The Chennai bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Appellant, Volvo cannot be expected to correlate its imports with the exports of the person to whom the license was originally issued.
The bench of P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that there is nothing in the license which restricts the import of internal combustion engines only to such internal combustion engines as would have been used in the goods which are permitted to be exported by the authorization.
The Appellant/assessee is an importer, who purchased a Duty- free Import Authorization (DFIA) License which was originally issued to M/s.International Tractors Ltd. The entity secured the license to import parts of tractors covered under Standard Input Output Norms (SION) category C969 dealing with ‘Agricultural Tractors’ in various conditions. This license came to be sold after becoming transferrable first to M/s.Vivid Visions Trexim P. Ltd., who thereafter sold the same to the Appellant.
The Appellant exports buses and vehicles falling under SION category C1059 in relation to which it made imports/purchases of internal combustion engines under two Bills of Entry dated November 26, 2011 and November 24, 2011, which were classifiable under CTI 8408 2020, for use in the manufacture of various construction equipment.
The Appellant made these imports against the above DFIA license and claimed the benefit of exemption from the payment of Basic Customs Duty under Notification No. 98/2009 dated 11.09.2009.
The benefit of the exemption was denied by the Adjudicating Authority on the ground that the items allowed to be imported under this DFIA license should be parts of tractors covered under SION category C969 whereas the appellant manufactured medium and heavy commercial vehicles covered under SION category C1059 for which it imported internal combustion engines.
The finding of the Adjudicating authority in the OIO No. 17918/2011 dated 20.12.2011 was thus that the internal combustion engine which could be imported under the license were to be those used for agricultural tractors, and not those used for medium and heavy commercial vehicles.
The issue raised was whether the Appellant could have imported internal combustion engines meant for use in medium and heavy commercial vehicles covered under SION category C1059 by utilizing this transferrable DFIA license?
The tribunal held that the SION category does not find any mention in the authorization at all. It is true that the export item name which is set out in a separate table titled “item(s) details” is identical to the description of the SION Category C969.
The tribunal held that no restriction can be read in where the words of the authorization do not themselves create such a restriction. The order therefore deserves to be set aside.
Case Details
Case Title: M/s.Volvo India Private Ltd. Versus The Commissioner of Customs
Case No.: Customs Appeal No.42088 of 2014
Date: 24.01.2025
Counsel For Appellant: Rohan Muralidharan
Counsel For Respondent: Anoop Singh
