Walnuts Cleared Duty-Free: Gujarat HC Upholds DFIA Exemption Without HS Code Matching

The respondent, M/s Devam Impex, sought an advance ruling under Section 28H of the Customs Act on whether in-shell walnuts could be imported duty-free under transferable DFIAs issued against exports of Assorted Confectionary Products (SION E-1) and Biscuits (SION E-5), claiming coverage as “Nut and Nut Products,” “Other Confectionary Ingredients,” and “Dietary Fibre.”

The Customs Authority for Advance Rulings allowed the claim. Aggrieved, the Commissioner of Customs, Kandla, filed an appeal under Section 28KA.

Question of Law: Whether exemption under Notification No.25/2023-Cus can be denied on the ground that the specific ITC (HS) code was not endorsed and that technical correlation with the exported goods was allegedly absent.

HC’s Order: The Gujarat High Court dismissed the appeal and upheld the CAAR ruling. The Court held that DFIA imports are governed by input descriptions and group classifications under the SIONs, not strict HS code matching, and no such requirement exists under the FTP or the notification. Relying on VKC Nuts Pvt. Ltd., the Court affirmed that in-shell walnuts fall within “Dietary Fibre” and “Nut and Nut Products.”

It further noted the absence of any technical evidence from the Revenue to rebut this position and relied on CBIC Circular No.20/2025-Cus clarifying that technical correlation is required only for inputs specified under Paragraph 4.29 of the FTP, which did not cover in-shell walnuts. The Court declined to frame any substantial question of law and dismissed the appeal.

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