Customs Cannot Take Independent View Against CESTAT Classification; Wheat Gluten Eligible For DFIA Exemption: Madras High Court

The Madras High Court has held that once CESTAT has classified wheat gluten as eligible for DFIA (Duty-Free Import Authorisation) exemption, Customs authorities are bound by those findings and cannot independently deny the exemption benefits. Justice N. Anand Venkatesh stated that the impugned orders have been passed only on the ground that Wheat Gluten is not covered under the DFIA Licence and, therefore, the assessee is not eligible to claim exemption. If the CESTAT has already taken a view that Wheat flour and Wheat Gluten fall under the same classification, the entire proceedings of the respondent cannot be sustained, since all the other findings hinge upon only this issue. In this case, the assessee/petitioner is engaged in the business of Importing and Trading of Wheat Gluten. The assessee purchased a Duty-Free Import Authorisation (DFIA) issued by the Director General of Foreign Trade for the policy period 2009-2014. The Central Government, through a notification dated 11.09.2009, exempted the materials imported into India against DFIA issued in terms of Paragraph Nos 4.2.1 and 4.2.2 of the Foreign Trade Policy from the whole of the duty of Customs leviable thereon, which is specified in the First Schedule of the Customs Tariff Act, 1975 and the whole of the additional duty leviable therein. In the said notification, it is provided that in respect of the resultant product specified in paragraph No.4.32.3 of the Handbook of Procedures (Vol.I) of the Foreign Trade Policy, the materials permitted to be imported shall be of the same quality, technical characteristics and specifications. The assessee's case is that the imported material, Wheat Gluten, is not specified in Paragraph 4.32.2 of the Handbook, and there is no correlation established for the inputs used in the export product and the imported goods. The assessee imported Wheat Gluten and claimed exemption under the notification dated 11.09.2009 and filed six Bill of Entries. The authorised officers assessed the six Bill of Entries and permitted the clearance of imported Wheat Gluten, without payment of duty by allowing the exemption under notification after debiting the DFIA produced by the assessee. The CESTAT has already taken a decision in many cases that wheat flour and Wheat Gluten fall under the same classification. The issue before the bench was whether the Additional Commissioner of Customs/respondent is bound by the decision taken by CESTAT can ignore the same and take an independent decision. The stand taken by the department is that no appeal was filed against the decision taken by CESTAT, considering the monetary limits. Non-filing of the appeal on monetary limits by itself will not take away the right of the department, and that issue is always left open. The bench opined that the Assessing Officer is bound by the findings rendered by CESTAT. The bench noted that as on today, the decision that was taken by CESTAT to the effect that Wheat flour and Wheat Gluten fall under the same classification, has not been taken on appeal. This is inspite of the fact that if a substantial question of law is involved, it ought to be questioned by the Department if they are aggrieved, irrespective of the monetary limit. Till this position is reversed in the manner known to law, the Assessing Officer is bound by the decision taken by CESTAT. The bench opined that the Additional Commissioner of Customs/respondent, who was bound by the decision taken by CESTAT, cannot be permitted to take a different view. In view of the above, the bench allowed the petition. Case Title: M/s. Parry Enterprises India Limited v. The Additional Commissioner of CustomsCitation: 2025 LiveLaw (Mad) 435 Case Number: W.P.Nos.17912 of 2023 Counsel for Petitioner/Assessee: Hari Radhakrishnan Counsel for Respondent/Department: Rajnish Pathiyil Click Here To Read/Download The Order

Customs Cannot Take Independent View Against CESTAT Classification; Wheat Gluten Eligible For DFIA Exemption: Madras High Court

Mehak Dhiman

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