TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1178
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....91 99 of the Customs Tariff Act, 1975. The appellants are one of the largest and leading research-intensive companies in the agricultural industry, offering a broad range of innovative and biological products for improving plant health, along with high value seeds. The appellants were exporting their manufactured products to various countries by availing export inventive schemes such 'Merchandise Exports from India Scheme (MEIS) under Chapter 3 of the Foreign Trade Policy 2015-2020. 2.2 The issue under dispute, involved in the present case, is regarding revision of classification of exported insecticides under CTI 3808 6100/ 3808 6200/ 3808 6990 proposed by the department, as opposed to declared classification of export goods by the appellants, as mentioned in various Shipping Bills under CTI 3808 9137/ 3808 9199, and consequent denial of export benefits under the Merchandize Exports of India Scheme ('MEIS'). On the basis of such understanding, the department had had proposed for reclassifying the exported goods on the basis of Sub-Heading Note 2 to Chapter 38 of First Schedule to the Customs Tariff, besides confiscation of such goods under Section 113(i) of the Customs Act, 196....
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....ds is the Second Schedule of Customs Tariff ('Second Schedule / Export Tariff') which pertains to export of goods from India. As per Notes to Second Schedule, only General Rules of Interpretation of the First Schedule, Section and Chapter Notes shall alone apply to the interpretation of Second Schedule. Thus, the sub-heading note 2 to chapter 38 shall not be applicable to export goods under the second schedule, and therefore the entire show cause proceedings is without authority of law and therefore he claimed that the impugned order is liable to be set aside. 3.3 Learned Advocate also submitted that the disputed issue is no more res integra, as in similar cases the Tribunal have held the case in favour of the appellants. In this regard, he relied upon the decision of the Tribunal in the case of Bharat Rasayan Limited Vs. Commissioner of Customs, Nhava Sheva-II, District Raigad - (2025) 29 Centax 1 (Tri.-Bom), wherein it was held that customs authority have no right or power to go beyond the licence granted by DGFT in respect of MEIS and re-determination of the classification of already exported goods, in the absence of any export duty involved therein and resultant confiscation....
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....above substitution in the First Schedule to the Customs Tariff Act, 1975. The goods in question were Insecticides described as SPFACE, SOLOMON, SHOONA etc., containing Deltamethrin and Cyfluthrin of Technical and formulation grade, which covered under Sub-heading note 2 and thus deserving merit classification was under CTH 3808 6100 or 3808 6200 or 3808 6900, (as the case may be) wherein MEIS was NIL. xxx xxx xxx xxx (v)..So, I find that M/s Bayer Crop Sciences Ltd. that had intentionally mis-classified the goods as each of those products were known to Bayer Crop Sciences Ltd. and they had separate heading for goods specified under sub-heading note 2 leaving little scope for mis-understanding. Therefore, I find that the exporter had mis-classified the goods under CTH items 3808 9199 as the subject goods are correctly classifiable under CTH item 3808 6100, 3808 6200 and 3808 6900 and the same were based on packing of net weight content. xxx xxx xxx xxx 25.1 (ii) I find that the rates of MEIS of various products including subject goods are as per the corresponding ITC (HS) code wise. I notice that the benefit of the MEIS is not available under the ....
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....lants as to whether, the same merits classification under Customs Tariff Item (CTI) 3808 9199 as claimed by the appellants; or, is it classifiable under CTI 38086100 or CTI 38086200 or CTI 38086900 as determined by the learned Commissioner of Customs, for deciding on the eligibility to export incentive/MEIS benefit, in respect of various Shipping Bills filed during the disputed period. (ii) Whether the Customs authorities can demand export benefit under Section 28(4) and/or 28AAA of the Customs Act, 1962, when the MEIS scrips have not been cancelled by the DGFT? (iii) Whether the extended period of limitation for recovery of export benefit is invocable, and whether confiscation of goods and imposing of redemption fine, imposition of penalties on the appellants are legally sustainable, especially considering the facts and circumstances involved in the present case? 8.1 In order to address the above issues of classification of exported goods and consequential eligibility of MEIS benefits, we would like to refer the relevant legal provisions contained in Section 12 of the Customs Act, 1962; the Customs Tariff Act, 1975 and rules framed thereunder for consideration....
