TMI Blog2019 (4) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... ual user condition relates to a person and not to a product. Therefore, the argument advanced by the petitioner regarding actual user condition would not sustain. It is not denied that popcorn maize has also similar starch contents as other varieties of maize, indicating that popcorn maize can be used to manufacture maize starch powder. The scheme never conveys that there is actual user condition attached to the import against the export obligation. It amounts to adding some conditions in the FTP when they never exist. Moreover, when the authorisation is made transferable under the scheme there is no question of actual user condition - 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. As per SION export item at serial No. E 75 is maize starch powder ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated that export shall be completed within the span of twelve months from the date of generation of particular file number. On completion of export and realization of proceeds, one has to apply for issuance of DFIA with the concerned authority. On each transaction, separate DFIA is issued as per the Standard Input Output Norms (SION). On issuance of authorisation the trader will get exemption from paying basic custom duty on the goods allowed to be imported under scheme. 3. The petitioner is a Private Limited Company engaged in the export business. Amongst other commodities, the petitioner is indulging into export of Maize Starch Powder since 2016. The petitioner procures Maize Starch Powder from the manufacturer and exports the same as a merchant exporter under DFIA scheme. 4. The DFIA is issued on post export basis for specified products, which are notified under SION. As per SION, the relevant entry E75 for exporting Maize Starch Powder is reproduced below: Sr.No. Export Item Quantity Import Item Quantity allowed E75 Maize Star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermits use of generic inputs then the name of specific input together with quantity must be endorsed in the relevant shipping bill and it should match description in the relevant bill of entry. 9. Respondent also contended that, it is not commercially viable to manufacture maize starch powder from the imported popcorn which is four times costlier. The petitioner is misusing the DFIA scheme and by importing costlier quality of maize i.e. popcorn, selling it in the domestic market to earn huge profit. It is also informed that now the concerned SION entry has been deleted to prevent the abuse. 10. The authorities have withheld issuance of DFIA licence to the petitioner. The decision, if any, rendered by the adjudicating authority can be challenged by way of appeal as provided under statute. In instant case, the Court has considered the petitioner's grievance on prima facie basis and passed interim order dated 19.04.2018 which is reproduced below: We had heard the learned counsel for the parties for a couple of hours on at least a couple of occasions. We had made certain queries on the previous date of hearing to the learned Assistant Solicitor General of India appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate inputs, the name of specific input should be endorsed in the relevant shipping bills. Therefore, the petitioner who is importing generic inputs i.e. maize, should endorse name of specific input i.e. popcorn maize in shipping bills, in absence it violates the policy condition. Secondly, it is the stand of the Union that the petitioner imported popcorn instead of maize which is much costlier than maize. The petitioner is misusing the authorisation by sale of popcorn in domestic market instead of using for manufacturing the export item. According to respondent it is not commercially viable to manufacture maize starch powder from the imported popcorn which is 4 times costlier. It is also the stand that the import is subject to actual user condition as per policy circular No. 2 dated 14.02.2017 issued by respondent No. 2. 14. Before entering into controversy, it would be apposite to reproduce the relevant provisions of DFIA: 4.25 DFIA SCHEME (a) Duty Free Import Authorisation is issued to allow duty free import of inputs. In addition, import of oil and catalyst which is consumed/utilised in the process of production of export product, may also be allowed. (b) P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production and declared in Shipping Bill/Bill of Export/Tax invoice for supply prescribed under GST rules within overall quantity against such group of inputs. Proportion of these inputs actually used/consumed in production of export product shall be clearly indicated in Shipping Bill/Bill of Export / Tax invoice for supply prescribed under GST rules. (vi) Separate DFIA shall be issued for each SION and each port. (vii) Export under DFIA shall be made from a single port as mentioned in paragraph 4.37 of Handbook of Procedures. (viii) Regional Authority shall issue transferable DFIA with a validity of 12 months from the date of issue. No further revalidation shall be granted by Regional Authorisation. 4.12 Accounting of Input (i) Whenever SION permits use of either (a) generic input or (b) alternative input, unless the name of the specific input together with quantity (which has been used in manufacturing the export product] gets indicated/endorsed in the relevant shipping bill and these inputs, so endorsed, within quantity specified and match the description in the relevant bill of entry, the concerned authorisation will not be redeemed. In words, the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort Policy. It was observed that in relevant appendix there was no classification of coconut oil therefore all varieties of coconut oil should be taken as covered by said term. Precisely, it was observed that the term coconut oil as mentioned should take in its folds all varieties. The Hon'ble Supreme Court in reported case of Commissioner of Central Excise, New Delhi Vs. Connaught Plaza Restaurant Private Limited, New Delhi with connected matter, (2012) 13 SCC 639 , ruled that in the absence of statutory definition in precise terms, words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding or according to their popular meaning. Therefore in absence of any definition, the general meaning of the word is to be construed. 19. The petitioner argued that it is not permissible for respondents to interprate policy condition. In this regard, reliance is placed on reported case of the Commissioner of Customs (Export) Vs. M/s. USMS Saffron Co. Inc. 2016 (344) ELT 161(Bom.). In said case, it is observed that if a particular Authorization does not contain any entry for restricting the item (Saffron), then, by an inferenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be looked upon to understand whether there exist actual user condition. For this purpose, respondents attracted our attention to the general notes for all export products groups . Note 1: 1. The norms have been published in this book with a view to facilitate determination of the proportion of various inputs which can be used or are required in the manufacture of different resultant products. In many cases, the resultant products and the inputs required have been described in generic terms. The applicants shall, therefore, ensure that the goods sought for import and actually imported are those, which are used/required in the export product. The items allowed for import in the licence shall be co related with the description of the export product in the Shipping bill by the exporter to be authenticated by Customs. For example, if the input allowed in the norms is 'relevant fabrics', only the specific types of fabric i.e. polyester or nylon etc. used in the export product shall be allowed. Similarly, if the norms provide for import of BOPP film against export of self adhesive tape, only BOPP film required for manufacture of Self Adhesive Tape will be allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. The respondents relied on the circular dated 14.11.2017 to impress about the actual user condition. It is countered on the point that the circular is in relation to the Advance Authorization Scheme and not about DFIA Scheme. Secondly, it is argued that the circular can not have retrospective effect. In this regard, petitioner relied on reported case of the Commissioner of Customs IV Vs. Lactose (I) Ltd. 2017 (355) ELT 541 (Bom.). In said case, it is ruled that the policy circular would apply only if it is issued prior to the date of issuance of licence meaning thereby it has no retrospective effect. In that light on the basis of circular entitlement cannot be denied. 27. As per SION export item at serial No. E 75 is maize starch powder against which exporter is permitted to import maize without putting any condition or restriction as regards to variety, quality or characteristic in the said entry. Moreover, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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