ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 16.08.2025
CESTAT Mumbai- Customs Cannot Deny DFIA and AA Exemptions Once DGFT Confirms Export Obligation
In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has set aside the duty demand and penalties imposed on M/s. โ Tejus, a Surat-based importer, in connection with alleged misuse of Duty-Free Import Authorization (DFIA) and Advance Authorization (AA) schemes. โ The case, which revolved around the interpretation of export obligation and post-importation conditions, has brought clarity to the jurisdictional limits of Customs authorities in such matters. โ
Background of the Case
M/s. Tejus, holding Import Export Code (IEC) No. โ 349001499, had obtained DFIA and AA licenses for importing polyester filament yarn (PFY) and textured filament yarn (TFY). โ The Directorate of Revenue Intelligence (DRI) alleged that the company had diverted imported goods to the local market without fulfilling the actual user conditions. โ Following an investigation, the Commissioner of Customs (Export), Raigad, confirmed a duty demand of โน5.21 crore, along with penalties and redemption fines, citing violations of the Customs Act, 1962. โ
The appellant challenged the order, arguing that the Customs authorities lacked jurisdiction to demand duty once the Export Obligation Discharge Certificate (EODC) was issued by the Directorate General of Foreign Trade (DGFT). โ The appellant relied on precedents set by the Supreme Court and Bombay High Court, which held that Customs authorities cannot refuse exemptions based on allegations of misrepresentation if the licensing authority has not questioned the validity of the license.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Source: CESTAT Mumbai
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