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.... Schedule." 8.2 On plain reading of the above legal provisions, it transpires that for the purpose of classification of imported goods, the relevant schedule is the First Schedule to the Customs Tariff and the relevant terms of the headings and any relative Section or Chapter Notes as may be applicable. The subheading notes are given for ease of reference, in classification of the goods, wherever it is warranted, in terms of the national treatment required for domestic market. For the purpose of classification of export goods, the relevant schedule to be looked into is the Second Schedule to the Customs Tariff i.e., the Export Schedule. Though there are no separate Section Notes or Chapter notes provided therein, for the purpose of determination of appropriate classification among the limited number of goods provided under a single table consisting of 63 odd items, for the purpose of levy of export duty, the Section Notes and Chapter Notes alone are made applicable for the Second Schedule. Therefore, it is evident that 'Sub-Heading Notes' of First Schedule to the Customs Tariff i.e., Import Tariff have not been made applicable for interpreting the Second Schedule i.e., Export Ta....
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....hlorfenapyr (ISO), cyfluthrin (ISO), deltamethrin (INN, ISO), etofenprox (INN), fenitrothion (ISO), lambda-cyhalothrin (ISO), malathion (ISO), pirimiphos-methyl (ISO) or propoxur (ISO)." 8.4 The aforesaid changes have also been explained by the World Customs Organization in its Newsroom Report dated 28.10.2016, as follows: The Amendment in the HSN Classification in Chapter 30 and 38 was introduced to monitor and provide a separate category for products that could be used as antimalarial products. Further, WCO also published a Table correlating the changes made in the HSN in October 2016 comparing the tariff entries in HSN 2017 and HSN 2012 wherein it was clearly observed that sub-Heading 3808 61, 3808 62 and 3808 69 along with sub-Heading Note 2 were introduced to include antimalarial products solely. Further, a similar addition was also made to Chapter 30. Relevant extract of the Concordance table is reproduced as under: TABLE I - CORRELATING THE 2017 VERSION TO THE 2012 VERSION OF THE HARMONIZED SYSTEM 2017 Version 2012 Version Remarks 3002.19 ex3002.10 3003.41 3003.42 3003.43 3003.49 3003.60 3003.90 ex3003.40 ex3003.40 ....
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....alone have been transported from sub-heading 380891 to either of sub-headings 380861, 380862, 380869, by showing the first three entries with ex380891. Further, those goods which do not satisfy the sub-heading notes or not covered under the scope of such sub-heading notes are allowed to be continued to be classifiable under sub-heading 380891, as the ex380891 appear both at prior 2012 and post amendment 2017 in the fourth/last entry. It is a fact on record that the subject goods being mixtures and insecticides are not those goods having antimalarial properties containing any of the specified substances. Therefore, we are of the considered view that the appellants have correctly classified the exported goods under Sub-Heading 3808.91, and therefore even on this account, the impugned Order is liable to be set aside. 9.1 We find that this Bench of the Tribunal, in an identical set of facts involved in the respondent's Commissionerate, in respect of another exporter M/s Heranba Industries Limited (supra), have examined all the disputed issues including issues at 7(ii) & 7(iii) in detail, and have held these in favour of the appellants by setting aside the order of the Commissioner. ....
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....gent views, of the various High Courts, there was a bona fide doubt as to whether or not such an activity amounted to manufacture. This being the position, it cannot be said that merely because the Appellants did not take out a licence and did not pay the duty the provisions of Section 11A got attracted. There is no evidence or proof that the licence was not taken out and/or duty not paid on account of any fraud, collusion, wilful mis-statement or suppression of fact. We, therefore, set aside the demand under the show cause notice dated 3rd May, 1993." 11. We also find merits in the argument placed by the appellants that classification of goods under a particular CTH/CTI is a function of the department in assessment of goods, and claim to a particular classification in the shipping bill by exporter will not lead to suppression or wilful mis statement. Considering the above, we are of the view that the charge of suppression is not sustainable against the appellants and consequently, the department has incorrectly invoked the extended period of limitation. 12. On limitation, though we are of the considered opinion that the show cause proceedings cannot be sustained,....
