TaxTMI 
TaxTMI 
2026 (4) TMI 760
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....t goods under 588 Shipping Bills (S/B), against which 58 MEIS scrips were obtained from Director General of Foreign Trade ('DGFT'). The Directorate of Revenue Intelligence (DRI) had initiated investigation against the appellants on the information that they had been exporting the subject goods by allegedly mis classifying them under CTI 3808 9910 or CTI 3808 9990, instead of sub-headings 380891, 380892 or 380893 and claiming higher MEIS i.e., 3% instead of 2%. On the basis of the investigation, DRI had issued Show Cause Notice (SCN) to the appellants, seeking recovery of ineligible MEIS duty amount to Rs.3,17,54,058/-, by reclassifying the impugned goods under subheading 380891, 380892 and 380893 and for payment of interest and imposition of penalty. The SCN dated 20.10.2020 was adjudicated by the learned Commissioner of Customs, NS-II, JNCH, Raigad vide Order-in-Original No.92/2022-23/Commr./NS-II/CAC/JNCH dated 23.02.2023 (for short, referred to as 'the impugned order'), in rejecting the classification of the goods as claimed by the appellants and directed to classify the goods as per Annexure-A to the SCN. Further, the impugned order has also appropriated the amount de....
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....se of the appellants themselves. The period of dispute in the said decided case is from 2017 to 2019, and the period involved in the present appeal is from 01.04.2015 to 06.07.2018. In the said order, the SCN dated 20.10.2020 was referred to, which pertains to the present appeal filed by the appellants. In the order dated 08.08.2025, the Tribunal has elaborately discussed the issues with regard to proper classification of the subject goods, limitation aspect for initiation of SCN proceedings, competency of the customs department for initiation of proceedings against the appellants, especially in the circumstances, where the SCN issued by the DGFT had not been adjudicated by the competent authorities under the FTP. Upon analysis of the factual matrix involved in the case pertaining to the subsequent period, the following questions were framed by the Tribunal in the Order dated 08.08.2025 for consideration. (a) Whether the Customs Department can demand export benefit under Section 28 (4) and/or 28AAA of the Act of 1962, when the MEIS scrips have not been cancelled by the DGFT? (b) Whether the export benefit can be demanded by invoking Section 28(4) and /or 28AAA of ....
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....ed that the entire demand is barred by limitation, inasmuch as, once the DRI had issued SCN dated 20.10.2020 for the same products in dispute and that too for the same period, then SIIB-JNCH, which is also an investigating branch of Ministry of Finance, cannot issue the present show cause notice dated 28.09.2023, by invoking extended period of limitation. We are in agreement with the submissions made by the appellants that the extended period of limitation cannot be invoked for recovery of the adjudged demands from the appellants, in view of the fact that the entire facts regarding the exportation of the products in question and availment of MEIS benefits were within the knowledge of the department, when they had issued the first SCN dated 20.10.2020. We further note that both the SCNs have been issued for the same period and for the same products, which is impermissible in law. If the said act of different wings in the same department is accepted, then there will be no end to litigation, which is never the intention of the legislature to do so. Be that as it may, it is a settled law that second show cause notice cannot be issued invoking extended period, when the first show cause ....
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....n Annexure-Z, the SIIB (X)/JNCH continued the investigation in respect of Shipping Bills mentioned in Annexure-R." 9. On reading of the above quoted paragraph, it would transpire that the products under dispute having the same description and same period in dispute were part of the investigation under the DRI SCN dated 20.10.2020 as well. Accordingly, in view of the ratio laid down by the Hon'ble Supreme Court, in the case of Nizam Sugar Industries (supra), it was not open for SIIB-JNCH to issue the second SCN for the very same period, for which the first SCN was issued by DRI, invoking extended period of limitation. Considering the above, we are of the view that the allegation of suppression of facts etc., against the appellants cannot be sustained and accordingly, the impugned order deserves to be set aside on the ground of limitation itself. 10. We also find that the charge of suppression of facts cannot be sustained in present case, as the investigating authorities (SIIB and DRI) themselves were not clear about the correct classification of products under dispute. The same is evident from the fact that while the first SCN dated 20.10.2020 issued by DRI, propos....
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....nion that the show cause proceedings cannot be sustained, but it is also important to look into the issue of jurisdiction raised by the appellants in this appeal. It is the case of the appellants that Customs authorities have no power to reject the MEIS benefit under Section 28(4) and/or 28 AAA of the Act of 1962, when the MEIS scrips have not been cancelled by the DGFT. The entire case of the Customs department is confined to wrongful availment of MEIS scrip benefits by the appellants upon mis-classification of the products in dispute. We note that the MEIS scheme was introduced in the Foreign Trade Policy 2015-2020 (FTP 2015-20) as an incentive scheme for the export of goods. Objectives of the MEIS was to promote the manufacture and export of notified goods/products. The DGFT issues the MEIS scrips, upon verification of the documents submitted by an applicant to the effect of their truthful eligibility. For the purpose of availing the import benefits, the MEIS Scrip was very much available with the appellants. The Foreign Trade (Development & Regulation) Act, 1992 (in short "FTDR') provides for a proper procedure for cancellation of the scrips. Further, Rule 10 of Foreign Trade (....