TaxTMI 
TaxTMI 
2026 (4) TMI 1285
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....e to the Customs Tariff 1975 (51 of 1975) subject to conditions specified therein. 2. Submission by the Applicant: 2.1 The applicant (M/s. Unibourne Food Ingredients LLP) is a Limited Liability Firm holding a valid import-export code number AAHFU0738L issued by the Office of the Director General of Foreign Trade in terms of the provision of Section 7 of the Foreign Trade Development & Regulation Act, 1992. The applicant seeking an Advance Ruling under Section 28H of the Customs Act, 1962 is covered by the definition of 'applicant' as per Section 28E (c) of Customs Act, 1962. The Applicant seeks to claim exemption from payment of Basic Customs Duty (BCD) under Notification No. 25/2023-Cus dated 01.04.2023 against their proposed import of various goods as listed in the table A below, against a valid Transferable Duty-Free Import Authorisations (DFIAs) issued by the Regional Authority in terms of Paragraph 4.24 and Paragraph 4.26 of Foreign Trade Policy subject to conditions specified therein. The said DFIA's are issued against (i) Export of Assorted Confectionary Products as per Standard Input Output Norms (SION E- 1); (ii) Export of Biscuits as pe....
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....in the limits specified in the said authorization: Provided that in respect of inputs referred in paragraphs 4.12(i) and 4.12(ii) of the Foreign Trade Policy, the material permitted to be imported in the said authorisation shall be of the specific name/description or quantity, respectively, as the material used in the export of the resultant product. The exporter shall declare these particulars of materials used in the shipping bill/bill of export: Provided further that in respect of resultant products requiring inputs specified in paragraph 4.30 of the Foreign Trade Policy, the materials permitted in the said authorisation shall be of the same quality, technical characteristics and specifications as the materials used in the said resultant product. The exporter shall declare these particulars of materials used in the shipping bill or bill of export; (iv) that the said authorisation shall be transferable subject to such conditions as may be specified; 2.4 The applicant proposed to purchase 2 DFIAs issued as per Para 4.24 and Para 4.26 of FTP (2023) bearing No. 0311046641 dated 19:08.2025 issued against Export of Assorted Confectionery Products as per S....
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....o. 14 of DFIA No. 3411006954 dated 11.09.2025 (Export of Biscuits) stipulates that import of Lactose/Mannitol/Sodium Saccharin and other Artificial Sweetening Agents are not allowed as substitute inputs against import of inputs. Under Condition No.15, it is specified that CIF value of input item S.No.4 (Leavening Agent, Emulsifier, Flavouring Agent, Starch, Food Colour, Anti-Oxidant, Fruit/Cocoa Powder, Dietary Fibre) together shall not exceed 10% of the total CIF value of Authorisation. 2.8 The applicant submitted that though the conditions of DFIAs specifies value cap restrictions and actual user conditions on certain inputs under both the DFIA's, in applicant's understanding and interpretation of law the same shall not apply in the applicant's case, in view of the Order dated 23.10.2024 passed by the Division Bench of Hon'ble Rajasthan High Court (Jodhpur Bench). 3. Applicants Interpretation of Law/Facts: 3.1 The applicant submitted that the Advance Ruling being sought under this application has a bearing on rate of duty. The applicant is exempted from payment of whole of duty of customs for imports made under a Transferable Duty-Free Import Authorisatio....
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....t or (b) alternative input, unless the name of the specific input together with quantity [which has been used in manufacturing the export product] gets indicated / endorsed in the relevant shipping bill and these inputs, so endorsed, within quantity specified and match the description in the relevant bill of entry, the concerned Authorisation will not be redeemed. In other words, the name/description of the input used (or to be used) in the Authorisation must match exactly with the name/description endorsed in the shipping bill. 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, 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 bills." Paragraph 4.29 of FTP. (Sensitive items under Duty Free Import Authorisation). In respect of following inputs, exporter shall be required to provide declaration with regard to technical chara....
