Transferable DFIA exemption: matching the SION description was enough, without proof of actual use in exported goods.

A transferable DFIA governed by the applicable Foreign Trade Policy and SION entitled the importer to basic customs duty exemption on Titanium Dioxide (Rutile) imported against the licence for glass bottles, because the import item corresponded to the licence description. Once transferability was granted after discharge of export obligation, the transferee was not required to prove actual user of the input in the exported goods or establish any fresh nexus beyond the licence and SION entry. The analysis follows binding precedent that DFIA benefit cannot be denied by importing an additional actual-use condition not found in the scheme. The exemption claim was therefore admissible, and the denial of benefit was unsustainable.

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Issues: Whether the importer was entitled to exemption from basic customs duty under Notification No. 98/2009-Cus on import of Titanium Dioxide (Rutile) against a transferable DFIA issued for export of glass bottles, and whether actual use of the imported input in the exported goods had to be established.

Analysis: The DFIA had been endorsed transferable after discharge of export obligation, and the relevant import entry specifically covered Rutile under the SION for glass formers. Titanium Dioxide was treated as the same commodity as Rutile for the purpose of the licence entry. The scheme governing the licence was the Foreign Trade Policy, 2009-14 and the corresponding handbook provisions, not the later policy provisions relied upon by the Revenue. Once transferability was granted, the transferee was not required to independently prove actual user or fresh nexus between the import item and the export product. The reasoning followed binding higher judicial precedents recognising that, where the import item corresponds to the SION description, DFIA benefit cannot be denied by importing an additional actual-use requirement not found in the scheme.

Conclusion: The exemption claim was valid and the denial of DFIA benefit was unsustainable.

Final Conclusion: The impugned order was set aside, the customs exemption was held admissible for the import in question, and consequential revalidation-related relief was directed if sought.

Ratio Decidendi: Under a transferable DFIA governed by the applicable Foreign Trade Policy and SION, entitlement to duty-free import depends on correspondence with the licence description, and the transferee need not separately establish actual use of the imported input in the exported goods.

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