Allahabad High Court Dismisses PIL Challenging DFIA Scheme — Existing Judicial Precedents Prevail
Overview
The Allahabad High Court recently dismissed a public interest litigation filed against the operation of the Duty Free Import Authorization (DFIA) Scheme as implemented under the Foreign Trade Policies (FTP) for 2009-14 and 2015-20. The PIL, filed by an advocate claiming to act in public interest, sought stringent restrictions on duty-free imports under transferable DFIAs and demanded action against officials, exporters, and importers allegedly misusing the scheme. The Court, after careful deliberation, found no merit in any of the prayers and dismissed the petition relying on well-established judicial precedents from the Punjab and Haryana High Court and the Bombay High Court.
Case Details
| Particulars | Details |
|---|---|
| Case Name | Sachin Pandey Vs U.O.I. |
| Court | Allahabad High Court |
| Subject Matter | Challenge to DFIA Scheme under FTP 2009-14 and 2015-20 |
| Outcome | PIL Dismissed — No order as to costs |
Background: The DFIA Scheme and Its Legal Framework
Statutory Foundation
The Foreign Trade Policy is formulated by the Government of India in exercise of powers vested under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act). The primary objectives of the FTP include stimulating Indian international trade, creating employment opportunities, earning foreign exchange, and regulating both imports and exports through various promotional mechanisms.
What is the DFIA Scheme?
The Duty Free Import Authorization (DFIA) Scheme is a post-export scheme introduced under FTP 2015-20 that allows duty-free import of specified inputs after an exporter has fulfilled prescribed export obligations. The scheme operates as follows:
- The exporter files an online application with the concerned Regional Authority before effecting exports under the DFIA scheme
- Exports must be completed within twelve months from the date of generation of the file number
- Upon completion of exports and realization of export proceeds, the exporter applies for issuance of the DFIA
- A separate DFIA is issued for each transaction in accordance with the Standard Input Output Norms (SION)
- On issuance of authorization, the exporter receives exemption from basic customs duty on goods permitted to be imported under the scheme
Key Distinction: Unlike the Advance Authorization (AA) Scheme — which is an actual user duty-free exemption scheme — the DFIA Scheme permits transferability of the authorization and the inputs, post endorsement of transferability, once the stipulated export obligation is discharged.
Customs Notification and Policy Framework
To operationalize the DFIA Scheme under FTP 2015-20, the Ministry of Finance issued a notification dated 1st April, 2015 under Sub-section (1) of Section 25 of the Customs Act, 1962, exempting goods imported against a valid DFIA from basic customs duty. The relevant policy provisions under FTP 2015-20 include:
Para 4.25 — DFIA Scheme:
- Duty Free Import Authorization is issued to allow duty free import of inputs
- Import of oil and catalyst consumed or utilized in the production process of the export product may also be permitted
- Provisions of paragraphs 4.12, 4.18, 4.20, 4.21 and 4.24 of FTP are applicable to DFIA as well
- Export of white sugar under DFIA is allowed under SION Sl.No-E 52 till 30.9.2018, with DFIA issuable only on or after 1.10.2019 and valid for imports till 30.9.2021
Para 4.27 — Eligibility:
- DFIA shall be issued on a post-export basis for products with notified Standard Input Output Norms
- Merchant exporters must mention the name and address of the supporting manufacturer on export documents including Shipping Bill, Bill of Export, or Tax Invoice under GST rules
- Application must be filed with the concerned Regional Authority before effecting exports
- No DFIA shall be issued for inputs subject to pre-import conditions, actual user conditions under SION, or where Appendix-4J prescribes pre-import conditions