VKC Nuts Pvt Ltd. Vs C.C. – Jamnagar (Prev) (CESTAT Ahmedabad)
‘Inshell Walnut’ is not only capable of being used but invariably used for manufacture of biscuits as fruit/flavor/dietary fibre. This has been held in appellant’s own case by the Hon’ble CESTAT-Mumbai in Final Order No. A/85730/2020 dated 11.09.2020. Moreover, as per the custom’s lab report dated 08.08.2018 and various technical opinions as discussed above, the Inshell Walnut is used as flavor or fruit/nut or dietary fibre in the manufacture of biscuits/cookies and confectionary. Therefore, there is no dispute that inshell walnut is correctly covered under the description of goods i.e, fruit/flavour/dietary fibre as mentioned in the annexures annexed along with DFIA Scheme as well as specified in SION.
In the case of Shah Nanji Nagsi Exports Pvt Ltd, The Hon’ble Court has rejected the contention of the revenue that the import goods should be actually used in the manufacture of export goods. In other words, actual user condition is not applicable unless it is specifically mentioned therefore, applying the same finding of the Hon’ble Court, in the present case also the contention raised by the revenue that the inshell walnut was not actually used in the export goods has no substance for denying the benefit of DFIA Scheme .The Hon’ble court in Shah Nanji Nagsi Exports Pvt Ltd(Supra) have categorically considered the amended provision of DFIA under Foreign Trade Policy 2015-20 and taken a view that if the input is covered under the description given and even if the input is not used actually in the export product the benefit of DFIA should be extended therefore, all the issues raised by the revenue in the present case have been elaborately dealt with by the Hon’ble Mumbai High Court of Nagpur Bench.
We as per judicial discipline cannot deviate from the ruling made by the Hon’ble High court. Accordingly, the appellant is entitle for DFIA Scheme in respect of import of inshell Walnut.
The imported goods “In shell Walnuts” are not specified under Sensitive items under Para 4.30 of FTP- (2015-2020) of DFIA’s. Therefore the exporter is not required to give a declaration of the technical specification, quality and characteristics of inputs used in the resultant product. The Central Board of Excise & Customs vide Circular No. 46 of 2007 had earlier clarified the above provisions which existed under the previous policy period under Para 4.55.3 of HBP).
It is settled law that Board Circulars are bindings on customs authorities as held by Hon’ble Gujarat High Court in the case of F.S. Enterprise Vs. State of Gujarat reported in 2020(32) GSTL 321 (Guj).
As per Policy Circular No. 72/2008 dated 24.03.2009, flexibility has been given to import alternative inputs or goods which are capable of using in the export product. Therefore inputs which are covered under the description are entitled for DFIA exemption for claiming DFIA benefits by either exporter or transferee or the importer under the Transferable DFIA Scheme. As per Policy Circular No. 22, even a transferee of the license can apply for amendments in ITC (HS) Numbers of the inputs from the regional licensing authorities. Therefore it cannot be said that if the specific name of input in the present case ‘In shell Walnut’ is not mentioned in the licence or in the export shipping bill, benefit of DFIA cannot be extended particularly when the broad description is specified in SION as well as in the annexure to the DFIA licence.
As per our above discussions and findings, we are of the view that in the facts of the present case the appellant is entitle for the benefit of DFIA for import clearance of in shell walnut.
FULL TEXT OF THE CESTAT JUDGEMENT
The issue involved is that whether the appellant is entitled to claim DFIA benefit under Transferable DFIA No. 0310863589 dt. 09.06.2020 & 0310833517 dated 19.03.2020 both issued in terms of Custom Notification No. 19/2015-Cus. dated 01.04.2015 for the import of Inshell Walnut covered under the description of Fruit/Food Flavour/Dietary Fibre against Export of Biscuits as per SION E-5.
2. The brief facts of the case are that the appellant is a transferee of aforesaid two transferable Duty Free Import Authorizations (DFIA) originally issued to Krish Food Industry (India) by the Office of the Director General of Foreign Trade under Foreign Trade Policy for the period (2015-2020) against export of Biscuits from the open market.
