2024 (11) TMI 272 - HC - Customs

Benefit under the MEIS Scheme - products namely Para Cumidine and Diaminostilbene 2, 2-disulphonic acid (DASDA) with their revised ITC HS Codes of 2921 49 20 and 2921 59 40 respectively - Effect of revision of ITC HS Codes HELD THAT - Two products namely Para Cumidine bearing Code No. 29214920(old CTI 29214990) and Diaminostilbene-2, 2-disulphonic acid bearing Code No. 29215940(old CTI 29215990) were part of the Appendix 3B Table 2 of the MEIS scheme and notification No. 38/2015-2020 was issued only with a view to synchronise with the Finance Act (No. 2) of 2019. Annexures to the Notification no. 38/2015-2020 at Annexure-D page 90 refers to both the items, i.e. ITC HS Code 29214920 and 29215940 as free items. Similarly in public notice no.12/2015-2020 dated 10.07.2020 was issued with a view to add MEIS entries in Appendix 3, Table 2 for exports made with effect from 01.01.2020 and Table B of the said notification provides for benefits for the entries which would not be applicable where rate is zero for exports made with effect from 01.01.2020 as those codes have ceased to exist with effect from 01.01.2020. On perusal of the Table B of the Notification No. 12/2015-2020 dated 10.07.2020 ITC HS Codes 29214920 and 29215940 are not notified. Therefore, it appears that Code Nos. 29214920 and 29215940 have continued to be part of Appendix-3B Table 2 of the scheme having old CTI 29214990 and 29215990 respectively. Reasons assigned for denial of the benefit are contrary to the Notification No. 38/2015-2020 dated 01.01.2020 read with public notice no. 12/2015-2020 dated 10.07.2020 which does not exclude HS Codes 29214920 and 29215940 as both the notifications are issued only with a view to syncronise the HS Codes with Finance Act (No. 2) of 2019. Appendix 3B Table 2 was introduced to MEIS Scheme from day one and on perusal of both the aforesaid notifications and public notice, there is no change in the said Table more particularly when items which were excluded are specifically stated in the notification and public notice. In that view of the matter, the contention raised on behalf of the respondent that after creation of specific ITC HS Code for these products, alignment of MEIS Schedule was done with Finance Act (No. 2) of 2019 is not tenable as there is no change in the MEIS schedule so far as these two items are concerned. Next objection raised by the respondent is with regard to MEIS Scheme stands discontinued with effect from 01.01.2021 and therefore, no benefit can be given to the petitioner and the decision of DGFT is final and binding on all matters relating to interpretation of policy and provisions in the handbook of procedure etc. , is also not tenable in view of the fact that at no point of time Codes No. 29214920 and 29215940 have been excluded from the schedule to MEIS Scheme which is in consonance with the office memorandum issued by CBIC which clearly states that new CTI 29214920 is carved out from old CTI 29214990 and new CTI 29215940 is carved out from old CTI 29215990 and in that view of the matter, the petitioner is entitled to benefit of MEIS on both the products till 31.12.2020.

Summary

Issues Involved:
1. Eligibility for MEIS benefits for products with revised ITC HS Codes.
2. Retrospective application of revised ITC HS Codes.
3. Interpretation of notifications and public notices regarding MEIS benefits.
4. Authority and finality of DGFT's decisions on policy interpretation.

Detailed Analysis:

1. Eligibility for MEIS Benefits for Products with Revised ITC HS Codes:

The petitioner sought the extension of MEIS benefits for products Para Cumidine and Diaminostilbene 2, 2-disulphonic acid (DASDA) under revised ITC HS Codes 29214920 and 29215940. The petitioner argued that these products were originally eligible for MEIS benefits under their old ITC HS Codes and should continue to receive benefits under the revised codes. The court noted that the products were part of Appendix 3B Table 2 of the MEIS scheme and that the notification No. 38/2015-2020 was issued to synchronize with the Finance Act (No. 2) of 2019. The court found that the revised ITC HS Codes were not excluded from the MEIS scheme, and therefore, the petitioner was entitled to the benefits until 31.12.2020.

2. Retrospective Application of Revised ITC HS Codes:

The petitioner contended that the retrospective application of the revised ITC HS Codes, as per public notice no. 12/2015-2020 dated 10.07.2020, was contrary to settled legal positions. The court observed that the notification and public notice were issued to align the MEIS schedule with international standards and did not explicitly exclude the revised codes. Therefore, the retrospective denial of benefits was not justified, and the petitioner should receive benefits for exports made from 01.01.2020 to 31.12.2020.

3. Interpretation of Notifications and Public Notices:

The court examined the notifications and public notices, particularly Notification No. 38/2015-2020 and Public Notice No. 12/2015-2020. It found that neither document explicitly excluded the revised ITC HS Codes 29214920 and 29215940 from the MEIS scheme. The court concluded that the notifications were intended to synchronize codes with the Finance Act (No. 2) of 2019 and did not alter the eligibility of the petitioner's products for MEIS benefits.

4. Authority and Finality of DGFT's Decisions on Policy Interpretation:

The respondent argued that the DGFT's decision on policy interpretation was final and binding, and MEIS benefits could not be claimed as a right. However, the court found that the DGFT's denial of benefits based on the alleged exclusion of revised codes was not supported by the notifications or public notices. The court emphasized that the revised codes were carved out from the old codes and should not have been excluded from the MEIS scheme. Thus, the petitioner's entitlement to benefits was upheld.

Conclusion:

The court allowed the petition, ruling that the petitioner was entitled to MEIS benefits for the products Para Cumidine and DASDA under the revised ITC HS Codes 29214920 and 29215940 until 31.12.2020. The court found that the denial of benefits was contrary to the relevant notifications and public notices, and the retrospective exclusion of the revised codes was unjustified. The rule was made absolute, and no costs were awarded.