TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1092
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.... 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 Bhagavat WP.Nos.18342,13372, 18347, 18351, 18354, 18356,1....
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.... 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 period from 2016 to 2021 by misclassification of the subject goods. 7.Aggriev....
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.... 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 22.04.2016 to 24.10.2019 130 9128827 TOTAL 2302 2421133 9. I submit that in response to the audit Consultativ....
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....R1)&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. 13. I submit that on detailed verification of the MEIS license data obtained from EDI, it was noticed that in respect of 2302 shipping bills covered in the three Consultative Letters, t....
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....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 licence.- 9.(1) The Central Government may levy fees, subject to such exceptions, in respect of such person or class of persons making an application for licence, certificate, scrip or any instrument bestowing financial or fiscal benefits of in respect of any licence, cer....
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.... 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 procured against them shall be freely transferable. The Duty Credit Scrips can be used for : (i) Payment of Customs Duties for import of inputs or goods, including capital goods, as per DOR notification, except items listed in Appendix 3A. (Amended vide Notification No 8/2015-20 dated 4th June, 2015) (ii) Payment of excise duties on domestic procurement of inputs or goods, including cap....
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....t 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 petitioners gave a detailed reply. 17.The Adjudicating Authority, while passing the order in original, placed specific reliance upon Section 9 of the FTDR Act r/w Rule 8 of the FTDR Rules and partially cancelled the MEIS scrip. 18.Section 9 of the FTDR Act has been extracted supra. It will be more relevant to take note of Section 9(4) of the FTDR Act, which deals with suspension or cancellation of scrip by the Director General or the Officer authorised, subject to such conditions as may be prescribed for good and sufficient reasons to be recorded in writing. The "conditions a....
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....lause 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 1993 is satisfied, the very order passed will become illegal since it will be construed as without jurisdiction. 23.It is an admitted case that the first scrip was issued on 28.02.2016 and the last scrip was issued on 02.06.2021 for exports made upto October 2019. These scrips are valid for a period of 24 months and the same is evident from para 3.13 of the handbook of procedures. Even the last scrip issued during the relevant period had expired on 01.06.2023. However, the action for cancellation of scrips was initiated by the Deputy Director General of Foreign Trade only on 25.08.2023 whe....
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....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 unit was liable to be withdrawn at any time during its currency under 10 of 16 specified circumstances, the learned Court held that the eligibility certificate could be withdrawn only during its currency and not after the maximum period for its validity had expired. The relevant extract from the judgment is as under: "A perusal of the conditions of eligibility certificate granted to the petitioner shows that the maximum amount of benefit available to the petitioner was fixed and also maximum period during which the benefit could be availed of that is Rs. 1,63,66,999/- for the period from 28.3.1998 to 27.3.2005 respectively. It is fu....
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.... 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 independently deal with the issue of cancelling the license retrospectively. 26.Section 9(4) of the FTDR Act speaks about the suspension or cancellation of a scrip. There is no doubt that a license or a scrip can be suspended only during its period of validity. The question that arises is whether such a license/scrip can be cancelled after its lifetime. In other words, what remains to be cancelled after the validity period of the license/scrip which has already come to an end. 27. Punjab and Haryana High Court, relying upon the Black's Law Dictionary, understood the term "cancel" and came to the conclusion that to cancel a license, it should be existing or subsisting an....
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....ich 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 has to fall within the descriptions under headings 8702-8704. Consequently, the petitioner is only entitled for 2% and not 3% as claimed by the petitioners. 32.The proceedings that have been initiated by the Customs Department on the very same issue are now pending before the Customs Excise and Service Tax Appellate Tribunal [CESTAT] Chennai. If for the sake of arguments, if this Court is inclined to accept the classification made by the respondents, it must be seen as to whether it can result in the cancellation of the license/scrip under Section 9(4) of FTDR Act r/w Rule 10 of the Foreign Trade (Regulation) Rules 1993. The scope of the above rule has already been discussed supra. ....