2026-VIL-1323-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs - Demand of duty forgone on utilization of transferable DFIA licenses when allegations against issuing exporter have been vacated – Appellant-Importer utilized transferable Duty Free Import Authorization licenses issued by exporter for importing goods and claimed import duty exemption but investigation revealed exporter had not disclosed technical characteristics and specifications of essential oil used in manufacture of goods in shipping bills and improperly obtained DFIA licenses - Appellant as importer was demanded to pay duty forgone aggregating specified amount under Section 28 of Customs Act by invoking extended period of limitation - Whether bona fide importer can be held liable for duty forgone when allegations against exporting licensee have been vacated and exporter's license remained intact - HELD – The Delhi Bench of Tribunal has in case of exporter held that allegations against exporter not proved and revenue had failed to produce evidence justifying that goods exported were not of same quality and technical characteristics as inputs used. Delhi Bench also observed that although DGFT levied penalties against exporter, it did not cancel exporter's license. These findings coupled with precedent of coordinate Bench in similar case of another importer who also utilized transferable DFIA licenses from same exporter clearly establish that when exporter's license itself stood intact and allegations against exporter vacated, importer as bona fide purchaser cannot be held involved in fraudulent ways to import goods exported under irregular or fraudulent license - Extended period of limitation has been invoked without justification as importer cannot be held guilty when exporter's conduct itself not established. Importer acted in good faith while utilizing transferable license. Demand of duty forgone is not sustainable – The impugned order is set aside and the appeal is allowed
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