Custom, Excise & Service Tax Tribunal
Unibourne Food Ingredients Llp vs Mundra on 17 March, 2022
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Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO. 3
CUSTOMS Appeal No. 10084 of 2022
CUSTOMS Miscellaneous (Stay) Application No. 10041 of 2022
(Arising out of VIII-48-2083-UNIVOURNE-GR-I-MCH-021-22 Dated-16/02/2022 passed by
Commissioner of CUSTOMS-MUNDRA)
UNIBOURNE FOOD INGREDIENTS LLP ........Appellant
301 Neelkanth Corporate Park Vidyavihar West
Mumbai, Maharashtra
VERSUS
C.C.-MUNDRA ........Respondent
Office of the Principal Commissionerate of Customs, Port User Buld. Custom House Mundra, Mundra, Kutch Gujarat-370421 APPEARANCE:
Sh. Amit Laddha, Advocate along with Sh. Hardik Modh and Sh.Prakash Shah, Advocates for the Appellant Shri G. Kirupanandan, Authorised Representative for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) HON'BLE MR. RAJU, MEMBER (TECHNICAL) Final Order No. A/ 10255 /2022 DATE OF HEARING: 07.03.2022 DATE OF DECISION:17.03.2022 RAMESH NAIR This appeal and Stay application has been filed by M/s. Unibourne Food Ingredients LLP against the impugned decision of the Commissioner of Customs, Mundra as conveyed by the Dy. Commissioner of Customs, Custom House, Mundra vide Letter No. VIII/48-2083/Unibourne/Gr.I/MCH/2021-22 dated 16.02.2022, rejecting the claim for duty free benefits for their imported goods of Vital Wheat Gluten Flour under Custom Notification No. 19 of 2015.
1.1. The brief facts of the case is that the appellant has imported Vital Wheat Gluten classifiable under CTH 11090000 and claimed exemption from Basic Customs Duty (BCD) by producing a Transferable DFIA License No. 0311010834 dated 24.01.2022 issued against Export of Biscuits as per SION E-5. The appellant sought duty free benefits for their imported goods of vital
2|Page C/10084/2022 C/Stay/10041/2022-DB wheat gluten against the description of Wheat Flour (CTH 11010000) as mentioned in the DFIA. The case of the department is that the appellant is not entitled to claim DFIA benefits against the DFIA produced by the appellant which allows only Wheat Flour (11010000) and not Wheat Gluten (11090000) imported by the appellant. The Commissioner of Customs, Mundra conveyed the decision through Dy. Commissioner of Customs by rejecting the claim of the appellant by holding that benefit is applicable only on import of Wheat Flour (11010000) and not Wheat Gluten flour as claimed by the appellant. It is pointed out that in the DFIA submitted, only the product description mentioned as Wheat Gluten Flour, however CTH for the same is not mentioned and further pointed out that the appellant has not produced any evidence to show that Wheat Gluten is actually used in the export product which is mandatory as per FTP to avail the benefit.
2. Shri. Amit Ladda, Learned Counsel along with Shri. Hardik Modh and Shri. Prakash Shah, Advocates appearing on behalf of the appellant submits as follow:-
2.1. It is submitted that the appeal is maintainable under section 129A (1) of the Customs Act, 1962 as per the ratio laid down in:-
1) Unibourne Food Ingredients LLP Vs. Commissioner of Customs, Jamnagar - Final Order No.
2) Sterlite optical Technologies Vs. Commissioner of Customs (Export), ACC, Mumbai - 2008 (226) ELT 69;
3) Swiber Offshore Construction Pvt. Ltd., Vs. Commissioner of Customs, Kandla 2014 (301) ELT 119 (Tri-Ahd).
2.3. It is submitted that the appellant has imported Vital Wheat Gluten Flour on the strength of a Transferable DFIA No. 031011010834 dated 24.01.2022 which clearly mentions 'Wheat Gluten Flour' under the description of Wheat Flour in the said authorisation. It is submitted that Vital Wheat Gluten is well covered by description, quantity & within the value of the DFIA produced by the appellant.
