2019 (12) TMI 572 - HC - Customs

Surrender of un-utilised MEIS scrips - Classification of export goods - Salmonidae - whether classified under HS Code 03031900 or under ? - HELD THAT - While it may be a fact that under the Customs Act the Customs authorities do look into the classification of a commodity for the purposes of recovery of the Customs duty evaded or avoided at the time of import/export of goods, it does not follow that the JDGFT is denuded of its jurisdiction with regard to the matters covered by the Foreign Trade (Development Regulation) Act and Rules. In the instant case the action taken by the JDGFT is traceable to the power conferred on him under the Foreign Trade (Development Regulation) Act, 1992 and hence, so long as the JDGFT has only found that there has been mis- classification, and consequent mis-declaration of goods, by the petitioners while claiming and receiving export benefits, he cannot be seen as acting without jurisdiction, or in excess of jurisdiction, while taking remedial action against the petitioner exporters. There is no jurisdictional error occasioned by the JDGFT while passing the orders impugned in these writ petitions - as per the Foreign Trade (Development Regulation) Act and Rules, there is an appeal provided against the impugned orders of the JDGFT, before the DGFT, which the petitioners can effectively pursue. Petition dismissed.

Summary

Issues:
Challenge to orders of Joint Director General of Foreign Trade (JDGFT) regarding MEIS benefits on export of Leather Jacket Fish under incorrect classification.

Analysis:
The writ petitions challenge the orders of the JDGFT regarding the classification of Leather Jacket Fish for MEIS benefits. The JDGFT found that the petitioners incorrectly claimed benefits for exporting fish under the 'Carangidae' family, which did not qualify for benefits during the export period. The JDGFT directed the petitioners to surrender unutilized MEIS scrips and placed their company under the Denied Entity List until compliance.

The main contention was that the JDGFT exceeded its jurisdiction by ruling on classification matters, which should fall under the Customs authorities' purview. However, the court disagreed, stating that the JDGFT's actions were within the scope of the Foreign Trade (Development & Regulation) Act and Rules. The JDGFT's power to address misclassification and misdeclaration of goods for export benefits was deemed legitimate under the Act.

The court emphasized that while Customs authorities handle classification for duty purposes, the JDGFT retains authority under the Foreign Trade Act. As the JDGFT's actions were based on misclassification findings, the court ruled that there was no jurisdictional error. It also noted that an appeal process existed for petitioners to challenge JDGFT orders before the DGFT.

Consequently, the court dismissed the writ petitions challenging the JDGFT's orders, advising petitioners to pursue the appeal process provided under the Foreign Trade Act. The judgment upheld the JDGFT's actions as valid within its jurisdiction, allowing petitioners to seek recourse through the appellate authority.