𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #DFIA

Bombay High Court Ruled on Customs Duty Exemption for Saffron Imports under Duty Free Import Authorisation
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 22.05.2026

Bombay High Court Ruled on Customs Duty Exemption for Saffron Imports under Duty Free Import Authorisation

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

A recent judgment by the Bombay High Court has clarified important legal issues surrounding the import of saffron under Duty Free Import Authorisations (DFIA) and the application of customs duty exemptions. This article provides a comprehensive overview of the case, the arguments presented, and the implications for importers and customs authorities.

Background of the Case

The case involved M/s USMS Saffron Co. Inc., which imported saffron by availing the benefit of Notification No. 98/2009-CUS dated 11th September 2009, claiming exemption from customs duties. The imports were made under DFIAs, which are licenses allowing duty-free import of inputs used in the manufacture of export products, as per the Standard Input and Output Norms (SION).

Key Issues Raised
1. Validity of Duty-Free Import Authorisations (DFIA):
  - The customs authorities challenged the use of DFIAs for importing saffron, arguing that the authorisations were issued against the export of assorted confectionery and biscuits, and that the actual use of saffron in these products was not proven.
  - The authorities cited amendments to SION norms, which required the actual quantity of saffron used in the export product to be mentioned in the shipping bill.
2. Alleged Violations:
  - The customs department alleged that the importer violated Rule 14 of the Foreign Trade (Regulation) Rules, 1993, and conditions in Public Notice No. 84/23.07.2010.
  - It was argued that the importer suppressed facts to wrongfully avail duty exemptions, leading to the issuance of a Show Cause Notice and invocation of Section 28 of the Customs Act.
Arguments by Both Sides
- Customs Authorities:
  - Claimed that the importer failed to prove actual use of saffron in the exported products, making the duty-free clearance impermissible.
  - Argued that the benefit of the exemption notification should not be available due to non-compliance with SION and related procedural requirements.
- Importer (USMS Saffron Co. Inc.):
  - Contended that the DFIA did not contain any specific restriction on saffron imports.
  - Pointed out that the licensing authority did not insert any entry restricting saffron, and therefore, the import and clearance at nil duty were valid.
  - Emphasized that there was no fraud or suppression of facts.
High Court’s Analysis and Decision
- The High Court reviewed the findings of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had ruled in favor of the importer.
- The court noted that the DFIA in question did not contain any entry restricting saffron imports, and the licensing authority had not imposed any such condition.
- It was held that in the absence of explicit restrictions or amendments to the authorisation, it was not permissible to infer additional conditions.
- The court found no evidence of fraud or suppression and concluded that the Tribunal’s findings were not perverse or legally erroneous.
- As a result, the appeals by the customs authorities were dismissed.
Implications of the Judgment
1. Clarity on DFIA Conditions:
  - Importers can rely on the explicit terms of their DFIAs. If no restriction is mentioned, customs authorities cannot impose additional conditions by inference.
2. Importance of Documentation:
  - Both importers and authorities must ensure that all relevant conditions and restrictions are clearly documented in the authorisation at the time of issuance.
3. Legal Certainty:
  - The judgment reinforces the principle that tax and duty liabilities must be based on clear legal provisions, not on inferred or implied conditions.
Conclusion

This judgment provides much-needed clarity on the use of DFIAs for importing inputs like saffron and the application of customs duty exemptions. It underscores the importance of precise documentation and adherence to the explicit terms of authorisations, benefiting both importers and regulatory authorities.

Connected Matter

MP High Court Upholds Duty-Free Import Benefits Under DFIA Scheme

Source: Bombay High Court

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May 22, 2026
Punjab & Haryana High Court Upholds DFIA Conversion Under Section 149 of Customs Act
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 03.01.2026

Punjab & Haryana High Court Upholds DFIA Conversion Under Section 149 of Customs Act

This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

On February 15, 2023, the Punjab and Haryana High Court delivered a significant judgment in the case of Commissioner, Customs ICD, GRFL vs. Mrs. Bectos Food Specialities Ltd. This case revolved around the conversion of Duty Drawback shipping bills to Duty-Free Import Authorization (DFIA) Scheme, a matter that has been a subject of legal contention for years. The judgment not only upheld the rights of exporters but also clarified the legal position regarding the time limit for such conversions under Section 149 of the Customs Act, 1962.

