2019 (3) TMI 984 - HC - Customs

100% EOU - Release of benefit at 5% under the Merchandise Exports from India Scheme (MEIS) - In case of export, shipping bill is filed claiming applicable and admissible export benefits under the MEIS. According to the petitioner, it is entitled to MEIS benefit at 5% which has been denied - principles of natural justice. Held that - We find force in the submission of learned counsel for the petitioner that before passing any final orders, the 2nd respondent should have given the petitioners an opportunity to deal with the order- in -original dated 20/11/2018 - From the record it appears that the order- in- original dated 20/11/2018 was received by the petitioner only on 5/12/2018, that is after the impugned order is passed by the 2nd respondent. This Court in the case of AXIOM CORDAGES LTD. VERSUS UNION OF INDIA AND ORS. 2018 (8) TMI 1243 - BOMBAY HIGH COURT had in clear terms directed the 2nd respondent to consider the Petition and its annexures as a representation of the petitioner and to pass a speaking order after hearing the petitioner. If at all the 2nd respondent wanted to rely upon the order- in -original dated 20/11/2018, the least the 2nd respondent should have done is to give an opportunity to the petitioner to deal with the order- in -original dated 20/11/2018 for considering its effect/impact on the proceedings before the 2nd respondent. The matter is remitted back to the 2nd respondent for a fresh decision on merits and in accordance with law.

Summary

Issues:
Challenge to denial of MEIS benefit at 5% under Merchandise Exports from India Scheme (MEIS) by Development Commissioner SEEPZ Special Economic Zone, Andheri (E), Mumbai.

Analysis:
The petitioner, a limited company with a 100% Export Oriented Unit, challenged the order denying MEIS benefit at 5% for exports made from January 2018. The denial was based on an adjudication order by the Commissioner of Customs. The petitioner contended that the denial was unjust as the classification of goods under the Customs Tariff Act was changed to avail MEIS benefits. The petitioner filed multiple representations to release the benefit, leading to a writ petition in the High Court.

The High Court noted that the classification issue was crucial for determining MEIS benefits. The Customs authorities classified the goods under a different sub-heading, affecting the eligibility for MEIS. The petitioner's appeal against the classification order was pending before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The Court emphasized the importance of proper classification for determining incentives under MEIS.

The Court found that the 2nd respondent had relied solely on the classification order by the 3rd respondent without giving the petitioner a chance to contest or address its impact. The Court highlighted that the petitioner received the classification order after the impugned decision was made. In light of these procedural shortcomings, the Court quashed the impugned order and remitted the matter back to the 2nd respondent for fresh consideration.

The Court directed the 2nd respondent to reevaluate the matter, ensuring the petitioner's opportunity to address the classification order's impact on the MEIS benefits. The Court clarified that its decision did not express any opinion on the merits of the case and kept all contentions open. The 2nd respondent was instructed to make a fresh decision within eight weeks after hearing all concerned parties. The ruling partially favored the petitioner, with no costs imposed.

In conclusion, the judgment highlighted the importance of procedural fairness and the need for proper consideration of classification issues in determining MEIS benefits. The Court's decision aimed to rectify the procedural deficiencies and ensure a fair opportunity for the petitioner to address the classification order's implications on the MEIS benefits.