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....roper officer in Section 28AAA is for the limited purpose of ensuring that a certificate wrongly obtained under the Customs Act could also be evaluated on parameters specified in that provision. However, the said stipulation cannot be construed as conferring authority on the proper officer to question the validity of a certificate or scrip referable to the FTDR Act." 13. In the present case, since the competent authority under the FTP i.e., the DGFT having not ruled against the appellants' claim for the benefits under MEIS, it would not be open for the Customs authorities to take punitive action against the appellants for denying the benefits under such scheme. We find that on the issue of wrongful availment of MEIS Scrip in an identical case, involving the product in question i.e., Lamda Cyhalthrin Technical, the Tribunal in the case of Bharat Rasayan Ltd Vs. Commissioner of Customs - 2024 (5) TMI 281, has held that customs authorities have overstepped their jurisdiction by resorting to re-classification of the export goods, when the MEIS scrips were not cancelled by the DGFT. For arriving at such a conclusion, the Tribunal in the said case has referred to and analysed th....
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....ance License to the appellant mentioning HS code 38089199 for their final product 'Lambda Cyhalothrin Technical'. He also submits that the customs department has no authority to cancel the scrips issued by DGFT i.e. the licensing Authority. And once this contention finds favour with the Tribunal, the question of redemption fine, interest or penalty does not arise. Per contra learned Authorised Representative appearing on behalf of revenue supported the findings recorded in the impugned order and prayed for dismissal of appeal. According to learned Authorised Representative considering the description of CTH and subheading 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/pr....
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....993 also provides that DGFT is the only authority which can withdraw the MEIS benefits by cancelling the license granted by them. For ease of reference the said Rule 10 is extracted as under:- "10. Cancellation of a licence. - The Director General or the licensing authority may by an order in writing cancel any licence granted under these rules if - (a) the licence has been obtained by fraud, suppression of facts or misrepresentation; or (b) the licensee has committed a breach of any of the conditions of the licence; or (c) the licensee has tampered with the licence in any manner; or (d) the licensee has contravened any law relating to customs or foreign exchange 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....
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....-claimed or illegally claimed MEIS benefits alongwith interest is 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, part-paid 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 ....
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....in of the agency designated under Foreign Trade (Development & Regulation) Act, 1992 and no other. To invalidate exports, it is necessary for customs authorities to invoke section 113 of Customs Act, 1962 and Section 113(i) in particular. Under this provision, only goods entered for exportation can be subject to confiscation and, as per section 2(18) 'export' means 'taking out of India to a place outside India,' implying that once goods have left India they cease to be under exportation. Such exports, under Section 51 of Customs Act, 1962, attain finality and can be reopened only if duty has not been collected or goods are found to be prohibited; there is no other empowerment for post-export confiscation. Eligibility for any benefit arising therefrom lies alone within the exclusive domain of the agency designed under Foreign Trade (Development and Regulation) Act, 1992 as the shipping 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 Cust....
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....customs authority will have no right or power to go beyond the licence and determine the classification or reclassifying the same. It is only the licensing authority who has to determine the said question at the time of granting licence. 16. Before parting with this matter, there is another aspect of the present proceedings that needs highlighting. The exercise of rejecting the entitlement to the scrip commenced with reclassification of the export goods, for assigning a different tariff item in Schedule to Customs Tariff Act, 1975. The classification of the goods is exclusive to Section 12 of Customs Act, 1962 and that too only for levy of duty. The classification declared by the exporter can be disturbed only by reference to the General Rules for Interpretation of the Export Tariff appended to Customs Tariff Act, 1975. Like undertaking of reclassification for imported goods, it is necessary that the onus of identifying the correct classification as substitute for declared classification rests with the assessing officer/proper officer. Such reclassification is to be undertaken solely for the purpose of conformity with the General Rules for Interpretation and not for any ot....