Background of the Case

The respondent, Mrs. Bectos Food Specialities Ltd., is a manufacturer of biscuits and cookies, exporting goods under the Duty Drawback Scheme. The dispute arose due to a notification dated August 1, 2013, which mandated that inputs used in the manufacture of export products under the DFIA Scheme must be imported and utilized in the export of goods. This notification led the respondent to export goods under the Duty Drawback Scheme during the period from November 13, 2013, to November 20, 2015.

However, the notification was later declared ultra vires by the Punjab and Haryana High Court in the case of M/s Pushpanjali Floriculture Pvt. Ltd vs. Union of India (2016). Following this, the respondent applied for the conversion of their exports from the Duty Drawback Scheme to the DFIA Scheme. The application was rejected by the Adjudicating Authority based on the Central Board of Excise and Customs (CBEC) Circular dated September 23, 2010, which imposed a time limit for such conversions. The respondent then filed an appeal before the Appellate Tribunal, which ruled in their favor, allowing the conversion subject to the reversal of benefits taken under the Duty Drawback Scheme along with interest.

Key Legal Question

The primary question before the High Court was whether the conversion of Duty Drawback shipping bills to DFIA Scheme could be allowed, especially when the application for conversion was rejected on the grounds of limitation as per the CBEC Circular.

Court’s Observations

The High Court referred to Section 149 of the Customs Act, 1962, which allows amendments to import/export documents at the discretion of the proper officer, provided the amendment is based on documentary evidence that existed at the time of export or import. Importantly, the Court noted that Section 149 does not prescribe any time limit for such amendments.

The Court also referred to the judgment of the Gujarat High Court in the case of M/s Lykis Limited vs. C.C. Mundra and M/s Mahalaxmi Rubtech Ltd. vs. Union of India, which had attained finality. In these cases, the Gujarat High Court held that the time limit prescribed by the CBEC Circular was merely procedural and could not override the statutory provisions of the Customs Act. The Court emphasized that any policy or circular imposing a time limit for conversion of shipping bills is ultra vires if it contradicts the Customs Act.

Key Takeaways from the Judgment
1. No Time Limit for Conversion Under Section 149: The Court reiterated that Section 149 of the Customs Act does not prescribe any time limit for the conversion of shipping bills. Any circular or policy imposing such a limitation is not legally binding.
2. Precedents from Gujarat High Court: The Punjab and Haryana High Court relied heavily on the judgments of the Gujarat High Court, which had already ruled in favor of exporters in similar cases. These judgments have set a precedent that time limits imposed by circulars cannot override statutory provisions.
3. Rights of Exporters: The judgment is a significant win for exporters, as it ensures that they can seek conversion of shipping bills without being restricted by arbitrary time limits set by non-statutory circulars.
4. Dismissal of Appeal: The High Court dismissed the appeal filed by the Customs Department, upholding the Appellate Tribunal’s decision to allow the conversion of shipping bills from Duty Drawback Scheme to DFIA Scheme.
Implications of the Judgment

This judgment has far-reaching implications for exporters and the Customs Department. It reinforces the principle that statutory provisions take precedence over procedural guidelines issued through circulars. Exporters who face similar issues can now rely on this judgment to seek conversion of their shipping bills without being constrained by time limits that are not explicitly mentioned in the Customs Act.

Moreover, the judgment highlights the importance of judicial precedents in shaping the interpretation of laws. By referring to the Gujarat High Court’s rulings, the Punjab and Haryana High Court has ensured consistency in the application of legal principles across jurisdictions.

Conclusion

The Punjab and Haryana High Court’s decision in the Commissioner, Customs ICD, GRFL vs. Mrs. Bectos Food Specialities Ltd. case is a landmark ruling that upholds the rights of exporters and clarifies the legal position on the conversion of shipping bills under Section 149 of the Customs Act, 1962. By dismissing the appeal of the Customs Department, the Court has set a precedent that will benefit exporters and ensure fair treatment under the law. This judgment is a testament to the judiciary’s role in safeguarding the interests of businesses and ensuring that statutory provisions are not undermined by procedural guidelines.

Source: Punjab & Haryana High Court

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January 3, 2026
Madras High Court Quashes Customs Orders on Wheat Gluten Import Under DFIA
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 17.11.2025

Madras High Court Quashes Customs Orders on Wheat Gluten Import Under DFIA

This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

The Madras High Court, in a significant ruling on October 15, 2025, quashed multiple orders issued by the Additional Commissioner of Customs, Chennai II Commissionerate, regarding the import of Wheat Gluten under Duty-Free Import Authorisation (DFIA). The judgment, delivered by Honourable Justice, addressed a series of writ petitions filed by M/s. Parry Enterprises India Limited and M/s. Fame Shipping Agency, challenging the orders that denied duty exemption on imported Wheat Gluten.

