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Rules Vital Wheat Gluten Is Eligible for DFIA Exemption as Wheat Flour
In a significant ruling, the quashed a issued by the against over its import of Vital Wheat Gluten. The court held that the product falls within the description of “wheat flour” under the , thereby affirming the petitioner’s entitlement to exemption from Basic Customs Duty.
The Dispute Over Vital Wheat Gluten
Bhansali Chematics, a Bangalore-based trader of food additives, imported a consignment of “Vital Wheat Gluten” in , claiming duty-free treatment under a DFIA authorisation that permitted the import of wheat flour. The authorisation had been validly transferred to it by the original exporter,
The DRI’s Trichy unit issued a seizure notice on , taking the position that wheat gluten is a distinct product, not covered by the term “wheat flour” under the DFIA Scheme. A previous writ petition challenging that notice led to a court order directing the DRI to provide a personal hearing and consider judicial precedents. After the hearing, the DRI issued the impugned on , which was then challenged in the present case.
Petitioner’s Contentions
Senior counsel , representing Bhansali Chematics, advanced three key arguments. First, the was founded entirely on a Public Notice dated , which amended the Standard Input Output Norms (SION) for the export product “Biscuits” by requiring “Maida/Atta/Flour” to be read as “Wheat Flour.” However, that public notice had been suspended indefinitely on —before the import in question. “Once the public notice stands suspended, it ceases to operate prospectiveley,” the court later observed.
Second, counsel argued that the question whether wheat gluten is covered by “wheat flour” for the DFIA Scheme was no longer . The , Ahmedabad, in cases such as and , had held that wheat gluten is “nothing but wheat flour having specific technical characteristics” and qualifies for exemption. A coordinate bench of the , in (decided on ), had affirmed this view and concluded that “wheat flour and wheat gluten fall under the same description for the purpose of the DFIA Scheme.”
Third, reliance was placed on a Circular dated issued by the , which clarified that between imported inputs and exported products is required only for inputs covered by . Since wheat flour and wheat gluten do not fall under that paragraph, no such correlation was necessary.
Respondent’s Stand
The DRI, represented by Senior Panel Counsel , contended that the seizure was justified because wheat flour and wheat gluten are . He argued that wheat gluten is obtained by processing wheat flour through aqueous separation to remove starch and other constituents, resulting in a value-added product with a considerably higher commercial value. While wheat flour enjoys exemption, wheat gluten attracts customs duty at 30%. The officer’s “” under should not be lightly interfered with in .
Court’s Reasoning and
Justice Hemant Chandangoudar carefully weighed the arguments. The court noted that the DRI’s principal basis—the 2016 Public Notice—had been suspended and could not provide a valid foundation for the seizure. “Once the public notice stands suspended, it ceases to operate prospectiveley. Therefore, the respondents could not have relied upon the said Public Notice to form the belief that the goods were liable to confiscation.”
Moreover, the issue had already been settled by . The , after considering technical literature and clarifications from the and the , had repeatedly held that wheat gluten falls within the description of wheat flour for DFIA purposes. The coordinate bench of the had endorsed this view, and the had passed a similar order on , which had attained finality. The respondents had not placed any material showing that these decisions had been stayed or set aside.
The court also found that the Customs Circular of did not support the DRI’s stand. It clarified that no is required in such cases.
Key Observations
The court emphasized that the power of seizure under Section 110 must be based on “relevant and . It cannot be founded on material which has ceased to have legal force or which is contrary to .”
On the facts, the court concluded: “In these circumstances, this Court is of the view that there was no before the first respondent to form the requisite that the imported goods were liable to confiscation. Consequently, the assumption of jurisdiction under is unsustainable, and the impugned is liable to be quashed.”
Impugned Seizure Quashed
The writ petition was allowed. The dated was quashed. The court directed the discharge of the furnished by Bhansali Chematics and ordered the return of the original and within two weeks.
The judgment reinforces that product classification under the DFIA Scheme must align with settled judicial interpretations and policy clarifications, and that customs officers cannot ignore or rely on suspended public notices to justify seizures.
