Court rules that movement from Free Trade Warehousing Zone to Domestic Tariff Area is a fresh import, not a re-import, rejecting exemption claims under Notification No. 45/2017-Cus.
In a significant ruling, the Delhi High Court has dismissed a batch of appeals filed by Baker Hughes Oilfield Services India Pvt. Ltd. and other appellants challenging the advance rulings of the Customs Authority for Advance Rulings (CAAR). The appeals were centered around the eligibility of the appellants to claim exemptions under Serial No. 5 of Notification No. 45/2017-Cus for the movement of equipment from a Free Trade Warehousing Zone (FTWZ) back to the Domestic Tariff Area (DTA).
The bench, comprising Justices Anil Kshetarpal and Shail Jain, held that such movements do not qualify as re-imports under the said notification but are to be treated as fresh imports. The court emphasized that the original transaction, certified under an Essentiality Certificate (EC), stands concluded upon completion of the initial contract, and subsequent movement under a new EC represents a new transaction.
The appellants, engaged in providing technical mining and allied support services, argued that the equipment moved to FTWZ should be considered re-imported when brought back to DTA, thus qualifying for exemption. However, the court found that the FTWZ arrangement was merely a logistical step between two domestic contracts and did not constitute an export-re-import cycle.
The court also highlighted the comprehensive scheme under Notification No. 50/2017-Cus, which regulates the use, transfer, and disposal of concessionally imported goods. It noted that the appellants' proposed method of using FTWZ to bypass these conditions and claim dual exemptions was impermissible.
Furthermore, the court dismissed the appellants' reliance on statutory fictions under the Special Economic Zones Act, 2005, and procedural rules, affirming that such legal fictions cannot be extended beyond their intended scope to create additional fiscal benefits.
This ruling reiterates the stringent compliance required for claiming customs exemptions and clarifies the legal distinction between fresh imports and re-imports under Indian customs law.
Bottom Line :
Customs Law - Movement of goods from a Free Trade Warehousing Zone (FTWZ) back to the Domestic Tariff Area (DTA) under a fresh Essentiality Certificate (EC) does not qualify for re-import exemption under Serial No. 5 of Notification No. 45/2017-Cus. Such movement is treated as a fresh import and not a re-import, as the original transaction concluded upon completion of the initial contract and export condition.
Statutory provision(s): Customs Act, 1962, Notification No. 45/2017-Cus, Notification No. 50/2017-Cus, Special Economic Zones Act, 2005, Rule 48(3) of Special Economic Zones Rules, 2006, Circular No. 21/2019-Customs
