TaxTMI 
TaxTMI 
2025 (7) TMI 1092
X X X X Extracts X X X X
X X X X Extracts X X X X
....9747, 19750, 19752, 19763, 19828, 19831, 19832, 19834, 19835, 19860, 19865, 19867, 19869, 19873, 19875, 19879, 19880, 20359, 20361, 20365, 20368, 20369, 6052, 6061, 6057, 6065, 6042, 6047, 6054, 13393, 13368, 13375, 13376, 13379, 13381, 13385, 13387, 13391, 13604, 13606, 13614, 13618, 13625 of 2025 ect batch & All connected WMPs Honourable Mr. Justice N. Anand Venkatesh For the Petitioner in all WPs : MR. Raghavan Ramabadran for M/S. Lakshmi Kumaran and Sridharan ATTORNEYS WP.Nos.16643, 16647, 16649, 16650, 16652, 16653 and 16655 of 2024 For the R1 & R2, R3 & R4 : DR.Babu, SCGPC, MR.Rajinish Pathiyal, SPC WP.Nos.6042,6047, 6052,6054, 6057, 6061 and 6065 of 2025 For the R1 and R2 : MR. V. Chandrasekaran, SPC WP.Nos.19216,19221,19217,19218, 19220 19647, 19651, 19653,19656, 19658,19647, 19727, 19750, 19752 and 19763, 19828, 19831, 19832, 19834 and 19835 of 2025 For the R1 & R2 : MR.R.Rajesh Vivekananthan, DSGOI For the R3 & R4 : MR.Rajinish Pathiyal,SPC WP.Nos.13368, 13375, 13376, 13370, 13381, 13385, 13387, 13391 and 13393 of 2025 For the R1 & R2 : M/S. Sushma, SPC WP.Nos.20359,20361,20635,20368, and 20369 of 2025 For the R1 & R2 : MR.T.Srikrishna Bha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting that the petitioners had obtained an excess amount of MEIS benefits by way of misclassification of commercial vehicles consisting of chassis, engine, driver cabin, wheel, fuel tank etc., under CTH 87060042 and hence the authority was proposing to take penal action under the Foreign Trade [Development and Regulation] Act, 1992 [for brevity referred to as "FTDR Act"]. In the show cause notice, it was informed to the petitioners that they had obtained MEIS incentives at the rate of 3% instead of 2% by way of misclassification of the subject goods under CTH 87060042. 6.The petitioners submitted their reply to the show cause notice, and thereafter, they were called for personal hearings and ultimately the Adjudicating Authority passed the order in original, retrospectively partially cancelling the MEIS scrips issued in excess of 1%. The Adjudicating Authority ordered the partial cancellation of MEIS scrip in each case which is equal to the excess amount availed by the petitioners and arrived at the revised value of the scrip. The order was passed on the ground that the licensee had claimed the MEIS benefits at 3% instead of 2% as per Appendix 3B of the MEIS Schedule during the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cancelled the MEIS scrips issued to the excess of 1%. The same was also confirmed in the appeal by the Appellate Authority, after affording opportunity. Accordingly, they have taken a stand that there are no merits in these writ petitions and have sought for the dismissal of the same. 9.The 3rd and 4th respondents, viz., the Customs Department, have filed a separate common counter affidavit, which has been adopted in all the writ petitions. The relevant portions are extracted hereunder: 8.I submit that subsequently three audit Consultative Letters were issued to the petitioner informing them to repay the excess MEIS benefits availed which for a sum of Rs. 24,21,13,329/- along with applicable interest. The Details of the letters and the shipping bills are tabulated as follows: S.No. CL.No. CL Date Port Code Period No.of shipping bills CL Amount 1 CHE/70/CIII/TBA-3/2021-Audit 12.03.2021 INMA A1 & INKAT 1 19.03.2016 to 22.10.2019 460 35059437 2 CHE/81/CIII/TBA-4/2021-Audit 15.03.2021 INEN R1 & INKAT 1 14.03.2016 to 27.08.2019 1712 1979250 3 CHE/208/CIII/TBA-12/2021-Audit 06.05.2021 INEN R1 22.04.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e following 4 ports viz., 779 Bills of Entry in ICD, Irungattukottai Port(INILP6), 106 Bills of Entry in Chennai Seaport(INMAA1), 1 Bill of Entry in Kamarajar Port/Ennore Port (INENR1)&1 Bill of Entry in Kattupalli Port(INKAT1). The Petitioner has paid import customs duties amounting to Rs. 100,43,51,482/- for the goods imported by them by the above mentioned Bills of Entry / Ports by debiting the MEIS Duty Crede Scrips containing undue excess MEIS rewards. The above said licenses were issued for the value which includes a total amount of Rs. 23,21,28,714/- issues against 2167 subject shipping bills. 