Customs exceeded authority by cancelling MEIS scrips; only DGFT can cancel, customs recovery limited to s.28(4).

CESTAT held that customs authorities exceeded their jurisdiction by reclassifying exported goods and cancelling MEIS scrips; only DGFT may cancel or recover MEIS benefits and customs can recover duty/interest under s.28(4) only. The tribunal noted a manifest clerical error in the penalty amount evidencing non-application of mind. The impugned order cancelling MEIS benefits for multiple shipping bills was set aside, the scrips restored to the appellant, and the appeal allowed with consequential reliefs in accordance with law.

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Issues Involved:
1. Classification of Goods
2. Confiscation and Redemption Fine
3. MEIS Benefits and Recovery
4. Jurisdiction of Customs Authorities

Summary:

1. Classification of Goods:
The appellant exported "Lambda Cyhalothrin Technical" under CTH 38089199 and claimed MEIS benefits. The customs department reclassified the goods under CTH 38086900, which does not qualify for MEIS benefits. The appellant argued that the classification under CTH 38089199 was industry practice and approved by DGFT. The Tribunal noted that the customs department lacks authority to cancel DGFT-issued scrips and emphasized that only DGFT can cancel licenses or MEIS benefits.

2. Confiscation and Redemption Fine:
The Commissioner ordered the confiscation of goods covered under the current and past 53 shipping bills, imposing redemption fines. However, discrepancies in the numerical and written amounts of fines and penalties indicated non-application of mind by the adjudicating authority. The Tribunal highlighted the necessity for careful adjudication.

3. MEIS Benefits and Recovery:
The customs department sought to recover MEIS benefits of Rs. 5,86,95,000/- u/s 28(4) of the Customs Act, 1962, along with interest and penalties. The Tribunal ruled that the customs authorities cannot cancel or recover MEIS benefits without DGFT's action. MEIS benefits are governed by the Foreign Trade Policy 2015-20 and can only be withdrawn by DGFT following due procedure.

4. Jurisdiction of Customs Authorities:
The Tribunal emphasized the distinct roles of DGFT and customs authorities. Customs authorities' jurisdiction is limited to levy and recovery of customs duties, not the administration of MEIS benefits. The Tribunal cited the Supreme Court's ruling in Titan Medical Systems (P) Ltd v. Collector of Customs, New Delhi, affirming that customs authorities cannot question licenses issued by DGFT.

Conclusion:
The customs authorities overstepped their jurisdiction by reclassifying exported goods and canceling MEIS scrips. The Tribunal set aside the impugned order, restored the MEIS benefits to the appellant, and allowed the appeal with consequential relief.

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