Background of the Case

M/s. Parry Enterprises India Limited, engaged in importing and trading Wheat Gluten, and its licensed Custom Broker, M/s. Fame Shipping Agency, filed writ petitions against the Additional Commissioner of Customs. The dispute arose when the petitioners imported Wheat Gluten under DFIA, claiming exemption from customs duty as per a notification dated September 11, 2009. The DFIA was issued for the export of biscuits, and the petitioners argued that Wheat Gluten qualifies as Wheat Flour under the same classification.

The Customs Department, however, contended that Wheat Gluten is not covered under the DFIA license, which only allows the import of Wheat Flour. Consequently, the Department issued show-cause notices, demanding duty, cess, and penalties, and sought to confiscate the imported goods.

Petitioners’ Argument

The petitioners argued that the issue of whether Wheat Gluten qualifies as Wheat Flour had already been settled by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in multiple cases, including Uni Colloids Impex Pvt Ltd. vs. Commissioner of Customs (2014) and Unibourne Food Ingredients LLP vs. Commissioner of Customs, Mundra (2022). In these cases, CESTAT had consistently held that Wheat Gluten is classified as Wheat Flour with specific technical characteristics and is eligible for duty exemption under DFIA.

The petitioners contended that the Customs Department was bound by the decisions of CESTAT and could not take an independent view contrary to the established precedent.

Respondent’s Stand

The Customs Department argued that the petitioners were not entitled to the exemption as Wheat Gluten was not covered under the DFIA license. They further stated that the Department had not appealed against the CESTAT decisions due to monetary limits, but this did not preclude them from raising the issue in other cases. The Department also argued that the petitioners had an alternative remedy of appeal and questioned the maintainability of the writ petitions.

High Court’s Observations and Judgment

Justice rejected the Customs Department’s arguments and emphasized the importance of judicial discipline. The Court held that the Customs Department is bound by the decisions of higher appellate authorities, such as CESTAT, unless those decisions are overturned by a competent court. The Court referred to the Supreme Court’s judgment in Union of India vs. Kamlakshi Finance Corporation Ltd. (1991), which established that revenue officers must follow the orders of appellate authorities unreservedly.

The Court also dismissed the argument regarding the maintainability of the writ petitions, stating that the bar on entertaining writ petitions due to alternative remedies is not absolute, especially when the jurisdiction of the authority passing the orders is challenged.

Key Takeaways from the Judgment
1. Binding Nature of CESTAT Decisions: The Court reiterated that decisions of appellate authorities like CESTAT are binding on assessing officers unless overturned by a higher court.
2. Judicial Discipline: The judgment emphasized the importance of judicial discipline in ensuring consistency and fairness in the administration of tax laws.
3. Writ Petition Maintainability: The Court clarified that the availability of an alternative remedy does not bar the High Court from exercising its jurisdiction under Article 226 of the Constitution, particularly when the authority’s jurisdiction is in question.
4. Wheat Gluten Classification: The Court upheld CESTAT’s consistent stance that Wheat Gluten falls under the same classification as Wheat Flour and is eligible for duty exemption under DFIA.
Conclusion

This landmark judgment by the Madras High Court is a significant win for importers and exporters, as it reinforces the binding nature of CESTAT decisions and provides clarity on the classification of Wheat Gluten under DFIA. The ruling also underscores the judiciary’s role in ensuring that administrative authorities adhere to established legal precedents, thereby preventing undue harassment of businesses and ensuring consistency in the application of tax laws.

Source: Madras High Court

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November 17, 2025
CESTAT Hyderabad Upholds DFIA Exemption on Lithium-Ion Battery Imports
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 21.04.2025

CESTAT Hyderabad Upholds DFIA Exemption on Lithium-Ion Battery Imports

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench – Court No. I has dismissed the Department’s appeal and upheld the exemption granted to M/s Olectra Greentech Ltd. for import of Lithium-ion batteries under a Transferable DFIA (Duty-Free Import Authorisation) scheme.

Background:
- Olectra Greentech imported lithium-ion cells under a DFIA license issued against exports of Agricultural Tractors.
- The customs department denied the benefit of exemption under Notification No. 25/2023-Cus dated 01.04.2023, stating that lithium-ion batteries do not match the export input description of “automotive batteries.”
- The Commissioner (Appeals) had earlier ruled in favor of Olectra, prompting a departmental appeal.
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 Hyderabad

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April 21, 2025