2.4. It is submitted that the decision to reject the claim was contrary to the binding judicial precedents on the same issue. It is submitted that DFIA
3|Page C/10084/2022 C/Stay/10041/2022-DB produced by the appellant clearly mentions Wheat Gluten Flour under the description of Wheat Flour , which itself is an evidence to show that Wheat Gluten flour and wheat flour are actually used in the Export Goods. As regards the contention, that the ITC (HS) No of Wheat Gluten Flour is not mentioned in the DFIA for claiming DFIA benefits, it is submitted that there is no such condition either in the DFIA License nor there is any stipulation in the foreign trade policy or hand book of procedure.
2.5. It is submitted that Wheat Flour/Wheat Gluten Flour is a specific input and therefore the mandate contained in the aforementioned Para 4.12 (i) and 4.12 (ii) of Custom Notification No. 19/2015 read with the provisions of the corresponding of FTP - 2015-2020 has no application in the present case. It is submitted that the declaration of actually used inputs as per the provision of Para 4.12 (i) and further declaration of actual proportionate quantities used in the Export product as provided under Para 4.12 (ii) of FTP - (2015-
20) are not required to be mentioned, for inputs which are not covered by Generic Input or alternative inputs . The said provision of Para 4.12 (ii) shall apply only , 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 these inputs actually used/consumed in production of export product for claiming entitlement under DFIA Scheme. It is submitted that in the present case, the input is specific with a single quantity as mentioned in the SION and therefore none of the aforementioned conditions shall apply in the present case.
2.6. It is submitted that in identical cases, this Tribunal has allowed import of Wheat Gluten covered by description of Wheat Flour under Transferable DFIAs. Reliance has been placed on the following orders:-
Unibourne Food Ingredients LLP Vs. Commissioner of Customs, Jamnagar (Preventive) - Final order No. A/11366/2020 dated 08.12.2020 ;
Uni colloide Impex Vs. Commissioner of Customs, Mumbai- A/85672-85676/2020 dated 11.06.2020;
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Uni Colloide Impex Vs. Commissioner of Customs, Ahmedabad- 2014(310) ELT 583 (Tri-Ahd).
It is submitted that the order was subsequently accepted by the department and allowed DFIA benefits for the import of Wheat Gluten covered by the description of Wheat flour 2.7. It is submitted that under post transferability of DFIA, there is no actual user condition exists in the DFIA License issued under Custom Notification No. 19 of 2015.
Reliance is placed on the judgement of Hon'ble Bombay High Court (Nagpur) in the case of Shah Nanji Nagsa Ltd., Vs. UOI - 2019 (367) ELT 335.
2.8. It is submitted that there is no Actual condition mentioned in the DFIA. As per Para 4.27 (iv) no DFIA would be issued where there is a pre-import condition or SION prescribes AU condition. None exists in the present case. It is submitted that the imported goods are not sensitive items as specified under Para 4.30 of FTP and therefore no correlation is required for technical specification, quality and characteristics of the imported goods and inputs used in export product as per Board Circular No. 46 of 2007. It is submitted that as per Policy Circular No. 72 of 2008, flexibility is given for import of alternative inputs which are either used or required for use in manufacturing of goods.
3. Shri. G. Kirupanandan, Learned Superintendent (AR) appearing for the revenue submits that the Revenue's contention is that the benefit of notification is available only when the conditions of notification are satisfied. Reliance is placed upon the judgement of Hon'ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs. Dilipkumar & Co., wherein it was inter alia held that exemption of notification should be interpreted strictly, the burden to proving applicability would be on the assesse to show that his case comes within the parameters of the exemption clause or exemption notification. In the present case, the appellant has failed to satisfy the description of goods and therefore the benefits of notification no. 19 of 2015 has been correctly denied.
