2019 (9) TMI 135 - AT - Customs

Green Cardamom not required to be specifically mentioned in DFIA Licence ruling

M/s Pace Ventures Pvt. Ltd Versus C.C. -Ahmedabad

The Tribunal held in favor of the appellant, ruling that the specific mention of Green Cardamom in the Duty-Free Import Authorization (DFIA) Licence was ... Benefit of Duty Free Import Authorization (DFIA) - FTP, 2009-14 read with Notification No. 98-2009-Cus dated 11.09.2009 - import of Green Cardamom - DFIA benefit denied on the ground that Green Cardamom is not mentioned in the Licence in the list of imported goods, Green Cardamom was not used actually in the export goods and that Customs Tariff Head is not mentioned in the Licence. HELD THAT:- In the Licence, there is no mention of name of specific items but it only mentioned relevant Food Additives for Pickles FDI approved, therefore, all those goods which are used as Food Additives for making Pickles will be covered under this category. Similarly in the case of export product of Biscuits, the imported goods includes Flavouring Agent therefore, there is no doubt that the Green Cardamom is used as Flavouring Agent in the manufacture of Biscuits. Mention of specific name of Green Cardamom - HELD THAT:- Once the imported goods is covered under broad description in Licence and if any item covered in such broad description will stand covered - If Revenue’s contention regarding specific product being not covered is accepted, then since Licence does not mention specific name of any goods, no any goods can be allowed to be imported under the said Licence, which is not the intention of DGFT in issuance of Licence - the description of relevant Food Additives/ or Food Flavouring clearly covers the Green Cardamom, therefore, it cannot be said that only because the specific name of Green Cardamom is not mentioned, the benefit will not be given. Denial also on the ground that CTH is not mentioned in the Licence - HELD THAT:- The ITC heading is not significant, once the imported goods is covered under the description, the benefit is available - merely because CTH was not mentioned or ITC (HS) is not matching so far description covers the goods imported, the benefit cannot be denied to the assessee. Production of evidence of actual use of imported goods in the export goods - HELD THAT:- There is no requirement of actual use, only the requirement is that whether the imported goods is capable of being used in the export goods and there is no dispute that Green Cardamom is indeed used in manufacture of Pickles and Biscuits as observed from the various books on Green Cardamom referred by Ld. Counsel - benefit cannot be denied on this ground. Appeal allowed - decided in favor of appellant. Issues Involved:1. Whether the appellant was entitled to duty-free import of Green Cardamom under the Duty-Free Import Authorization (DFIA) scheme.2. Whether the specific mention of Green Cardamom in the DFIA Licence was necessary.3. Whether the Customs Tariff Head (CTH) of the imported items needed to match the CTH mentioned in the DFIA Licence.4. Whether actual use of the imported Green Cardamom in the export goods was required to claim the DFIA benefit.Detailed Analysis:1. Entitlement to Duty-Free Import under DFIA:The appellant imported 200 kgs of Green Cardamom and sought duty-free clearance under two DFIA Licences issued against the export of Vegetables Pickles and Biscuits. The appellant claimed exemption under the Foreign Trade Policy (FTP) 2009-14, supported by Notification No. 98-2009-Cus dated 11.09.2009, which exempts material imported against a valid DFIA from the whole of Customs duty. The department denied the benefit on the grounds that Green Cardamom was not explicitly mentioned in the DFIA Licences and was not used in the export goods.2. Specific Mention of Green Cardamom in DFIA Licence:The appellant argued that there was no requirement for the specific mention of Green Cardamom in the DFIA Licence, as long as the imported goods fell under the broad description of 'Relevant Food Additives' and 'Flavouring Agent' mentioned in the Licences. The Tribunal agreed, stating that all goods used as Food Additives for Pickles and Flavouring Agents for Biscuits were covered under the DFIA Licences. The Tribunal referred to various authoritative books confirming the use of Green Cardamom in Pickles and Biscuits, thereby supporting the appellant's claim.3. Matching of Customs Tariff Head (CTH):The department contended that the CTH of Green Cardamom was not mentioned in the DFIA Licences, which was significant for claiming the benefit. The Tribunal, however, held that the ITC (HS) Code or CTH was not a criterion for the DFIA benefit as long as the imported goods fell under the description mentioned in the Licence. Citing previous judgments, the Tribunal emphasized that the description in the Licence was sufficient to cover the imported goods, and the absence of a specific CTH did not invalidate the claim.4. Requirement of Actual Use in Export Goods:The lower authorities denied the DFIA benefit on the grounds that the appellant could not produce evidence of actual use of Green Cardamom in the export goods. The appellant argued that there was no condition of actual use under the DFIA scheme, as per Notification No. 98/09-Cus dated 11.09.2009. The Tribunal supported this view, stating that the DFIA scheme did not require actual use but only that the imported goods were capable of being used in the export goods. The Tribunal referenced the judgment in Shah Nanji Nagsi Export Pvt. Ltd, which clarified that the DFIA scheme is a post-export scheme without an actual user condition.Conclusion:The Tribunal concluded that the reasons given by the lower authorities for denying the DFIA benefit were not sustainable. The Green Cardamom imported by the appellant was covered under the broad descriptions in the DFIA Licences. Consequently, the Tribunal directed the competent authority to issue a certificate enabling the appellant to apply for revalidation of the relevant DFIAs for the disputed period. The impugned order was set aside, and the appeal was allowed.