2026-VIL-1065-CESTAT-KOL-CU
  1. Home
  2. 2026-VIL-1065-CESTAT-KOL-CU

CUSTOMS CESTAT Cases

Customs - Applicability of Actual User Condition in Duty Free Import Authorization (DFIA) Scheme – Appellant-importer, as a transferee of a transferable DFIA issued on a post-export basis against export of assorted confectionary products, imported citric acid and claimed exemption from Basic Customs Duty – Denial of exemption benefit by imposing an actual user condition, which was incorporated into the DFIA through a Public Notice issued by the DGFT - Whether an actual user condition can be imposed on imports made under a post-export DFIA scheme through a Public Notice, and whether such condition is binding on the importer – HELD - An actual user condition cannot be imposed through a mere Public Notice as it constitutes a policy decision that requires promulgation through a Notification published in the Official Gazette, in compliance with the statutory mandate under the Foreign Trade (Development & Regulation) Act, 1992. The DFIA scheme, being a post-export benefit scheme distinct from the Advance Authorization scheme, does not have an actual user condition inbuilt within it - The Rajasthan High Court in Nrapen Shanker Acharya v. Union of India, established that pre-import conditions and actual user conditions under Chapter 4 of the Foreign Trade Policy can only be imposed through a Notification in the Official Gazette. The Supreme Court decision in Viraj Impex Pvt. Ltd. v. Union of India further establishes that delegated legislation must be published in the Official Gazette to acquire the force of law, and that once the legislature prescribes a specified mode of promulgation, the executive cannot introduce an alternative mode - There is no actual user condition inbuilt in the DFIA scheme since it is a post-export scheme where the exporter first exports goods and then receives a transferable DFIA certificate after realization of proceeds. The transferability feature of DFIA distinguishes it from pre-export schemes, and applying actual user rigours to a post-export transferable scheme amounts to administrative rigidity that violates principles of textual and contextual interpretation - The appellant is entitled to the benefit of DFIA exemption without being subject to the actual user condition. The imposition of actual user condition through Public Notice is declared illegal and non-binding – The appeal is allowed - Power of CEGAT/Tribunal to Test Constitutional and Statutory Validity of Delegated Legislation - The appellant challenged the validity of the Public Notice imposing actual user conditions as being contrary to statutory requirements - Whether the Tribunal possesses the competence and jurisdiction to test the constitutional validity and statutory vires of subordinate legislations, rules, and delegated legislation - HELD - The Tribunal is competent and has the jurisdiction to examine the vires of statutory legislations and delegated legislation. The tribunal relies on the Supreme Court decision in L. Chandrakumar v. Union of India, which establishes that tribunals created under Articles 323-A and 323-B of the Constitution are possessed of the competence to test the constitutional validity of statutory provisions and rules, and that such tribunals act as courts of first instance in areas of law for which they are constituted. The Tribunal further cites the Delhi High Court judgment in Select Impex Ltd. v. Union of India, which was affirmed by the Supreme Court, establishing that the tribunal is a quasi-judicial authority deserving and commanding the respect of the Executive - It was inappropriate for high Government functionaries to assert that the Tribunal is not competent to interpret import and export policy. While appeals against orders of the Director General of Foreign Trade do not directly lie to the Tribunal, the Tribunal possesses the inherent authority to examine whether delegated legislation has been properly promulgated in accordance with statutory requirements - Revalidation of Expired Duty Free Import Authorization Licenses - Whether the Customs department should issue a certificate confirming the non-utilization of DFIAs due to Departmental actions, to enable the appellant to seek revalidation of expired licenses from the competent authority – HELD - The request for issuance of a certificate by the Customs Department is legitimate and should be granted. When licenses expire due to invalid notifications, public notices, or circulars issued by the respondents, the importer cannot be expected to present licenses for utilization under such circumstances, and a case for directing revalidation is made out - The denial of substantial benefits under the DFIA scheme merely because licenses expired due to customs' refusal to allow import of goods would be unjust, particularly when appellants have invested significant sums in purchasing such licenses - The Customs department is directed to issue a certificate to the DGFT within two weeks, confirming the sequence of events from the date of first refusal of duty-free clearances until the date when the customs Department started finalizing bills of entry. This certificate will enable the appellant to approach the DGFT for consideration of revalidation of the expired licenses under the applicable procedures.
Download File
show more Judgements  

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Weekly Summary

VIL Video

GSTAT Outreaches, Filing Intricacies...
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?