2.1. The assessing officer raised a query and sought explanation from the appellant that in respect of inputs referred in para 4.12(i) and (ii) of FTP-2015-20, the material permitted to be imported shall be of specific name/description or quantity which is actually used in the export product and should be mentioned in the relevant Shipping Bills. Further it was mentioned that the appellant cannot seek exemption of single input item, inshell walnut under three different product descriptions viz., Fruit/Flavour/Dietary Fibre.
3. The appellant replied to the said query in detail. However, the revenue rejected the claim on the ground that the appellant has not produced evidence to show that Inshell Walnut is actually used in export product. According to the revenue, only those inputs which are actually used in export product shall be allowed exemption from payment of customs duty in terms of Custom Notification No. 19/2015-cus. The import goods Inshell Walnut is not mentioned in the DFIA against input item description ‘Fruit /Food Flavour/Dietary Fibre”.
3.1. The above decision of the revenue was taken by the Principal Commissioner and the same was communicated through Deputy Commissioner of Customs (Prev) Jamnagar vide letter No. VIII/48-142/Cus-T/2016/2315 dated 30-09-2020 and Joint Commissioner (I/S), Custom House Pipavav vide letter No. VIII/48-01/Cus-T/Misc/2019-20/575 dated 06/10/2020. It is this decision of rejection of DFIA claim, the appellant is aggrieved with, hence filed the present appeal.
4. Shri Hardik Modh, learned counsel appearing on behalf of the appellant submits that in response to the preliminary objection raised by the Learned Authorised Representative that the appeal is not maintainable since it was filed against the letter issued by Joint Commissioner of Customs, he submits that the appeal is maintainable in terms of section 129 (1) of Customs Act, 1962 for the reason that the final decision was taken by the Principal Commissioner of Customs (Prev.) and it is that decision which was communicated by the Joint Commissioner of Customs (Prev.). Therefore, the order which was communicated to the appellant is given by Commissioner of Customs. Therefore, against such order, the appeal lies before this Tribunal. In this regard, he placed reliance on the following judgments:
(1) Sterlite Optical Technologies Vs. Commissioner of Customs (Export) ACC, Mumbai reported in 2008 (226) ELT 0069 (Mumbai)
(2) Unibourne Food Ingredients LLP vs Commissioner of Customs, Hyderabad 2018(364) ELT 254 (Tri- Hyd)
(3) Samrat Houseware Pvt. Ltd. vs Commissioner of Customs (Sea), Chennai-V 2019 (368) ELT 1089
(4) S. Offshore Pvt. Ltd. 2018 (361) ELT 51 (Bom)
4.1 He submits that in view of the above judgments it is settled position that against any decision taken by the Commissioner and communicated by the lower officer to the assessee, the appeal lies before the Tribunal. He further submits that as regard the case law in the case of Commissioner of Customs and Central Excise Vs M.P. Steel Corporation- 2003 (154) ELT 12 (SC), the same has no application in the present case. The said case relates to some internal correspondences between the Superintendent and Collector wherein the Collector took a policy decision on the question of how LDT was to be calculated. Whereas in the instant case, a clear decision was taken by the Principal Commissioner of Customs (Preventive) which was merely conveyed by the Joint Commissioner of Customs (Preventive). He further submits that the case law of M/s Piramal vs. Commissioner of Central Excise, Chennai vide Final Order no. A/40550/2017 dated 30.03.2017 has also no application as in the said case the assessee approached Hon’ble Tribunal against a rejection letter for extending warehouse period. He submits that the contention that the assessing officer is under no legal obligation to follow the decision of higher authorities while discharging the quasi judicial powers vested in the Act is wholly misplaced. The query has been raised at the time of assessment of Bills of Entry. The superior authority i.e. the Principal Commissioner of Customs (Preventive) has denied the duty benefit under DFIA Licenses and has conveyed the same through Joint Commissioner of Customs (Preventive). The Principal Commissioner of Customs (Preventive) has also directed the appellant to pay applicable customs duty for clearance of goods. He further submits that Revenue has relied upon several case laws on the question of whether it is binding on the assessing officer which was cited below:
