By TIOL News Service

MUMBAI, OCT 30, 2015: AN import consignment of 25 Kgs. of Saffron was sought to be Ex Bonded duty free under Notification No. 98/2009-Cus. dt. 11.09.2009 vide Bill of Entry as "Food Flavours" under a DFIA License transferred in appellant's name. This DFIA was issued against SION norm E-1 for the export of assorted confectionary products.

The benefit of DFIA notification was denied by adjudicating authority (upheld by Commissioner(A)) on the basis that the import of saffron as food flavour is permissible only if the same is utilized in the export product, which was not established.

On appeal, CESTAT allowed the appellant the liberty to produce an appropriate licence for release of the goods, before the Customs.

The appellant, thereafter, produced a fresh DFIA License which was issued as per SION E-5 for the export of Biscuits under the description of "Food Flavour” as mentioned in the DFIA. In this license there was no actual user condition.

However, the DC directed the appellant to furnish 100% PD Bond for the value of the goods and 100% Bank Guarantee for the duty foregone for the release of the goods on provisional basis.

As their appeal was rejected, the importer is before the CESTAT.

After considering the submissions made by both sides, the Bench inter alia observed -

"6.2. Para 4.2.2 of the FTP authorizes issue of DFIA and license was transferred after the discharge of export obligation. The License being freely transferable, no actual user condition can be imposed on the transferee who has purchased the License from the open market. The importer therefore is not required to establish the actual user condition in terms of DGFT Policy Circular 50/2008 and CBEC Circular No. 46/2007. We note that in similar cases of same goods, i.e. Saffron, the Orders of Commissioner Appeals allowing such import at Mumbai and Nava Sheva were accepted by the Department and the imports under relevant B/Es such B/E No 5551749 field at ACC Mumbai bear the remarks "Assessed as per Commissioner (Appeal) order accepted by Committee of Commissioner of Customs vide F.No. S/3-Misc-18/2010 DFI ACC”. No appeal having been filed in view of acceptance of this Order, the acceptance by the Committee of Commissioners is binding on officers and any contrary decision amounts to defiance of the decision taken by Committee of Commissioners.Therefore department cannot now impose strict conditions for provisional release when there are Orders of the Tribunal and the Commissioner (Appeals) in favour of the appellant. Therefore the Order imposing 100% Bank Guarantee is not sustainable.

6.3. In our view, the adjudicating authority does not have the authority to impose such conditions for provisional release. This exercise of the power is very arbitrary and suffers from lack of reasonableness in view of the judicial pronouncements in appellant's favour. We further find that the letter of DC date 06.07.2015 stating that appeal has been filed against ‘said' Order has no meaning because CESTAT in the Order dated 20.01.2014 only remanded the matter allowing the appellant to submit a fresh License. The Commissioner (Appeals) has also not appreciated the issue in proper perspective the context of various decisions but has only upheld the right of adjudicating authority to resort to provisional assessment."

Holding that the Order directing the appellant to submit Bond and Bank Guarantee for 100% of the duty amount deserved to be set aside,the Bench directed the Customs to release the consignment within three days of the receipt of the Order by accepting the DFIA in question.

(See 2015-TIOL-2327-CESTAT-MUM)