12. I submit that though the Petitioner contested the audit classification proposed in the Consultative Letters, however, when it indicated that the vehicle models 'FUSO 4028T" and "FUSO 3340S exported by them vide & Shipping Bills are tractor models and are to be appropriately classified as "Road Tractors for semi Trailers of engine capacity more than 1800cc" under RITC/ITC HS Code 87012090 by the Officers of Audit Commissionerate, the Petitioner re-paid the excess MEIS of Rs. 11.04.260/- along with interest of Rs. 5,15,544/- vide TR6 challan no. 0005123 dated 04.03.2022.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....carefully considered the submissions made on either side and the materials available on record. 13.The following issues arise for consideration, in these writ petitions: (a) Whether the MEIS scrips which was issued during the relevant period (first scrip on 22.08.2016 and the last scrip on 02.06.2021),which were already availed of and of whose validity period of 24 months has also expired, can be cancelled by exercising jurisdiction under Section 9(4) of FTDR Act r/2 Rule 10 of the Foreign Trade (Regulation) Rules 1993. (b) Whether the authorities satisfied themselves on the fulfillment of the requirements of the relevant provisions before the retrospective cancellation of the scrips. (c) Whether the Appellate Authority properly applied its mind on the grounds raised by the petitioners while rendering the findings by assigning proper reasons. 14.Before venturing to decide the above issues, certain important provisions and a schedule has to be taken note of, and they are extracted hereunder: (a) Section 9 of the Foreign Trade (Development and Regulation) Act, 1992, is extracted hereunder; Issue, suspension and cancellation of licenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y instrument bestowing financial or fiscal benefits].-The Director- General or the licensing authority may by an order in writing cancel any [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] granted under these rules, if- (a) the [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] has been obtained by fraud, suppression of facts or misrepresentation; or (b) the [licensee or transferee] has committed a breach of any of the conditions of the [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits]; or (c) the [licensee or transferee] has tampered with the [licence, certificate, scrip or any instrument bestowing financial or fiscal benefits] in any manner; or (d) the [licensee or transferee] has contravened any law relating to customs or foreign exchange or the rules and regulations relating thereto. (c) Clause 3.02 of the Foreign Trade Policy [2015-2020] is extracted hereunder: 3.02 Nature of Rewards Duty Credit Scrips shall be granted as rewards under MEIS and SEIS. The Duty Credit Scrips and goods imported /domestically....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stn Pstn Engn Wth G.V.W.>5TonsBt<=20 Tons: Lorry and Trucks 2 2 0 (h).Sl.4540 is extracted hereunder: S.No. HS Code ITC(HS) Code Description of goods MEIS-Reward Rate (in%) Country Group Code A Country Group Code B Country Group Code C 4540 87060042 Chassis Fr Vhcls Hdng 8704 Excp Petrl Drvn 3 3 0 15.The show cause notice was issued to the petitioners by the Assistant Director General of Foreign Trade for cancellation of the MEIS scrips, imposition of penalty in terms of Section 11 of the FTDR Act and suspension/cancellation of the importer exporter code number in terms of Section 8 of the FTDR Act. In the show cause notice, it is made clear that the proceedings are initiated based on the inputs received from the Commissioner of Customs, Chennai. It was informed to the petitioners that there is a misclassification of the subject goods under CTH 87060042, and based on that misclassification, the petitioners have claimed MEIS benefits at the rate of 3% instead of 2% and hence, the excess MEIS scrips for the period from 2016-2021 were sought to be recovered. 16.On receipt of the show cause notice, the petition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assed an order in original, that gave a finding stating that the subject goods were bonafidely misclassified under CTH 87060042 and therefore the proceedings for imposing penalty was dropped. Hence, Rule 10(a) is not satisfied. 