TaxTMI 
TaxTMI 
2019 (4) TMI 146
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....rder to increase the foreign trade, certain concessions have been accorded to Indian traders. 2. FTP 2015­20 formulated for the period from 1st April, 2015 to 31st March, 2020 floated a Duty Free Import Authorisation Scheme (DFIA) to regulate export viz­a­viz import of the goods. It is a post export scheme which gave exemption from basic custom duty while importing specified inputs. The design of the scheme is like, the merchant/export trader, has to file on­line application to the concerned regional authority before exporting the goods under DFIA scheme. It is stipulated that export shall be completed within the span of twelve months from the date of generation of particular file number. On completion of export and realization of proceeds, one has to apply for issuance of DFIA with the concerned authority. On each transaction, separate DFIA is issued as per the Standard Input Output Norms (SION). On issuance of authorisation the trader will get exemption from paying basic custom duty on the goods allowed to be imported under scheme. 3. The petitioner is a Private Limited Company engaged in the export business. Amongst other commodities, the petitioner is indu....
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....n of India that petitioner misused the DFIA scheme and committed fraud since 26.10.2016. It was noticed that instead of importing maize as permitted in SION list, the petitioner imported popcorn which is much costlier than maize and thus, causing heavy loss to the Government Exchequer. The petitioner's act is in gross violation of Clause 4.12(i) of the FTP 2015­20. The said clause prescribes that whenever SION permits use of generic inputs then the name of specific input together with quantity must be endorsed in the relevant shipping bill and it should match description in the relevant bill of entry. 9. Respondent also contended that, it is not commercially viable to manufacture maize starch powder from the imported popcorn which is four times costlier. The petitioner is misusing the DFIA scheme and by importing costlier quality of maize i.e. popcorn, selling it in the domestic market to earn huge profit. It is also informed that now the concerned SION entry has been deleted to prevent the abuse. 10. The authorities have withheld issuance of DFIA licence to the petitioner. The decision, if any, rendered by the adjudicating authority can be challenged by way of appeal....
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....s import of maize of specified quantity in proportion. Under the scheme petitioner imported variety of maize namely popcorn maize and claimed authorisation i.e. exemption from paying basic custom duty. 13. On technical front respondent stated that, the petitioner's act of importing popcorn is in gross violation of para 4.12(i) of the FTP 2015­20 which contemplates that, when SION permits use of generic inputs or alternate inputs, the name of specific input should be endorsed in the relevant shipping bills. Therefore, the petitioner who is importing generic inputs i.e. maize, should endorse name of specific input i.e. popcorn maize in shipping bills, in absence it violates the policy condition. Secondly, it is the stand of the Union that the petitioner imported popcorn instead of maize which is much costlier than maize. The petitioner is misusing the authorisation by sale of popcorn in domestic market instead of using for manufacturing the export item. According to respondent it is not commercially viable to manufacture maize starch powder from the imported popcorn which is 4 times costlier. It is also the stand that the import is subject to actual user condition as per p....
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.... be permitted for import in the authorisation in proportion to the quantity of these inputs actually used/consumed in production, within overall quantity against such generic input/alternative input. (v) In addition, if in any SION, a single quantity has been Indicated against a number of inputs(more than one input), then quantities of such inputs to be permitted for import shall be in proportion to the quantity of these inputs actually used/consumed in production and declared in Shipping Bill/Bill of Export/Tax invoice for supply prescribed under GST rules within overall quantity against such group of inputs. Proportion of these inputs actually used/consumed in production of export product shall be clearly indicated in Shipping Bill/Bill of Export / Tax invoice for supply prescribed under GST rules. (vi) Separate DFIA shall be issued for each SION and each port. (vii) Export under DFIA shall be made from a single port as mentioned in paragraph 4.37 of Handbook of Procedures. (viii) Regional Authority shall issue transferable DFIA with a validity of 12 months from the date of issue. No further revalidation shall be granted by Regional Authorisati....
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....s been accorded. According to petitioner, SION E75 refers the input commodity as "maize" without putting any restriction therefore, entry would cover maize of any quality, since the norms have not confined any quality of maize. 18. On similar line, the petitioner relied on reported case of M/s Jain Exports (P) Ltd. and Another Vs. Union of India and others, (1988) 3 SCC 579. In said case, issue was whether import of industrial coconut oil was banned under Import Policy. It was observed that in relevant appendix there was no classification of coconut oil therefore all varieties of coconut oil should be taken as covered by said term. Precisely, it was observed that the term coconut oil as mentioned should take in its folds all varieties. The Hon'ble Supreme Court in reported case of Commissioner of Central Excise, New Delhi Vs. Connaught Plaza Restaurant Private Limited, New Delhi with connected matter, (2012) 13 SCC 639, ruled that in the absence of statutory definition in precise terms, words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding or according to their popular meaning. Therefore in absence of any definit....
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....ll its types like corn, oat, wheat rice etc. However, when the term maize is used, it is a specific class of cereal apart from its inter­se varieties, therefore, the term maize can be well construed as a specific term and therefore, the provision of para 4.12(i) would not apply. 23. Respondents would submit that the general norms would indicate that, the items which are imported should be used for manufacturing resultant exportable items. The object of the scheme is to be looked upon to understand whether there exist actual user condition. For this purpose, respondents attracted our attention to the "general notes for all export products groups". Note­1:­ "1. The norms have been published in this book with a view to facilitate determination of the proportion of various inputs which can be used or are required in the manufacture of different resultant products. In many cases, the resultant products and the inputs required have been described in generic terms. The applicants shall, therefore, ensure that the goods sought for import and actually imported are those, which are used/required in the export product. The items allowed for import in the licence shall be ....
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....ser condition attached to the import against the export obligation. It amounts to adding some conditions in the FTP when they never exist. Moreover, when the authorisation is made transferable under the scheme there is no question of actual user condition. 26. It reveals that DFIA scheme is distinct than Advance Authorization Scheme where raw material is to be imported on authorization and to be used for manufacturing purpose. Basically, DFIA is post export scheme in which exporter has to first export goods and after realization of proceeds, exporter has to make an application to the authority, who after verification, grant DFIA certificate which is transferable. Therefore, there is no actual user condition inbuilt under the scheme. The respondents relied on the circular dated 14.11.2017 to impress about the actual user condition. It is countered on the point that the circular is in relation to the Advance Authorization Scheme and not about DFIA Scheme. Secondly, it is argued that the circular can not have retrospective effect. In this regard, petitioner relied on reported case of the Commissioner of Customs­IV Vs. Lactose (I) Ltd. 2017 (355) ELT 541 (Bom.). In said case,....