TaxTMI 
TaxTMI 
2026 (2) TMI 298
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....authorizations (DFIA)' issued by the Directorate General of Foreign Trade (DGFT) that were presented by the appellant, M/s Frunuts Exim LLP, for availing exemption from 'basic customs duty (BCD)' against notification no. 25/2003-CE dated 1st April 2003, on import of 13,234 kg of 'dried cranberry', valued at US$ 44,346, vide bill of entry no. 6882603/26.11.2024; of these under 'other confectionary ingredients' enumerated in the relevant Standard Input Output Norm (SION) group, one [DFIA no. 5611002533 dated 10th January 2024 (at sl. no. 3)] permitting 'relevant fruit (juice/pulp/puree)' was adjusted towards discharge of liability for 7464 kg and the other [DFIA no. 0311030812 dated 7th February 2024 (at sl. no. 8)] permitting 'fruits and fruit products' towards discharge of liability on the remaining 5770 kg. 2. The assessing authority raised a query on putative ineligibility of the impugned goods for the exemption and, not satisfied with the response, revised the bills of entry for clearance on payment of duty in full. By impugned order [order-in-appeal no. 1557(Gr.IIA-B)/2024(JNCH)/Appeals dated 10th December 2024] of Commissioner of Customs (Appeals-III), Mumbai, the den....
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....nsel argued that 'post-export' and 'transferred' authorizations under the said scheme stands on footing far removed from 'pre-export' instruments in the Foreign Trade Policy (FTP) and minutiae of other schemes in the same chapter of the Foreign Trade Policy (FTP) inasmuch as export obligations had been fulfilled by the original holder and entitlements flow from details contained in the corresponding shipping bills that were subjected to scrutiny before the authorizations were issued by the licencing authority. He also deprecated the attempt to sit in judgment over the decisions made under authority of another law by officials with domain expertise thereto. 6. Learned Authorized Representative intimated that debit [DFIA no. 5611002533 dated 10th January 2024] of Rs. 23,31,285 and debit [DFIA no. 0311030812 dated 7th February 2024] of Rs. 18,02,185 against the two authorizations had been inappropriately claimed even as these were not placed on record as transferred to the appellant as mandated by trade notice [trade notice no. 06/2021-22 dated 25.052021] of Director General of Foreign Trade (DGFT). He drew our attention to a condition '19. For compliance of the provisions....
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....rescribed in section 17(5) of Customs Act, 1962. It is seen from the records that the sum and substance of the rejection led from 'It has been observed that the imported "Dried Cranberry" is not mentioned against the description of the goods mentioned in the DFIA. Pl give justification/explanation since your import of the imported goods claiming DFIA exemption under Notfn., 25/2023-Cus dated 01.04.2015 (sic) is subjected to AU condition and value restrictions. Also you may clear the goods after paying customs duty as applicable to the imported goods' and, with the assertion of 'post-export' authorizations not entailed with 'actual use' condition and of impugned goods conforming to enumeration of input/s therein, followed with 'Your letter dated 27.11.2024 is not satisfactory to justify utilization of DFIA with respect to actual user condition. Therefore, duty exemption under Notfn. 25/2023 is denied. You may clear the goods under payment of duty.' which leaves no room for doubt that it was alleged breach of 'actual use' condition which prompted denial of benefit. This cryptic declaration by the original authority circumscribes the present proceedings even as....
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.... upon prospective export obligation is redundant and no such obligation attaches to the original holder and subsequent transferees. To read such into that string of words is not rational. Per contra, properly comprehended, it is tantamount to disclaimer by the licencing authority that presumption of conformity with the prescriptions in the said scheme - specific export product, technical descriptions and specifications of input/s - as well as in the impugned notification, inheres with endorsement of the corresponding shipping bills by customs officials at the time of export. This caveat may have been of assistance to customs authorities had some initiative been taken to verify the contents of the said shipping bills; the observations of the assessing officer offers no space for such conclusion. In the absence of factual scrutiny of the declarations, it was not proper to conclude that 'dried cranberry' was, with ample certainty, not used in the manufacture for denial of benefit of notification. Fastening responsibility that accrues, in the normal course, to the exporter, for full and correct declaration in the shipping bills, on subsequent transferee who has aught to do with bills o....
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....ned authorizations to ascertain improper issue by the licencing authority. The denial was proposed by the assessing authority solely from skepticism about 'actual use'; a superfluous appendage sought to be tagged on 'transferee' of 'post-export' authorization without any legal authority to do so. Indeed, the implied proposition is that the customs officials at the port of export had not carried out due ascertainment of the shipments. To base denial of entitlement on such peripheral summations is neither responsible discharge of authority under Customs Act, 1962 nor in conformity with spirit of the 'export promotion schemes' designed by the Central Government. Consequently, all findings that transcend the original ground in the bill of entry are in excess of jurisdiction and liable to be discarded. 12. It would also appear that the several decisions cited on behalf of the appellants do resolve the conundrum agitating the first appellate authority on 'actual use' of 'post-export' imported input/s. However, on behalf of respondents, these have been distinguished by Learned Authorized Representative and we turn to perusal of these. The decision of the Tribunal in re Frunuts Exim LLP....