21.Rule 10(b) and (c) will not apply to the facts of the present case. The only other Clause to be taken into consideration is Rule 10(d). This Clause speaks about contravention of any law relating to customs or foreign exchange or the Rules and Regulations relating thereto. It only means that those rules must pertain to the customs or foreign exchange. This Clause is completely silent regarding contravention of the Foreign Trade Policy. 22.The authority who exercises the jurisdiction is a creature of the statute, and therefore the power has to be necessarily traced under that statute. The relevant statute is the FTDR Act, and the relevant provision is Section 9(4) which deals with the cancellation of scrips. The authority can cancel the scrips only subject to such conditions as may be prescribed and which is relatable to Rule 10. If the authority does not state in the order as to which condition under Rule 10 of the Foreign Trade [Regulation] Rules 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecutor's opening statement>. 2. To temporarily keep (a person) from performing a function, occupying an office, holding a job, or exercise a right or privilege<the attorney's law licence was suspended for violating the Model Rules of Professional Conduct>. {Cases: Licenses 38; Officers and Public Employees 65.}" 24. Obviously for something ( in this case the DEPB) to be cancelled or suspended it should be existing or subsisting. It is incongruous to cancel or suspend something that has ceased to exist. Obviously there is nothing subsisting to suspend or cancel, about a DEPB which has lost its validity, for it is no longer a DEPB but a piece of paper of no worth. 25. In M/s Stella Industries (P) Ltd. Vs. State of Haryana (2009) 20 VST 62 (P&H) a Division Bench of this Court was considering the question as to whether an eligibility certificate granted under Rule 28-A of the Haryana General Sales Tax Rules, 1975 could be withdrawn or cancelled after the benefit thereunder has been availed of or the currency of the eligibility certificate had expired. With reference to Rule 8(a) of the Rules, as per which, the eligibility certificate granted to an industrial u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rency is over, would be clearly beyond the enabling provisions of Sub Rule 8 of Rule 28A of the Rules." SLP (Civil) No.11053 of 2007 challenging the aforesaid decision was dismissed by Hon'ble the Supreme Court on 13.12.2007. Though there is no Rule comparable to Rule 28 A, in the Export Import Policy, but the judgment supports the conclusion that once the period of validity of the DEPB has expired no action to cancel or withdraw it can be taken because then there is no `DEPB' in existence to be cancelled and on which the cancellation order can operate. Cancellation of DEPB in such a situation is a meaningless order and can have no consequence. 26. Moreover, in Section 9(4) there is no power to cancel or suspend the licence retrospectively. 27. It is well settled that no action taken under a statute can have retrospective effect in the absence of a specific provision in the statute conferring such power. 25.The learned Additional Solicitor General appearing on behalf of the 1st and 2nd respondents, submitted that the above judgment only serves as a persuasive value and it does not have a binding effect. Therefore this Court, can indepe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r meaning to enable an authority to recall an order or a decision which resulted in the issuance of scrip, when it is ultimately found that such order or decision requires reconsideration. In view of the same, I am in respectful disagreement with the judgment of the Punjab and Haryana High Court referred supra. In the light of the above discussion, this Court holds that the MEIS scrips which were issued during the relevant period (first scrip on 22.08.2016 and the last scrip on 02.06.2021) can be cancelled even if the scrips are availed off and the validity period of 24 months has expired. 31.The dispute between the parties pertains to the description of the subject property, which was sought to be brought by the petitioners under ITC(HS) code 8706 and whereas the authorities have brought it under CTH 8704. On carefully going through the application that was submitted by the petitioners, it is seen that they have properly described the subject goods and also mentioned the relevant code as provided under Appendix 3(B). The authorities are of the view that what was exported was not merely chassis but it also included engine, driver cabin, wheel, fuel tank, etc, and therefore it ha....