The Gujarat High Court has upheld the ruling of the Customs Authority for Advance Rulings (CAAR) permitting duty-free import of in-shell walnuts under Transferable Duty-Free Import Authorisations (DFIAs), holding that the issue was squarely covered by binding judicial precedents and that no substantial question of law arose for consideration.
The case stemmed from an application filed by Devam Impex, a DFIA licence holder, seeking clarification on whether it could import in-shell walnuts without payment of basic customs duty against licences issued for the export of biscuits and confectionery products. The CAAR ruled in favour of the importer, holding that in-shell walnuts were covered under the permissible input descriptions such as “nut and nut products” and “dietary fibre”, subject to prescribed value limits.
Aggrieved by this ruling, the Customs Department approached the Gujarat High Court, contending that walnuts were not specifically endorsed in the DFIA licences and that exemption could not be granted without matching HS codes or proof of actual use in the exported goods.
The High Court, however, rejected the Department’s challenge and observed that courts have repeatedly held that in-shell walnuts fall within the broader classification of “dietary fibre” and “nut and nut products” for the purposes of DFIA imports, and that once DFIA transferability is permitted, Customs authorities cannot impose restrictive conditions beyond the scope of the policy.
The Court further noted that CBIC Circular No. 20/2025-Cus dated July 24, 2025, clarified that correlation of technical characteristics is required only for inputs specified under Paragraph 4.29 of the FTP, and not for inputs falling under other provisions such as Paragraphs 4.12 and 4.28. Since in-shell walnuts were not among the restricted inputs, no technical correlation was required to be established. The High Court also held that the scope of interference under Section 28KA of the Customs Act, 1962 is limited, and an advance ruling cannot be interfered with unless it is shown to be arbitrary, illegal, or perverse.
Accordingly, holding that the CAAR ruling was legally sound, the High Court dismissed the appeal and upheld the permissibility of duty-free import of in-shell walnuts under DFIA.
Appearances:
For the Appellant – Advocate Ankit Shah,
For the Respondent – Senior Advocate Mihir Joshi, along with Advocate Hardik P. Modh, Advocate