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.... under DFIA, whether imported or domestically procured. The said Appendix 4H is in consonance with Paragraph 4.27(i) of FTP and not in derogation thereof. It nowhere stipulates requirement of declaration of quality, technical characteristics and specifications either of the inputs used for the exported product or of the duty-free goods imported or domestically procured. xxxx 15. Vide a Judgment dated 18.10.2019, the Hon'ble Allahabad High Court was pleased to dismiss a similar PIL Civil No.28695 of 2019 in Sachin Pandey vs. UOI thru Secy. Ministry of Commerce & Industries & Ors., while inter alia relying upon judgment of Hon'ble Bombay High Court in Shah Nanji Nagsi Exports Pvt. Ltd. Vs. Union of India reported in 2019 (367) E.L.T. 335 (Bom), with the following observations:- "4. A new Foreign Trade Policy 2015-20 was announced on 01.04.2015 incorporating various changes under DFIA Scheme. The FTP for the year 2015-20 provides a frame work and mechanism for increasing export of Indian goods. In order to increase the foreign trade, certain concessions have been accorded to Indian traders. 5. FTP 2015-20 floated a Duty Free Import Authorization Sch....
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....her varieties of maize, indicating that popcorn maize can be used to manufacture maize starch powder. The scheme never conveys that there is actual user 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. 27. As per SION export item at serial No.E-75 is maize starch powder against which exporter is permitted to import "maize" without putting any condition or restriction as regards to variety, quality or characteristic in the said entry. Moreover, there is no such corresponding condition in licence. In its absence, any addition of words cannot be imported to change the equation. Precisely, import of popcorn maize is not excluded from the scope of term "maize". 16. We see no reason to take a different view to take away the benefits otherwise available under the DFIA Scheme under the Foreign Trade Policy, whether of 2009-14 or 2015-20, merely to satisfy the petitioner. According to us the aforesaid judgments of the Punjab and Haryana High Court and Bombay High Court sti....
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....l, the Hon'ble High Court of Rajasthan, seized of the matter in Nrapen Shankar Acharya v. Union of India [order dated 23rd October 2024 in DB CWP no. 17806/2024], held therein that '6. Under Chapter 4 of the Duty exemption/remission scheme which enables duty free import of the inputs for export production including replenishment of inputs or duty remission, a detailed procedure has been laid down. The schemes thereunder consist of Advance Authorisations and Duty Free Import Authorisation; Duty Remission Scheme; Scheme for Rebate of State and Central Taxes and Levies etc. Clause 4.03 deals with Advance Authorisation clause 4.05 talks of eligible applicant/export/supply. There are also provisions for the Self-Ratification Scheme (4.06), Value Addition (4.08) and Minimum Value Addition (4.09). The learned senior counsel appearing for the petitioner referred to clause 4.13 which provides for "pre-import condition in certain cases" to support the prayer made under clause (i) of the present writ petition. However, we are of the opinion that the pre-import condition for the inputs under Chapter 4 can be issued only by Ministry of Commerce and Industry subjecting the imports under....
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....easonably calculated to bring it to the notice of all persons who may be affected by it, namely, through a mode which is ordinarily and generally accepted for that purpose. The aforesaid principle was referred to with approval by this Court4 and it was held that natural justice requires that before a law can become operative, it must be promulgated or published. It must be broadcast in some recognisable way so that all men may know what it is, or, at the very least, there must be some special rule or regulation or customary channel by or through which such knowledge can be acquired with exercise of due and reasonable diligence. 18. Another two-Judge Bench of this Court undertook a comprehensive survey of law relating to publication of subordinate legislation. The court recognised the modern reality that delegated legislation pervades almost every sphere of governance, often framed unobtrusively and without the visibility that attends Parliamentary enactments. It was, therefore, held that publication of promulgation is indispensable to enforceability of subordinate legislation. It was further held that when the parent statute prescribes a particular mode of publica....
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.... access to the exemption notification, was considered in re Shah Nanji Nagsi Export Pvt Ltd thus '24. The statute should be read as a whole, in its context and scheme, to discover what each clause or word is meant and designed under the scheme. Interpretation of words and clauses must depend on the text and context. There was no difficulty for the framers of the scheme to specifically lay down that the imported items must be used for manufacturing export items. However, in its absence the terms 'can be used' must be interpreted as it stands. It simply conveys that the imported item should be potential to use but necessary to be used. The scheme itself is of transferable authorisation and therefore in that context different interpretation cannot be made. Moreover, Clause 4.27 (iv) conveys that wherever SION prescribes 'Actual User' condition, it will prevail. Herein no such actual user condition is specifically prescribed by SION for relevant entry. Chapter 9 of FTP, 2015-20 specifically defines the term 'actual user' as a person who utilizes imported goods for manufacture in his own unit. It means that actuak user condition relates to a person and not to a product. Therefo....
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....ant does not have sanction of law; denial of exemption on that ground lacks authority of law. Among the general provisions made applicable to the scheme of import accessed by the appellant, there is no finding in the impugned order except in relation to paragraph 4.12 of the Foreign Trade Policy (FTP) and, even so, is restricted to the specification of detail of input/s in the shipping bill for restricting import of like input/s alone. We have examined the disaggregation of spheres in which transferee of authorization and original holder-cum-exporter operate. The decision in re Shah Nanji Nagsi Export Pvt Ltd has set out the relevance of context. The circular of Central Board of Indirect Taxes & Customs (CBIC) has also clarified that '(a) Only in case of import of inputs mentioned in paragraphs 4.29 of the FTP, 2023, correlation of technical characteristics, quality and specifications of the inputs with the export product is required to be established when imported under the DFIA scheme. (b) In case of inputs mentioned in paragraphs 4.12 and 4.28(iii) of FTP, 2023, only name of the specific input along with quantity is required to be declared in the shipping bill/....