Order date – 02 September 2022

Facts – 

• The appellant, M/s Shalimar Precision Enterprises P. Ltd., imported a consignment of “Melamine” dated 13.03.2013 and sought clearance under DFIA Scheme availing the benefit under Notification No. 98/2009-CUS dated 11.09.2009. 
• The consignment was cleared for home consumption by the Customs Officers. The DFIA license was purchased by the appellant for consideration as it was transferable. 
• The DFIA license, inter alia, permitted duty free import of “Syntan”. The term “Syntan” refers to Synthetic Tanning Agent used in leather processing. According to the appellant Melamine is a Syntan.
• A Show Cause Notice dated 28.02.2014 was issued according to which the appellant had mis-represented Melamine as Syntan and wrongly availed the benefit of exemption notification under the DFIA license. 
• Accordingly demand of duty was imposed and imposition of penalty under Section 117 of the Customs Act was proposed, which was confirmed.
• Aggrieved, the appellant filed an appeal.

Issue – 

• Whether importing Melamine and declaring it “Syntan” and claiming the benefit of exemption under DFIA license is justifiable?

Order – 

• The Tribunal observed that the lower authorities have confirmed the demand ignoring the earlier order of this Tribunal in Dimple Overseas Ltd., and ignoring all the technical literature which state that Melamine can be used directly for tanning leather.
• The Tribunal held that standard input/output norms published by the DGFT and also from the license that the HSN codes are not specified when allowing imports in the license and only the materials are indicated. So long as the goods match the description, they can be imported. The customs officers cannot add conditions to license and insist that the inputs have to fall under a particular HSN.
• The Tribunal relied on the Supreme Court's G.C. Jain case in which it was held that the materials need not be used directly, but can be used after some processing and will still qualify for exemption under license.
• Therefore, the impugned order was set aside and the appeal was allowed.