2019 (3) TMI 984 - HC - Customs

Court quashes denial of MEIS benefit to company, emphasizes proper classification for incentives.

Axiom Cordages Ltd. Versus Union of India & ors.

Axiom Cordages Ltd. Versus Union of India & ors. - 2019 (367) E.L.T. 49 (Bom.) 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.