TaxTMI 
TaxTMI 
2026 (6) TMI 1020
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....rt basis against the Export of Assorted Confectionary Products covered by Standard Input Output Norm (SION E-1). 2.2 Vide Public Notice No. 41 dated 02.11.2016, the DGFT, inter-alia, imposed the Actual User Condition on inputs at serial no. 2,3 and 4 and further imposed value cap restrictions on Sr. Nos. 5,6 and 7 of SION E1 and accordingly, the Regional Authorities have endorsed the said conditions in the DFIA. 2.3 The said BE was selected for assessment by the faceless assessment group and during the said assessment, various queries were raised on 24.07.2025 and 25.07.2025. The said queries were duly responded to by the Appellant vide its letters dated 24.07.2025 and 25.07.2025. 2.4 Thereafter, the Ld. Assessing Officer disregarded the submissions of the Appellant and proceeded to reassess the BE by denying the benefit of exemption claimed by the Appellant and assessed the imported Citric Acid at merit rates. Copy of the query dated 28.07.2025 reassessed Bill of Entry is attached with the appeal memorandum. 2.5 The Appellant made a detailed submission to the Respondent, vide its letter dated 28.07.2025, and requested him to allow clearance of goods by extending DFIA b....
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.... DFIA scrip was issued. In an event, unlike the Advance Authorization scheme, there is no actual user condition inbuilt under the DFIA. It is submitted that the custom authorities, at various customs house across India, are extending duty free benefit against transferred DFIAs without insisting on the "actual use" condition. It is further submitted that the Appellant is a Transferee of the said DFIA dated 16.04.2025 issued on a post-export basis against the Export of Assorted Confectionary Products covered by Standard Input Output Norm (SION E-1). He further submits that in the present case, the product description mentioned in the DFIA under Serial No. 4 of the DFIA matches with the imported goods viz. Citric Acid (Food Grade - Monohydrate - 99.5%). 3.1 He further submits that as submitted above, the Public Notice No. 41 dated 02.11.2016 was issued by DGFT, inter alia, amending various SIONs under Food Products. One such amendment was imposing the actual user condition on items under Sl.no. 2, 3 and 4 and value cap restrictions on items under Sr. No. 5, 6 and 7 of the said SION E-1. The said imposition of actual user condition and value cap restrictions was issued by DGFT throu....
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....uired to fulfil the actual user conditions. He also relies on the decision of this Tribunal in the case of Frunuts Exim LLP Vs Commissioner of Customs, Nhava Sheva, Raigad, 2026 (2) TMI 298. 3.6 Further, he relies on the judgment of the Hon'ble Bombay High Court in the case of Shah Nanji Nagsi Exports Pvt. Ltd. Vs Union of India, 2019 (367) ELT 335 (Bom), wherein it is held that there is no actual user condition inbuilt in the DFIA scheme. He also relies on the judgment of the Hon'ble Allahabad High Court in the case of Sachin Pandey vs UOI - 2020 (371) E.L.T. 34 (All). 3.7 In view of the above, he submits that the benefit under the DFIA read with Notification be allowed to the Appellant and the Respondents ought not to insist on fulfilment of the actual user condition. 3.8 Further, it is submitted that the Appellant is presently holding number of Transferable DFIAs from the open market in respect of the disputed items. However, owing to the pendency of litigation, the said DFIAs could not be utilized, and during this period, the validity of the licenses expired. Accordingly, the Appellant prays that appropriate directions be issued to the Respondents / Customs Department ....
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.... opinion that the pre-import condition for inputs under Chapter 4 can be issued only by the Ministry of Commerce and Industry subjecting the import items under appendix 4-3 to pre-import condition. The expression "may" occurring under clause 4.13 has to be read in consonance with the powers of the Union of India to issue a Notification and the powers of DGFT shall remain confined to issue a Notification under clause 4.13 only in tune with the Notification, if any, issued by the respondent no.1 imposing pre-import conditions for inputs. As to imposition of Actual User Condition by way of public notice, this is well remembered that such an exercise shall also be touching upon the policy decision and, therefore, can be notified only through a Notification in the official Gazette." 7. Further, in the case of Viraj Impex Pvt. Ltd. Vs. Union of India & Anr. (supra), the Hon'ble Apex Court has analyzed the issue and observed as under : "16. We have given our thoughtful consideration to the rival submissions and have taken note of the relevant statutory provisions. Law, to bind, must first exist. And to exist, it must be made known in the manner ordained by the legislature. Del....
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....ette, and it is from that date alone that rights may be curtailed or obligations imposed. To hold otherwise, would permit unpublished delegated legislation to burden citizens, a proposition expressly rejected by this Court in long line of decisions referred to supra." 8. We further take note of the fact that in this case, DFIA Scheme is a post export benefit Scheme. In that circumstances, the appellant is not required to fulfill the actual user conditions. The same view has been taken by this Tribunal in the case of Frunuts Exim LLP (supra), wherein this Tribunal has observed as under : "19.............................................Application of 'actual use' to 'postexport' scheme distinguished by 'transferability' in the same manner as intended for 'pre-export' schemes is nothing but rigidity in administration that betrays 'text and context' as the foundation for interpretation. The rigours envisaged for the original schemes needs to be read down contextually as was undertaken by the Hon'ble High Court. 20. 'Actual use' is redundant in the impugned scheme. The objection raised for denial of exemption by the assessing authority, and affirmed by the first app....
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....e Bombay High Court has observed as under : "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." 10. In view of the above observations, we hold that the appellant is not required to fulfill the actual user conditions for import made in DFIA 11. Therefore, we hold that mere Public Notice issued by DGFT, cannot impose the actual condition. In view of that, the actual condition is not binding on the appellant for the import made under DFIA, which was issued post export basis against the Export of Assorted Confectionary Products covered by Standard Input Output Norm. Therefore, the goods in question cannot be denied the benefit of exemption claimed by the appellant. Accordingly, the appellant is entitled for the consequential benefit thereof. ....
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.... Court in the case as reported supra. 14. Therefore, we hold that this Tribunal is competent to examine the vires of statutory legislations and having jurisdiction thereof. 15. We find that the appellant further made a request that during the pendency of litigation, the DFIAs could not be utilized and during this period, the validity of the licenses has been expired. Therefore, it was prayed that the appropriate directions be issued to the Respondents/Customs Departments to issue a Certificate to the DGFT, confirming the aforesaid conditions, so as to enable them to seek revalidation of the DFIAs. 16. We find that the similar issue came before the Punjab & Haryana High Court in the case of Pushpanjali Floriculture Pvt. Ltd. (supra), wherein the Hon'ble High Court has observed as under : "44. It is seen that the DFIA is issued with a limited validity of 24 months. Due to the actions of the respondents the DFIAs could not be utilised by the petitioner. The Hon'ble Supreme Court in the matter of Sandeep Exports Ltd., 2004 (9) SCC 128 = 2004 (164) E.L.T. 133 (S.C.), had directed the respondents to issue certificate for the purpose of revalidation of expired licenses d....