Madras High Court Invalidates Customs Seizure: Vital Wheat Gluten Classified as Wheat Flour Under DFIA Exemption

The intersection of customs exemptions and technical product classifications frequently leads to prolonged litigation between revenue authorities and the assessee. A recent judicial pronouncement by the Madras High Court in the case of Bhansali Chematics Private Limited Vs Senior Intelligence Officer has provided critical clarity on the interpretation of import items under the Duty Free Import Authorisation (DFIA) Scheme. The Court decisively ruled that the importation of "Vital Wheat Gluten" qualifies for basic customs duty exemption under the umbrella term of "wheat flour."

This comprehensive analysis delves into the factual matrix, the legal arguments presented, and the broader implications of the High Court's ruling on the exercise of seizure powers under Section 110 of the Customs Act, 1962.

Factual Matrix of the Dispute

The assessee, engaged in the commercial trade and importation of food ingredients and additives, imported a consignment declared as "Vital Wheat Gluten." This importation was executed via Bill of Entry No.5680611 dated 13.11.2025. To claim an exemption from the Basic Customs Duty, the assessee utilized a transferred DFIA license, specifically DFIA No.3411005881 dated 30.12.2024. This authorization was originally issued to the exporter, Koshambh Multitred Pvt. Ltd., and subsequently transferred to the assessee, permitting the duty-free inbound shipment of wheat flour corresponding to ITC HS Code 11010000.

The Department's Initial Action

The customs authorities disputed the exemption claim, culminating in an initial seizure notice dated 17.11.2025. The assessee immediately challenged this action before the High Court via W.P.No.46271 of 2025. In its order dated 15.12.2025, the Court mandated the revenue department to grant the assessee a personal hearing. The department was explicitly directed to evaluate the assessee's explanations, review the cited judicial precedents, and issue a reasoned order.

Despite these directives, following the personal hearing, the Senior Intelligence Officer issued a fresh seizure memo on 26.12.2025, prompting the assessee to approach the High Court once again to quash the proceedings.

The dispute hinged on whether "Vital Wheat Gluten" is technically and legally synonymous with "wheat flour" for the purpose of claiming benefits under the DFIA Scheme.

Submissions by the Assessee

The legal counsel representing the assessee constructed their defense on several robust pillars: