under Notification No. 98/2009-Cus.

Analysis: The relevant DFIA licences were issued when the applicable SION norms described the input as sugar without restricting it to cane sugar. The later policy circular of 31.1.2011 did not amend the SION norms, and the restriction against lactose was introduced only by the subsequent public notice of 1.2.2012. Earlier DGFT communications and policy circulars recognized that lactose could be treated as sugar and that exporters could use alternative inputs mentioned in the SION, subject to the policy in force on the date of issue of authorisation. The Customs notification could not be denied on the basis of a later clarification when the licences had been issued under a regime permitting alternative inputs.

Conclusion: Lactose was held to be importable against the DFIA licences as an alternative input, and the appellant was entitled to the benefit of Notification No. 98/2009-Cus.

Ratio Decidendi: The policy and SION norms in force on the date of issuance of the DFIA govern the entitlement under the licence, and a later circular or clarification cannot defeat a vested entitlement to import an alternative input permitted by the then-existing norms.

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