2024 (3) TMI 649 - AT - Customs

Wilful misdeclaration or suppression of facts - Benefit of Merchandise Export from India Scheme (MEIS) - Export of various frozen seafood - exporting goods as Frozen Leather Jacket Fish - classified under 03031900 Or under 03038999 - interest and penalty - whether the appellant is eligible for the benefit of MEIS scrips - HELD THAT - The Commissioner in the impugned order states that the goods were misclassified to avail the benefit of MEIS but the fact remains that the goods were clearly described as Leather Jacket Fish classified under Chapter Heading 03031900 which was eligible for MEIS during the relevant period. And only an account of reclassification, the Revenue alleges wilful mis-classification without any evidence on record to prove that the appellant had suppressed any facts or wilfully misclassified their products. On the other hand, the classification by the appellant was accepted and the exports were allowed based on these approved documents and on verification of the export documents the scrips were issued by DGFT. There is no allegation by the DGFT that there had been any suppression or mis-declaration of any of the facts for the issuance of the scrips. Moreover, when the authorities hold that the scrips were valid scrips in the hands of the importers, the question of them becoming invalid in the hands of the exporter appears to be too farfetched. The letter which has been reproduced above categorically states that the exports even though have taken place under chapter heading 03031900 during the relevant period need to be regularised, therefore, since the scrips issuing authority has no objection to accept these shipping bills for the benefit of MEIS the question of denying the benefit by the customs only for the reason that the change in classification is not sustainable. None of the elements in Section 28AAA have been adduced by the Revenue to invoke these provisions after nearly 3 years of the issue of the Public Notice No.27/2015 dated 14.7.2015. Admittedly in all the relevant documents Leather Jacket Fish is the description of the products and therefore, the allegation of mis-declaration does not sustain. Thus, we do not find any reason to uphold the impugned order and therefore, the impugned order is set aside. The appeal is allowed with consequential benefits if any.

Summary

Issues Involved:
1. Misclassification of Export Goods
2. Eligibility for MEIS Benefits
3. Invocation of Section 28AAA of the Customs Act, 1962
4. Validity of MEIS Scrips for Importers

Summary:

1. Misclassification of Export Goods:
The appellant, M/s. Dolphin Wires Pvt. Ltd., exported 'Frozen Leather Jacket Fish' under Chapter Heading 0303 1900 and claimed MEIS benefits. The Directorate General of Foreign Trade (DGFT) later deleted Chapter Heading 0303 8999 from the MEIS schedule. The Directorate of Revenue Intelligence (DRI) found that the appellant had misclassified the goods to claim ineligible benefits. The Commissioner confirmed the misclassification and imposed a demand of Rs.1,34,51,498/- along with interest and a penalty of Rs. 13,50,000 under Section 114AA.

2. Eligibility for MEIS Benefits:
The appellant argued that they consistently classified the goods under Chapter Heading 0303 1900 from 2014 onwards and claimed MEIS benefits in good faith. They contended that there was no evidence of intentional misdeclaration or suppression of facts. The DGFT had issued the MEIS scrips after verifying the documents, and the Customs accepted the classification at the time of export.

3. Invocation of Section 28AAA of the Customs Act, 1962:
The Tribunal examined the provisions of Section 28AAA, which allows recovery of duties if an instrument is obtained by collusion, wilful misstatement, or suppression of facts. The Tribunal found no evidence of collusion or suppression by the appellant. The classification under Chapter Heading 0303 1900 was accepted by Customs, and the DGFT issued the scrips based on verified documents. The Tribunal referenced the Supreme Court's decision in Northern Plastic Limited vs. Collector of Customs and Central Excise, which held that unless suppression or wilful misstatement is proved, invoking Section 28AAA is unsustainable.

4. Validity of MEIS Scrips for Importers:
The Commissioner dropped the demand against importers who utilized the MEIS scrips, stating that the scrips were valid and legally obtained. The Tribunal noted that if the scrips were valid for importers, they should also be valid for the exporter. The DGFT's letter confirmed that exports of Leather Jacket Fish under Chapter Heading 0303 1900 during the relevant period should be regularized.

Conclusion:
The Tribunal found no reason to uphold the impugned order, setting it aside and allowing the appeal with consequential benefits. The Tribunal emphasized that the reclassification by the department after the DGFT's Public Notice cannot be detrimental to the appellant's interests, and the elements required to invoke Section 28AAA were not proven.