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....ir understanding and interpretation of law are eligible to claim exemption from payment of Basic Customs Duty under Notification No.25 of 2023, without any condition, on the following grounds and not prejudiced to each other: (a) that the inputs proposed to be imported (Table A) are not specified inputs under Paragraph 4.29 of the FTP. Therefore, no correlation is required to be established for technical specification, quality and characteristics of the inputs used in export goods and imported goods as clarified by Central Board of Indirect Taxes vide 20/2025 -Cus dated 24.07.2023. (b) The Applicant relied upon the judgement and order dated 7th November, 2022 of Hon'ble Tripura High Court in the case of Sri Sibhankar Bhowmik Vs. UOI. The Hon'ble High Court has more particularly dealt with this issue under Para 8, 9, 10 and 11 of the said order which is reproduced below: "8. It is amply clear that whereas these further words i.e., "same quality, technical characteristics and specification" are categorically used in Paragraph 4.30 of FTP and also in the second proviso to the condition (iii) of the Customs Notification No. 19 of 2015, however they ar....
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.... for manufacturing resultant products are covered by the generic description of ' Confectionary ingredients' in the case of Export Goods ' Assorted Confectionary' and in the case of Export of Biscuits, the inputs are covered by the broad description ' Biscuit Additives & Ingredients' & Dairy products and therefore the provisions of Para 4.12 (i) and 4.12 (ii) of FTP has no application in the present case. (d) The applicant submitted that in any event, DFIA scheme is a post export incentive scheme. The Hon'ble Tripura High Court, in the aforementioned judgement has categorically rejected the argument of the Petitioner that material used in the export goods would include not only materials imported but also even such material used is domestically procured, under Para 12 of the Order as reproduced below: 12. There is also no merit in the contention of the petitioner that although substantive condition (iii) of Notification No. 19 of 2015 concerns mentioning in Transferable DFIA the details "of material imported', in the first proviso the words "as the materials used" for the purpose of ascertaining the "materials permitted to be import....
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....fore, can be notified only through a Notification in the official gazette." (i) The applicant submitted that in view of the aforementioned judgement of Hon'ble Rajasthan high court, the conditions attached to certain inputs in both the DFIA's to the extent of actual user conditions on the basis of Public Notice No. 41 of 2016 has no legal basis and hence Honest in law. In applicant's understanding and interpretation of law, the applicant is entitled to claim DFIA benefits without actual user condition on inputs, wherever applicable. (j) The applicant submitted that in their understanding and interpretation of law amendments in SION by way of restricting imports through value caps cannot be imposed by disregarding the requirement of production and consumption data for taking a decision for review of SION as held by Hon'ble Rajasthan High Court in the aforementioned case, under Para 7 of the Order: 7. .... .. The requirement of regarding production of data and information would be the foundation for taking a decision for review of SIONs and no exception can be taken to such a requirement of calling for data and information by the Norms Commi....
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....y availing exemption from payment of Basic Custom Duty (BCD) under notification No. 25/2023-Cus dated 01.04.2023 at the jurisdiction of office of the Pr. Commissioner/Commissioner of Customs, Nhava Sheva-I, JNCH, Nhava Sheva, Mumbai. In terms of Provisions of the Section 28-I(1) of the Customs Act, 1962 read with the Sub-regulation No. (7) of the Regulation No. 8 of the Customs Authority for Advance Rulings Regulations, 2021, the application was forwarded to the office of the Pr. Commissioner/Commissioner of Customs, Nhava Sheva-I, JNCH, Nhava Sheva, Mumbai on 02.01.2026, 28.01.2026, 16.02.2026 and 12.03.2026 as indicated by the applicant at Sr. No. 13 of their CAAR-1 Forms calling upon them to furnish the relevant records with comments, if any, in respect of the said application. However, no comments were received from the concerned jurisdictional Commissionerate. 5. Records of Personal Hearing: 5.1 Personal Hearing was held on 06.04.2026 and 16.04.2026. Ms Soumya Ail, Advocate/Representative appeared for the online hearing on behalf of the applicant and reiterated the contention of the applicant filed with the application. She submitted that the applicant sought advance rul....