4. We have heard both the sides and perused the records. By the impugned decision dated 16.02.2012, Commissioner of Customs has denied the DFIA
5|Page C/10084/2022 C/Stay/10041/2022-DB exemption benefit under notification no. 19 of 2015 to the appellant. The appellant has imported Vital Wheat Gluten and claimed Basic Customs Duty Exemption against the product description Wheat Flour (ITC HS No. 11010000), which is appearing under serial no.1 of the list of import goods against Export of Biscuits as per SION E-5. DFIA produced by the appellant before the customs is a transferable license issued against Export of Biscuits as per SION E-5. Once the DFIA is made transferable, the Exporter is permitted to transfer the inputs to any third party as per the provisions of Para 4.29 of the FTP- 2015-2020. Both wheat gluten and wheat gluten flour is mentioned in the DFIA. Therefore, it can be fairly accepted that both wheat flour and wheat gluten is used for manufacturing Biscuits which is Exported. Since both the inputs are used in the resultant export goods, the licensing authorities have correctly issued the DFIA to that extent. The department is also not disputing this aspect except for the sole contention that the ITC (HS) Number of wheat gluten flour is not mentioned in the DFIA. The appellant has relied upon decisions of coordinate benches of the Tribunal on the very same issue. The Tribunal on all these occasions has taken a consistent stand by holding that Wheat Gluten is covered by the description of Wheat Flour. As such no different view can be taken and are bound to follow the ratio laid down in that case as judicial precedent. That for claiming DFIA benefit, under Notification No. 19 of 2015, the appellant is only required to satisfy the description , value and quantity mentioned in the DFIA. The imported goods are covered within the description, value and quantity of the DFIA. Therefore the submission that the appellant has not satisfied with the conditions of Notification is not correct. There is no such condition either in the policy or in the procedure or in the notification no. 19 of 2015 which stipulates that ITC (HS) No. is a criteria for claiming DFIA benefits as held by this Tribunal in the case of USMS Saffron Co. Inc Vs. Commissioner of Customs, ACC, Mumbai vide Final Order No. A/3627/15/CB dated 30.09.2015. Under Exemption Notification No. 19 of 2015, "Materials" has been defined as "raw materials, components, intermediates, consumable, catalysts and parts which are required for manufacture of resultant product" . The Hon'ble Supreme Court in the case of Commissioner of Customs, Kolkota Vs. G.C.Jain
- 2011(269) ELT 307 (SC) has inter alia held that 'the term used as 'material" required for manufacture of export products would encompass such entities also which are not only directly used or usable as such in the manufacturing processes but also which could be used with same processing" This Tribunal in the case of Unicolloide Impex Vs. Commissioner, Mumbai in Final order dated 11.06.2020 (supra)
6|Page C/10084/2022 C/Stay/10041/2022-DB has accepted the contentions of the appellant that the import of 'wheat gluten' as 'flour' stood settled by the decision of the Tribunal in Uni colloide Impex Vs. CC, Ahmedabad (2014(310)ELT 583 (Tri-Ahd) (supra) and that two orders dated 12th September 2011 and 16th December, 2011 , of Commissioner of Customs (Appeal), having taken this view could not be reopened by the adjudicating authority as these had been accepted as legal and proper in review proceedings prescribed by the statute.
4.1 As regards, the question of compliance of Para 4.12 (i) and (ii) of FTP, it is fairly agreed that Wheat Flour/Wheat Gluten are specific items and not Generic or alternative inputs . The aforementioned paras shall be applicable only for items described in Generic terms or alternative entries as mentioned in the SION. A single quantity is mentioned in the DFIA. The provision of Para 4.12 (ii) of FTP can be applied only when SION prescribes alternative inputs with relevant quantities, which shall be allowed in proportion to the quantities actually used in export product. No such inputs or quantities are mentioned against the input item. Therefore the above provision cannot be applied in the present case.
4.2 As per Board Circular No. 46 of 2007 and DGFT Circular 50 of 2008, no correlation is required for technical characteristics/quality and technical specification between imported goods and export goods unless item is specified under Para 4.55.3 of HBP (New Para 4.30 of FTP). Neither Wheat Flour nor Wheat Gluten Flour is a specified item under Para 4.30 of FTP. It is settled law that Board Circulars are binding on the department. Further DGFT Policy Circular 72 of 2008 allows import of alternative inputs either used or capable of using in the export goods. In this case, it is evident from the DFIA that the Exporter has used both Wheat Gluten as well as Wheat Gluten Flour in the Export goods i.e. Biscuits.
4.3 With respect to the actual use of goods in the export product for claiming DFIA benefits, it has already been answered by the Hon'ble Bombay High Court in the case of Shah Nanji Nagsi Export Ltd., Vs. UOI - 2019(367) ELT 335 (Bom) This Tribunal has followed the said Order in the appellant's own case (supra).
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5. As per our above discussion and finding, we are of the considered view that the impugned order is not sustainable.
6. Accordingly, the impugned order is set aside. The appeal is allowed. MA also stand disposed of.
(Pronounced in the open court on 17.03.2022) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) PRACHI