TMI Blog2014 (5) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner (Appeals) in the instant case has therefore clearly erred in ignoring the settled position. These decisions and clarifications backed by technical literature which are available on record, leave no room for doubt that Wheat Gluten under import is Wheat Flour with specific technical characteristics. Once it is concluded that the imported goods are covered under the scope and ambit of permissible item ‘Wheat Flour’, and also that it was capable of being used in the manufacture of ‘Biscuits’, it is to be seen whether exemption could still be denied on the ground of nexus and Public Notice no. 35 dated 30.10.2013 - Apart from the DGFT’s Circular 72/2008 and CBEC’s Circular 46/2007-Cus, relevant portion of which is extracted, which have been according to us rightly relied upon by the appellants, we note that it is settled law that when the import is against the transferred DFIA (Licence) it is not necessary to establish that the material imported was actually used in the export product unless the resultant product figures in the sensitive list and the theory of broad nexus being settled by Apex Court - The fact situation in the instant case is also similar. Exemption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e placed on record. 3.2 A BE Query Report dated 17.2.2014 was issued by the proper officer, the text of which is as hereunder:- Per DGFT Policy Circular No. 13 dated 31/1/2011 SION norms Sr. No. E 5 for Biscuits do not include Gluten. Please clarify the same. You are requested to produce the undertaking for authorization holder; Wheat gluten has been used in export product. i.e. Biscuits if the undertaking not the DFIA will be denied. 3.3 The undertaking referred to in the query memo related to the undertaking mentioned in Para 2 of the DGFT s Public Notice 35 dated 31.10.2013 which states that in case where exports are fully or partly completed before 01.08.2013, the corresponding import of inputs which were actually used in the export product shall be allowed subject to the undertaking from the authorization holder. Since the query was in the nature of a decision, an appeal was preferred thereagainst before the Commissioner of Customs (Appeals), who entertained the appeal. When the matter was posted for hearing before the Commissioner (Appeal) on 19.03.2014, a detailed order-in-original dated 18.03.2014 was produced by the departments representative befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Customs notification referred to above are fulfilled. (v) The DFIA in question was issued on 30.05.2012. It is settled law that the policy provisions prevailing on the date of issue of a licence shall govern the rights and liabilities under the licence in terms of the provisions contained in Para 4.2.2(b) of the FTP. Subsequent amendments to the Policy cannot take away the right which accrued on the date of issue of the licence since the government has no power to amend the Policy retrospectively as held by the Courts. (vi) The appellant disputed applicability of the DGFT s notification no.31 dated 01.08.2013 which amends the Policy with effect from 01.08.2013 as also of PN 35 dated 31.10.2013 which allows only those inputs which have been specifically indicated in the shipping bill at the time of discharge of export obligation (EODC) or at the time of redemption. (vii) The DGFT s Policy circular (PC) no. 13 dated 31.01.2011 which says that import of gluten is not permissible under SION E-5 for biscuits does not constitute to be a legal basis to deny the duty free benefit unless there is a corresponding amendment of the SION E-5 to delete import of wheat Gluten. The same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt s reliance on the DGFT s Circular 72/2008 and CBECs Circular 46/2007-Cus is not well placed. DGFT s Circular 72/2008 is not applicable in this case because of another Circular No. 13 dated 31.01.2011 which specifically excludes wheat gluten as an item of import against export of biscuits. (ii) Para 3 of the Circular No. 46/2007- Cus says that cases where SION is applicable are excluded from the preview of the circular. In this case the SION has been notified and hence the circular 46/2007-Cus is not applicable. ((iii) The appellant s contention that in the absence of a corresponding amendment to the SION disallowing the import of wheat gluten on the line of amendment carried out through PN No. 93(RE-2010/2009-14) on 1st February 2012 to disallow the import of sweeteners shows that the import of gluten could not be disallowed only on the basis of the circular is incorrect since the DGFT vide Circular no. 13 has clarified what evidently is the legal position viz. not to allow Wheat Gluten under the entry wheat flour. The matter being so clear, no PN was required to be issued. (iv) Though the term Wheat flour is not defined in the Policy, the term wheat flour should be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actually used or are capable of being used in the export product, the exporter has the flexibility to import the alternative input / product mentioned in the SION. 2. Similar Policy Circular 30 (RE-05)/2004-09 dt. 10.10.2005 in DFRC scheme 3. Policy Circular No. 13 (RE-2010)/2009-14 dated 31/1/2011 - SION norms Sr. No. E 5 relied upon in the BE Query Report 4. Policy Circular 3 (RE-2013)/ 2009-14 dt. 2.8.2013 concerning Withdrawal of Policy Circular 30 dt. 10.10.2005 concerning alternative inputs. 