Court Confirms that Inshell Walnuts Qualify as Dietary Fibre for Duty-Free Import Under DFIA Scheme
In a significant ruling, the Gujarat High Court, comprising Justices A.S. Supehia and Pranav Trivedi, upheld the Customs Authority for Advance Rulings (CAAR) decision permitting the duty-free import of Inshell Walnuts under the Duty-Free Import Authorisations (DFIA) scheme. The court dismissed an appeal by the Commissioner of Customs, Kandla, challenging the CAAR's interpretation of Customs Notification No.25/2023-Cus, which facilitates such imports.
The court found that Inshell Walnuts could be classified under "Dietary Fibre" and "Nut and Nut Products" as per the Standard Input Output Norms (SION) E-5 and E-1. This classification allows the import of Inshell Walnuts without imposing Basic Customs Duty, provided they align with the value-based limitations set in the DFIA. The judgment aligns with previous decisions by the Bombay High Court and other tribunals, recognizing Inshell Walnuts as permissible under the DFIA when used in products like biscuits and confectionery.
The appeal questioned the correlation of Inshell Walnuts with dietary fibre and the absence of specific HS codes in the DFIA license. However, the court rejected these concerns, citing precedents where similar exemptions were granted. The court emphasized that the DFIA scheme allows import based on broad product descriptions rather than strict HS code matching, provided the imports conform to the descriptions and value criteria specified in the DFIA.
The judgment reflects a broader interpretation of the DFIA scheme, emphasizing trade facilitation and reducing litigation by providing clarity and certainty to importers. It also highlights the limited scope for interference in CAAR decisions unless they are found to be profoundly illegal or arbitrary.
The court's decision is supported by Circular No.20/2025-Cus issued by the Central Board of Indirect Taxes and Customs (CBIC), which clarifies that specific technical characteristics need not be established for inputs not listed under Paragraph No.4.29 of the Foreign Trade Policy. This circular further strengthens the rationale behind the CAAR ruling and the Gujarat High Court's subsequent affirmation.
This ruling is anticipated to impact the import-export community positively, offering a clearer framework for utilizing the DFIA scheme for similar products.
Bottom Line:
Customs Law - Import of "Inshell Walnuts" against DFIA license - "Inshell Walnuts" are permissible imports under DFIA issued pursuant to SION E-5 for exports described as "Dietary Fibre" and SION E-1 for exports described as "Nut and Nut Products." Strict correlation of ITC (HS) numbers is not mandated under Notification No.25/2023-Cus and DFIA scheme. Exemption granted by CAAR upheld.
Statutory provision(s): Customs Act, 1962 Section 28K, Customs Notification No.25/2023-Cus, Foreign Trade Policy Paragraph Nos.4.12, 4.28(iii), 4.29
Commissioner of customs v. M/A Devam Impex, (Gujarat)(DB) : Law Finder Doc Id # 2827790
