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TMI Blog2024 (5) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... s recoverable by the Regional Authorities of DGFT, if the scrip is issued to the Exporter and the same is not utilized for the payment of customs duty. Therefore, in the first place only the DGFT is empowered to cancel or recover the MEIS scrips and that too only if it s not utilized for payment of customs duty. What the customs authorities are trying to recover from the appellant u/s. 28(4) ibid is MEIS benefits already availed by the appellant during the years 2016-2019 which certainly they cannot do as under the said provision the customs department can recover only the duty not levied or not paid or short levied or short paid or erroneously refunded or interest not paid, partpaid or erroneously refunded by reason of collusion or willful mis-statement or suppression of facts and not the MEIS benefits and, that, too only on the ground of ineligibility to MEIS. The learned Counsel has also submitted that there is no customs duty liability on export of the impugned product even if the classification is changed and the issue is only about the availability of MEIS benefits to the appellant which we have already made clear. The role of customs authorities, if at all, may commence only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer. Such reclassification is to be undertaken solely for the purpose of conformity with the General Rules for Interpretation and not for any other purpose. Reclassification for any other purpose has no place in adjudication. Thus, we are of the view that the customs authorities have overstepped its jurisdiction by resorting to re-classification of exported goods and cancelling the MEIS scrips. The same are hereby restored to the appellants. Accordingly the impugned order is set aside and the appeal filed by the Appellant is allowed with consequential relief, if any, in accordance with law. - MR. C J MATHEW, MEMBER (TECHNICAL) AND MR. AJAY SHARMA, MEMBER (JUDICIAL) Shri B.L. Garg, Advocate for the appellant Shri Ranjan Kumar, AC(AR) for the respondent ORDER Instant Appeal has been filed assailing the impugned order dated 12.08.2022 passed by the Commissioner of Customs, NS-II, JNCH by which the classification of the goods as declared by the appellant was rejected in respect of 54 shipping bills (including 53 past shipping bills) and the goods were reclassified and option to redeem the goods covered under the single current shipping bill i.e. Shipping Bill No. 8838574 dated 9.10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and Bank Guarantee executed at the time of export. (iii) The impugned goods, covered under the past 53 shipping bills as detailed at Table -III, having declared FOB value of Rs.2,86,40,54,000/- appears to be mis-classified, though the goods are not available for confiscation, should not be held liable to be confiscated under the provisions of Section 113(i) of the Customs Act, 1962. (iv) The claimed MEIS of Rs.5,86,95,080/- (Rupees Five Crore Eighty Six Lakhs Ninety Five Thousand Eighty only) in respect of impugned 54 shipping bills should not be rejected and restricted to Nil, on the basis of re-classification of the subject goods under CTH 38086900. (v)MEIS scrips of Rs.5,86,95,080/- (Rupees Five Crore Eighty Six Lakhs Ninety Five Thousand Eighty only) which were obtained fraudulently by way of mis-classification of the impugned export goods covered under total 54 shipping bills and utilized towards the payment of Customs duty by M/s. Bharat Rasayan Ltd. should not be demanded and recovered from them under the provisions of section 28(4) of the Customs Act, 1962. (vi) Interest on duty demanded above, should not be demanded and recovered under section 28AA of the Customs Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Bond and Bank Guarantee executed at the time of export. iii) I confiscate the impugned goods, covered under the past 53 shipping bills as detailed at Table III, having declared FOB value of Rs.2,86,40,54,000/- under the provisions of Section 113(i) of the Customs Act, 1962. However, I give an option to redeem the goods covered under the past 53 shipping bills as detailed at Table-III, having declared FOB Value of Rs.2,86,40,54,000/- on Redemption Fine of Rs.25,00,00,000/- (Rupees Twenty Five Lakhs only) under the provisions of section 125(1) of the Customs Act, 1962 in lieu of confiscation. xxx xxx xxx (ix) I impose penalty of Rs.25,00,000/- (Rupees Twenty Eight Crores) of M/s. Bharat Rasayan Limited under Section 114AA of the Customs Act, 1962. [Emphasis supplied] On the shipping bill dated 09.12.2019 redemption fine in numerical is mentioned as Rs.2,00,000/- but in words its written as Rupees two lakhs and seventy thousand only. Similarly on past 53 shipping bills redemption fine under the provisions of 125(1) in numerical is mentioned as Rs.25,00,00,000/- whereas in words it is written as Rupees twenty five lakhs only . The amount of penalty on the appellant u/s 114AA in num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scription of CTH and sub-heading notes 2 of Chapter 38 there is no dispute that subject goods are appropriately classifiable under heading 3808 6900 as proposed by customs department. As a result the MEIS scrips were rightly cancelled by the department. 