𝐒 𝐉 𝐄𝐗𝐈𝐌 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬

 “Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”

Dated: 28.01.2025

CESTAT Chennai allows Duty exemption benefits as per the import item in the DFIA license

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, ruled in favor of M/s. Volvo India Pvt. Ltd., allowing them to claim a customs duty exemption under a Duty-Free Import Authorization (DFIA) license. The tribunal found no explicit restriction in the license limiting imports to agricultural tractor parts, setting aside the denial by lower authorities.

Key Highlights of the Proceedings:

Appellant and Background:

• M/s. Volvo India Pvt. Ltd. appealed against the denial of customs duty exemption under a Duty-Free Import Authorization (DFIA) license.
• The license was originally issued for importing tractor parts under SION category C969 and was later transferred to the appellant.

Import and Exemption:

• Volvo imported internal combustion engines for medium and heavy commercial vehicles under the DFIA license.
• The exemption was denied, as authorities argued that the license was specific to agricultural tractor parts.

Tribunal’s Analysis:

• The DFIA license did not explicitly restrict imports to agricultural tractor parts.
• Circulars and precedents cited clarified that technical correlation of imports with exports was not required unless specifically mentioned in the license or relevant rules.

Legal Precedents Referenced:

• CESTAT relied on CBEC Circulars (46/2007 and 50/2008) and judgments like Global Exim vs Union of India (2019) and SICPA India Ltd. (2012) to support its decision.

Tribunal’s Decision:

• The tribunal held that the appellant’s imports were valid under the license, and no restriction could be implied beyond the license’s explicit terms.
• The orders of the lower authorities were set aside, and the appeal was allowed.

Outcome:

• The tribunal granted customs duty exemption to Volvo India Pvt. Ltd., clarifying the scope of DFIA licenses and import restrictions.

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Source: CESTAT Chennai

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