Subsequent suspension cannot affect duty free import as DFIA license was valid at the time of import

Wadhwani Commodities Trading Vs Commissioner of Customs (CESTAT Kolkata)

CESTAT Kolkata held that activity undertaken by the appellant as calibration tests and upgradation/configuration of the appliances according to the requirements/specifications of the customers, does not amount to manufacture as no new product came into existence. Hence, demand unsustained.

Facts- Intelligence was gathered to the effect that one exporter, namely Maa Jawala Enterprises was in the process of shipping four export consignments to Malaysia under Duty Free Import Authorization scheme (DFIA) through Haldia dock by resorting to mis-declaration of description, quantity and value of goods. Intelligence further suggested that Shri Alok Kedia, son of Shri Ram Narayan Kedia was the key person involved in the fraudulent export activities.

Post detailed investigation, it revealed that M/s Maa Jawala Enterprises has obtained 18 licenses under DFIA against fraudulent exports of betel nut powder, out of which, 13 were made transferable and sold to the appellants/importers. Against those DFIA License, the appellants had imported betel nut split claiming exemption from payment of duty for some cases on execution of bond and bank guarantee. Therefore, it was alleged against the appellant that they are not entitled to claim the exemption of payment of Customs duty against the above said 13 DFIA License, which has been obtained by M/s Maa Jawala Enterprises against the fraudulent exports of betel nut power. Therefore, the duty has forgone.

Conclusion- At the time of importation, the DFIA license against which the appellants have affected the duty free import of betel nut (split) were valid and made transferrable by DGFT, therefore, relying on the decision in the case of M/s Neev Trading Company, we found that the subsequent suspension cannot affect the duty free import made by the appellants as on the date of import license was valid and made transferable by DGFT.

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