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....port of Biscuits (SION E-5), (iii) Export of Vegetable Pickles (SION E-126) and (iv) Export of Namkeens/Mixtures/Savouries (SION E-132) without establishing correlation between the quality, technical characteristics, quality and specifications of imported goods and inputs used in export goods? 6.3 The applicant vide its email dated 06.04.2026 submitted that they had submitted total 4 DFIA's, as per details given below for seeking an Advance Ruling with regard to the applicability of Customs Notification No. 25/2023-Cus dated 01.04.2023 for claiming Exemption benefits under DFIA's issued as per SION E-1 (Export of Assorted Confectionary products); SION E-5 (Export of Biscuits); SION E-126 (Export of Vegetable Pickles) and SION E-132 (Export of Namkeens/Mixtures/Savouries). Sr. No. DFIA No. Date Validity Relevant SION 01 0311051259 05.02.2026 05.02.2027 SION E-1 02 0310838914 15.10.2020 26.03.2026 SION E-5 03 3411007247 02.12.2025 02.12.2026 SION E-126 04 3411007258 03.12.2025 03.12.2026 SION E-132 6.3.1 They submitted that they reframed the question of law to include all the af....
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....hat they intend to import various non-sensitive goods against the valid Transferable DFIA's issued against Export of Assorted Confectionery Products by Regional Authority in terms of Paragraph 4.24 and 4.26 of the Foreign Trade Policy, 2023. 7.5 The applicant is seeking exemption from the payment of whole of Customs duty under Notification No. 25/2023-Cus dated 01.04.2023 issued under Sub-Section (1) of Section 25 of the Customs Act, 1962 on the import of various non-sensitive under a valid transferable DFIA Licenses issued against Export of Assorted Confectioneries (SION E-1), Export of Biscuits (SION E-5), Export of Vegetable Pickles (SION E-126) and Export of Namkeens / Mixtures / Savouries (SION E-132). Therefore, before proceeding further, I find it essential to examine the notification No. 25/2023-Cus dated 01.04.2023. The above referred notification exempts materials imported into India against a valid Duty-Free Import Authorisation issued by the Regional Authority in terms of paragraphs 4.24 and 4.26 of the Foreign Trade Policy (hereinafter referred to as the said authorisation) from the whole of the duty of customs leviable thereon which is specified in the First Sc....
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....t through any other seaport, airport, inland container depot or through a land customs station within his jurisdiction; (vi) that the exports as specified in the said authorisation (both in value and quantity terms) were fulfilled within the period specified in paragraph 4.28 of the Foreign Trade Policy by exporting resultant products, manufactured in India, which are specified in the said authorisation: Provided that in case of an authorisation for intermediate supply, the export obligation shall have been discharged by supplying the resultant products to the exporter in terms of paragraph 4.05(c)(ii) of the Foreign Trade Policy; (vii) that the importer produces evidence of fulfilment of the export obligation to the satisfaction of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be; (viii) that in relation to the said authorisation issued to a merchant exporter, the name and complete postal address of the supporting manufacturer who manufactured the export product is declared in the shipping bills and specified in the said authorization." 7.6 From the plain reading of the above, it emerges that the fir....