6. The period involved herein is from 2016 to 2019. Merchandise Exports from India Scheme (hereinafter referred to as MEIS ) was introduced in the Foreign Trade Policy 2015-2020 (FTP 2015-20) as an incentive scheme for the export of goods. Objective of the MEIS is to promote the manufacture and export of notified goods/products. Trade facilitation is a priority of the Government for cutting down the transaction cost and time, thereby rendering Indian exports more competitive. The rewards are given by way of duty credit scrips to the exporters. This scheme is notified by Director General of Foreign Trade (DGFT) and implemented by the Ministry of Commerce Industry. The said scheme aims to offset associated costs or infrastructural inefficiencies involved in export of goods or products produced or manufactured in India. The incentives under the said schemes are given in percentage, anywhere ranging between 2% to 5% of the realized free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange or the rules and regulations relating thereto. 8. In view of the aforementioned Act of 1992 and Rules, 1993 made thereunder, for withdrawing the MEIS benefits, the license issued to the exporter by the DGFT has to be cancelled firstly by the licensing authority i.e. DGFT. The customs department is not at all empowered to venture into the authority of DGFT to withdraw the MEIS benefits. Nothing has been brought on record to establish that DGFT has initiated any proceedings for cancelling the licence of appellant for alleged mis-classification or for withdrawing the MEIS benefit. The Customs authorities can initiate action for recovery under the Customs Act, 1962 only once DGFT initiates action for cancellation of an instrument and cancelled the same by following due procedure. Until the DGFT has taken any action for cancellation, the Customs department cannot recover the duty by discarding the scrips issued by DGFT. 9. Ineligible categories under MEIS have been provided under clause 3.06 of FTP and it provides that the following exports categories/sectors shall be ineligible for Duty Credit scrip entitlement under MEIS: (i) Supplies made from DTA units to SEZ units. (ii) Expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression of facts and not the MEIS benefits and, that, too only on the ground of ineligibility to MEIS. The learned Counsel has also submitted that there is no customs duty liability on export of the impugned product even if the classification is changed and the issue is only about the availability of MEIS benefits to the appellant which we have already made clear. 12. Hon'ble Supreme Court in the matter of Titan Medical Systems (P) Ltd v. Collector of Customs, New Delhi; 2003(151) ELT 254 (SC) has laid down that once an advance licence was issued and not questioned by the licensing authority, the customs Authorities cannot refuse exemption on an allegation that there was misrepresentation because if there was any misrepresentation, it was for the licensing authority to take steps in that behalf. The Hon ble Supreme Court has held that if the licensing authority i.e. DGFT has not questioned the veracity of the transactions undertaken under the license, the customs authorities cannot refuse exemption on an allegation that there was any misrepresentation. Likewise in the present situation the appropriate authority could only be the authority which issued the license i.e. DGFT and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing bill cannot be nullified except in the said circumstances. 14. The role of customs authorities, if at all, may commence only upon presentation of scrips for clearance of exported goods that too in accordance with Notification No. 24/2015-dt. 8.4.2015 issued u/s. 25 of the Customs Act, 1962. Once the scrips are issued and are presented before customs authorities to be debited towards duty liability as assessed, the acceptance thereof is governed by the notification (supra) issued u/s. 25 ibid. This is segregation of jurisdiction, which is implicit in the notification applicable to utilization of scrips on imports of goods. There is, thus, no concurrent jurisdiction over the stages involved between export and import and each stage is governed to the limits of licensing and assessment jurisdiction by the respective statutes. 15. The functions of the licensing authorities and the customs authorities operate in different fields. The function of the licensing authorities is to consider whether any particular item should be allowed to be imported or exported due to various circumstances such as the requirement of the item, the amount of foreign exchange involved, permissibility and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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