8. We have also noted the CBEC Circular 46/2007-Cus dated 20.12.2007, wherein it was clarified that- 3. It is, therefore, clarified that except for the items specified in paragraph 4.55.3 of the Handbook of Procedures, Vol. I 2004-09, in all other cases a correlation between the inputs under import with those used in the exported product is not required to be established and that clearance under DFIA scheme may be allowed if other conditions of the scheme and Customs notification referred to above are fulfilled. Whether Wheat Gluten is Wheat Flour: 9. So far as the issue as to whether or not the item Amygluten 160 (Wheat Gluten) is Wheat Flour, it is see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no endorsement on the same restricting the scope of Item no. 1 i.e. Wheat Flour, to exclude from its ambit Wheat Gluten which is also Wheat Flour with specific technical characteristics . Thus, neither the SION norms nor the DFIA imposes any restriction on the type of Wheat Flour. It is settled law as held by the Hon ble Bombay High Court in the matter of Narendra Udeshi 2003 (156) E.L.T. 819 (Bom.) that by way of Circulars and Public Notice, restrictions and prohibitions in imports under licence cannot be imposed. The said judgment was upheld by the Hon ble Supreme Court in U.O.I. v. Narendra Udeshi - 2003 (158) E.L.T. A275 (S.C.). Further, in Sandur Micro Circuits Ltd., 2008 (229) E.L.T. 641 (S.C.) it was held that- 5. The issue relating to effectiveness of a Circular contrary to a Notification statutorily issued has been examined by this Court in several cases. A Circular cannot take away the effect of Notifications statutorily issued. In fact in certain cases it has been held that the Circular cannot whittle down the Exemption Notification and restrict the scope of the Exemption Notification or hit it down. In other words it was held that by issuing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l against said judgment was dismissed. In CC, Chennai v. Salem Stainless Steel - 2001 (131) E.L.T. 30 (Mad.), the Hon ble Madras High Court held that nexus need not be established because the question of nexus would arise only when obligation of the exporter exists and the petitioner as a purchaser of the licenses after discharge of the obligation of export is not required to establish the nexus. The Hon ble Supreme Court in the matter CC (Imports), Mumbai v. Hico Enterprises - 2008 (228) E.L.T. 161 (S.C.) held that the Customs Department cannot compel the appellant-importer who are the transferee to once again prove that the export obligation has been fulfilled by the original license holder in accordance with the notification. With this clear exposition, it is emphatically clear that in case of transferable license the nexus between the imported material and export product is not required to be proved afresh by the transferee/importer, once the imported material is otherwise covered by the advance license. In view of this authoritative judicial pronouncement, the department cannot now loosely interpret the provisions under scheme by reading several contrasting instructions is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government to amend the Export and Import Policy with retrospective effect: In exercise of the powers conferred under section 5 of the Foreign Trade (Development and Regulation) Act, 1992, the policy can be amended however any oppressive amendment to the Policy is applicable only prospectively, as repeatedly held by Courts that the Government has no powers under the section 5 of the FT (D R) Act, to amend the policy retrospectively. In our view, even in the context of Public Notice, the ratio laid down by the Hon'ble High Courts in the case of Narendra Udeshi (supra) and Sandur Micro Circuits Ltd (supra) will apply in full force. When we are faced with a situation of choosing between binding precedents of higher judicial fora needs to be given precedence and followed. However, as against the said binding precedents, the Public Notice no. 35 dated 31.10.2013 seeks to apply the Notification no. 31 dated 1.8.2013 retrospectively, to make the conditions applicable, even to the licenses issued prior to the amendment. We are bound by these binding precedents and we cannot ignore them to deny exemption to item covered under the DFIA issued prior to ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DGFT authorities and having missed the bus at the time of export, it may not be correct to insist on specifications from a transferee of DIFA. Further we also take note of the fact that DGFT is supposed to ensure that all the requirements have been fulfilled before allowing transferability. 6. The above findings recorded by the Tribunal is based on the documentary evidence. Even during the course of hearing, the learned counsel appearing for the Revenue was unable to point out from any of the documents available on record that the import was not in accordance with the licence conditions or the specifications provided therein. The view taken by the Tribunal is in accordance with the law laid down by this Court in the case of A.V. Industries v. Union of India, 2005 (187) E.L.T. 9 (Bom.) to which one of us (V.C. Daga, J.) is party. The Appeal is therefore dismissed for want of substantial question of law with no order as to costs. The fact situation in the instant case is also similar. Exemption under DFIA under Notification No. 98/2009-Cus.dated 11.9.2009 would thus be available. 16. In view of the foregoing findings and authentative judicial pronouncements, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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