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....ser' condition or Appendix-4J prescribes pre import condition for such an input. 7.8 From the above, I observe that the DFIA license are issued for duty free import of inputs including intermediates on post export basis for products for which SION Norms have been notified by the Regional Authority. I further observe that no DFIA license can be issued by the authority for the inputs where a pre-import condition or an actual user condition has been notified. 7.9 Further, Para 4.29 of the Foreign Trade Policy lists sensitive items and puts a mandate on exporter as well as the regional authority to mention technical characteristics, quality and specification in the Authorization in respect of such sensitive outputs as listed there. Para 4.29 of the FTP, 2023 is reproduced as under: 4.29 Sensitive Items under Duty Free Import Authorisation (a) In respect of following inputs, exporter shall be required to provide declaration with regard to technical characteristics, quality and specification in Shipping Bill: "Alloy steel including Stainless Steel, Copper Alloy, Synthetic Rubber, Bearings, Solvent, Perfumes / Essential Oil/ Aromatic Chemicals, Surfactants, Rel....
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....ndicate file number on the export /supply documents viz. Shipping Bill / Bill of Export / Tax invoice for supply prescribed under GST rules. (iv) In terms of Para 4.12 of FTP, Wherever SION permits use of either (a) a generic input or (b) alternative input, the specific input together with quantity [which has been used in manufacturing the export product] should be indicated / endorsed in the relevant Shipping Bill/ Bill of Export / Tax invoice for supply prescribed under GST rules. Only such inputs may 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 i....
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....4.29 of the FTP, 2023, correlation of technical characteristics, quality and specification 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 the FTP, 2023, only name of the specific input along with the quantity is required to be declared in the shipping bill/bill of export. Declaration of technical characteristics, quality and specification of the inputs used in the manufacture of the export product is not required." 7.14 Further, I have gone through the application and I find that the question raised by the applicant is general in nature, concerning the permissibility of availing exemption for import of non-sensitive goods under transferable DFIA without adherence to certain conditions. In this context, I do not consider it necessary to undertake a detailed examination of the SION norms applicable to each of the export products covered under the subject DFIAs or the DFIAs themselves at this point, as the issue for determination does not turn on product-specific norms but on the interpretation of the overarching legal provisions and the binding nat....
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.... above) itself makes the exemption conditional upon the authorisation being valid and compliant with SION norms, and specifically provides that the benefit is available only where SION does not prescribe actual user condition. Thus, where SION itself prescribes such condition, the same becomes binding and enforceable for the purposes of availing exemption. Further, in Commissioner of Customs v. Dilip Kumar and Company, the Hon'ble Supreme Court held that exemption notifications must be strictly construed and the burden of satisfying all conditions lies on the claimant. Thus, any condition forming part of the governing framework must be strictly complied with. 7.19 I further observe that the DFIA licences issued by the Regional Authority contain specific condition sheets prescribing value caps, exclusions, and actual user conditions in respect of certain inputs. These conditions are issued by the competent licensing authority under the Foreign Trade (Development & Regulation) Act, 1992 read with the Foreign Trade Policy and Handbook of Procedures. Further, a reading of Para 4.13 of the Foreign Trade Policy shows that pre-import conditions can be imposed through two distinct m....
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....igibility to exemption, and any deviation from the same would render the benefit inadmissible. 7.22 As per the discussion above, I find that the exemption under Notification No. 25/2023-Cus dated 01.04.2023 can be availed for import of non-sensitive inputs not mentioned in Para 4.29 of FTP, 2023 as long as the goods fall within the specific description endorsed in the DFIA licence and SION norms and are not covered under Appendix 4J subject to the conditions mentioned in the DFIA Licence. I further find that the "actual user" condition, where incorporated in SION norms, is valid and enforceable; the conditions endorsed in the DFIA licence are binding on the importer as well as Customs authorities; Customs authorities cannot add to or subtract from the licence conditions. 7.23 Therefore, I conclude that the applicant is entitled to avail exemption under Notification No. 25/2023-Cus dated 01.04.2023 only to the extent that the imports are in strict conformity with the DFIA licence, SION norms, and the conditions attached thereto, and any deviation including violation of actual user condition, wherever applicable, would render the benefit inadmissible. 8. In light of the abov....