Duty-Free Import Of In-Shell Walnuts Permissible When Covered Under Generic DFIA Input Descriptions like “Dietary Fibre” and “Nut and Nut Products”: Gujarat HC

The Gujarat High Court has dismissed an appeal filed by the Commissioner of Customs, Kandla, and upheld an advance ruling allowing duty-free import of in-shell walnuts under the Transferable Duty Free Import Authorisation (DFIA) scheme, holding that such imports are permissible when covered under generic DFIA input descriptions like “Dietary Fibre” and “Nut and Nut Products”. The Bench of Justice A.S. Supehia and Justice Pranav Trivedi rejected the department’s challenge to an order passed by the Customs Authority for Advance Rulings (CAAR), Mumbai, which had permitted the importer to import in-shell walnuts without payment of Basic Customs Duty by availing exemption under Notification No. 25/2023-Cus dated April 1, 2023. M/s Devam Impex, a proprietorship firm holding a valid Importer-Exporter Code, had approached CAAR seeking clarity on whether in-shell walnuts could be imported under DFIA licences issued against exports of assorted confectionery products (SION E-1) and biscuits (SION E-5). The importer claimed that walnuts fell within the DFIA descriptions of “Other Confectionery Ingredients”, “Nut and Nut Products”, and “Dietary Fibre”. CAAR ruled in favour of the importer, holding that the imports were permissible subject to value-based limits prescribed under the DFIA licences. Aggrieved, the customs department filed an appeal under Section 28KA of the Customs Act, 1962, arguing that walnuts could not be treated as dietary fibre and that exemption could not be granted without strict matching of ITC (HS) codes and proof of actual usage in exported goods. The department contended that exemption notifications must be strictly construed and relied on the Supreme Court’s ruling in Dilip Kumar & Co. to argue that walnuts—being high in fats and oils—could not be classified as dietary fibre. It further argued that the DFIA licences did not specifically mention the HS code for in-shell walnuts and that allowing such imports under generic descriptions could lead to misuse of the scheme. The department also relied on a subsequent DGFT Public Notice dated August 26, 2025, suspending certain SION norms in the food sector, to argue that the very basis of the CAAR ruling stood diluted. Rejecting these submissions, the High Court noted that the issues raised were no longer res integra and stood conclusively settled by judicial precedents, particularly the Bombay High Court’s decision in Commissioner of Customs v. VKC Nuts Pvt. Ltd.. In that case, the Bombay High Court had categorically held that in-shell walnuts are covered under the DFIA input description of “dietary fibre” and can be imported duty-free. The Gujarat High Court also took note of technical opinions from customs laboratories and tribunal rulings which recognized the use of walnuts as a source of dietary fibre in biscuits and confectionery products. The Bench emphasized that in the absence of any contrary technical evidence produced by the department, such findings could not be disregarded. The Court reiterated that DFIA benefits are linked to input descriptions, value, and quantity, and not to rigid matching of ITC (HS) codes. Relying on multiple CESTAT decisions, the Bench held that neither the Foreign Trade Policy nor the relevant customs notifications mandate HS-code matching as a pre-condition for availing DFIA exemptions. The Court also referred to CBIC Circular No. 20/2025-Cus dated July 24, 2025, which clarified that technical correlation between imported inputs and exported goods is required only for items listed under Paragraph 4.29 of the FTP, a category which does not include walnuts. The Bench observed that an advance ruling can be set aside only if it is patently illegal, arbitrary, or perverse. Since the CAAR ruling was well-reasoned and aligned with settled law, no substantial question of law arose for consideration. The High Court dismissed the tax appeal filed by the customs department and disposed of the connected stay application, thereby reaffirming the permissibility of importing in-shell walnuts under DFIA licences against generic input categories like dietary fibre and nut products. Case Details Case Title: The Commissioner Of Customs - Kandla Versus M/A Devam Impex Case No.: R/Tax Appeal No.507 Of 2025 With Civil Application (For Stay) No.1 Of 2025 In R/Tax Appeal No. 507 Of 2025 Date: 24/12/2025 Counsel For Petitioner: Ankit Shah Counsel For Respondent: Mihir Joshi, Senior AdvocaTE Click Here To Read Order Read More: Madras HC Revokes GST Registration Cancelled for Non-Filing of Returns, Cites Genuine Financial Hardship and Ill-Health

Duty-Free Import Of In-Shell Walnuts Permissible When Covered Under Generic DFIA Input Descriptions like “Dietary Fibre” and “Nut and Nut Products”: Gujarat HC

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