PRATEEK JALAN, J.

1. This appeal filed by the Revenue, under Section 130 of Customs Act 1962 (hereafter, the Act), is directed against an order dated 01.09.2017 passed by the Customs Excise and Service Tax Appellate Tribunal (hereafter, the Tribunal) in Appeal No. C/53217/2015. By the impugned order, the Tribunal allowed the Respondent/ Assessee’s appeal against an order dated 04.06.2015 passed by the Commissioner of Customs (Exports), New Delhi and set aside the redemption fine and penalty imposed.

2. The present appeal was admitted on 03.08.2018 and the following questions of law were framed for consideration:

“(i) Did the Customs Excise and Sales Tax Appellate Tribunal (hereinafter CESTAT) fall into error in its interpretation of Notification No. 40/2006-Cus dated 01.05.2006, and also with respect to para 4.55.3 of the Handbook of Procedure for Export and Import.

(ii) Did the CESTAT err in law in its appreciation of specifications that the exporter had to provide and the declaration required, in terms of the above Notification No. 40/2006-Cus read with para 4.55.3 of the Handbook of Procedure for Export and Import) in the circumstances of the case?”

3. The facts giving rise to this appeal are not in dispute. During the period 2006-09, the assessee used to clear and export its goods, namely pan masala and gutka. These exports were covered by a Duty Free Import Authorization license (hereafter, DFIA License) issued by the Director General of Foreign Trade (hereafter “DGFT”), under the prevalent Foreign Trade Policy (“FTP” hereafter) of the Centarl Government. Based on the its records and the statement of the assessee’s Director, Shri Vikram Kothari, as well as statement of perfume suppliers, the revenue issued a show cause notice (dated 21.06.2013) alleging that the assessee had contravened the provisions of Paragraph 4.55.3 of the Handbook of Procedure of Import and Export (hereafter "HBP") and an exemption notification dated 01.05.2006 (Notification No. 40/2006-Customs, hereafter “the exemption notification”) issued by the Customs authorities. According to the Revenue, the effect of the HBP and the exemption notification was that the assesse had to mention the technical characteristics, quality and specifications of the perfumes/essential oils/ aromatic chemicals used by it in its shipping bills. The assessee resisted the show cause notice and contested the proceedings.

4. In the Order-in-Original dated 04.06.2015, the Commissioner of Customs (Exports) considered exports made by the assessee at New Delhi and Kanpur and imposed, in sum, fines of Rs. 18,00,000 (in lieu of confiscation of the goods in question, under Section 125 (1) of the Act), and penalty of Rs. 8,00,000/- (under Section 114 of the Act). The Order-in-Original recorded inter-alia as follows:-

“3. In terms of Exim Policy 2004-09, Chapter 4 of Foreign Trade Policy (FTP) 2004-09, Duty Free Import Authorization (DFIA) is issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. This scheme is in force from 1st May, 2006. These Authorizations shall be issued only for products for which Standard Input and Output Norms (SION) have been notified. A minimum 20% value addition shall be required for issuances of such authorization except for items in germs and jewelry sector. Once export obligation has been fulfilled, requires for transferability of authorization or inputs imported against it may be made before concerned RA. Once, transferability is endorsed, Authorization holder may transfer DFIA or duty free inputs, except fuel and any other items notified by DGFT. An Advance Authorization shall specify:

(a) name and description of items to be imported and exported/supplied.

(b) quantity of each item to be imported or wherever quantity cannot be indicated, value of item shall be indicated. However, if in SION, quantity and value of individual inputs is a limiting factor, same shall be applicab