2025-VIL-1084-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs - Classification of Water Treatment Chemicals, MEIS benefits, recovery of Customs duty - Appellant is engaged in the manufacture of water treatment chemicals, including 'Organophosphorus Compounds' (Acids and Salts) under the brand name 'Aquacid' - Appellant had been receiving export incentives in the form of a Focus Market Scheme (FMS) and later Merchandise Exports from India Scheme (MEIS) on the export of the said products - Show Cause Notice issued alleging that the appellant had misclassified the goods under Tariff Item No. 29319090 and the goods were more appropriately classifiable under the residuary Tariff Item 29313900 appearing in sub-heading "Other Organo-phosphorus derivatives" - Whether the goods exported by the appellant are appropriately classifiable under Tariff Item No. 29319090 as claimed by the appellant or under Tariff Item No. 29313900 as contended by the department - HELD - The expert opinion obtained by the appellant categorically stated that the goods manufactured by the appellant are 'Organophosphorus Compounds' and not 'Organophosphorus Derivatives'. The Revenue authorities, not being qualified scientific experts, lack the technical competence to opine on the nature of the subject products - The opinion/certificate of an expert is binding upon the Revenue and the same cannot be brushed aside, particularly when the authorities are not expert themselves and there is no evidence/material available to the contrary – The CRCL is a Departmental laboratory and the report submitted by it cannot be ignored or disregarded without any valid reason. The onus to prove the classification of a particular product lies on the Department, which the Department failed to discharge in the present case. Accordingly, the impugned goods are appropriately classifiable under Tariff Entry No. 29319090, as claimed by the appellant, and the reclassification of the goods under the CTH 29313900, in the impugned order is rejected - the demands of Custom duty confirmed under Sections 28 and 28AAA of the Customs Act, 1962, the penalties imposed under Sections 114A, 114AA and 114AB of the Act, and the redemption fine imposed in lieu of confiscation of the goods under Section 111(o) of the Act are set aside – the appeal is allowed - Whether the Customs authorities have the jurisdiction to question the eligibility of the appellant under the MEIS scheme and deny the benefit thereunder until such licenses have been cancelled by DGFT - HELD - The Circular No.334/1/2012-TRU dated 01.06.2012 clarified that the recovery proceedings under Section 28AAA can be initiated by the Customs authorities only after the DGFT initiates any action for cancellation of the instrument, and the matter shall be decided only after the instrument has been cancelled by DGFT. The Tribunal observed that in the present case, no proceedings for cancellation of the MEIS Scrips have been initiated by the DGFT except in respect of 18 licences, and even those proceedings remain unadjudicated as on date - In the absence of any cancellation of the MEIS licenses by the DGFT, the recovery proceedings initiated by the Customs authorities are not sustainable.
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