CAAR Mumbai allows withdrawal of DFIA Inshell Walnut exemption advance ruling application

Background of the advance ruling application

Sai Kripa Enterprises (IEC No. ESBPK5119K) approached the Customs Authority for Advance Rulings (CAAR), Mumbai by filing an application in Form CAAR-1 before the Office of the Secretary, CAAR, Mumbai. The application, accompanied by the prescribed documents, was received in the CAAR Mumbai Secretariat on 07.04.2026 under Section 28H(1) of the Customs Act, 1962 (referred to as “the Act”).

The assessee requested an advance ruling on whether it was eligible to claim exemption from Basic Customs Duty under Notification No. 25/2023-Cus. dated 01.04.2023 for imports of Inshell Walnuts made against a Transferable DFIA. The DFIA in question had been issued for exports of:

  • Assorted Confectionery Goods
  • Biscuits
  • Vegetable Pickles
  • Namkeens / Mixtures / Savouries

A key element of the application was that the assessee sought clarity on the exemption benefit without having to establish that the imported Inshell Walnuts were actually used in the manufacture of the aforesaid exported products.

Thus, the precise issue projected before CAAR Mumbai related to the interpretation of the exemption available under Notification No. 25/2023-Cus. for Inshell Walnuts imported under a Transferable DFIA, and whether such benefit could be availed absent proof of actual consumption of the imported goods in the export product.

Request for withdrawal of advance ruling application

Subsequently, the assessee reconsidered its position. By an email dated 15.09.2026, Sai Kripa Enterprises informed CAAR Mumbai that it did not wish to pursue the application further. In the said email, the assessee clearly communicated two requests:

  1. Withdrawal of the advance ruling application already filed; and
  2. Cancellation of the personal hearing that had been scheduled in connection with the application.

The email conveyed that the assessee no longer desired a ruling on the questions originally framed and expressed regret for any inconvenience caused.

In effect, the assessee exercised its option to pull back the application before an advance ruling was issued, and also sought that the adjudicatory process, including the proposed oral hearing, be brought to an end.

To deal with this withdrawal request, CAAR Mumbai examined Regulation 20 of the Customs Authority for Advance Rulings Regulations, 2021, as amended by Notification No. 63/2022-Cus. (N.T.) dated 20.07.2022, which came into force on 25.07.2022.

Regulation 20, which governs the withdrawal of applications filed before CAAR, is unambiguous. The relevant portion, as cited in the order, reads:

“20. Withdrawal of Application- The applicant may withdraw his application at any time before an advance ruling is pronounced.”

The provision thus recognizes the assessee’s right to exit the advance ruling mechanism so long as the Authority has not yet pronounced its decision. No condition is imposed regarding reasons for withdrawal; the only limitation is the timing, i.e., withdrawal is not permissible once a ruling has already been issued.

From a procedural standpoint, this ensures flexibility for assessees who may, due to business strategy, clarification received from other sources, or any change in circumstances, no longer require a binding advance ruling.

Application of Regulation 20 to the present case

CAAR Mumbai verified the stage of the proceedings in the case of Sai Kripa Enterprises. It was noted that:

  • The application was duly filed and registered under Section 28H(1) of the Customs Act, 1962.