2025-VIL-716-MAD-CU
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CUSTOMS High Court Cases

Customs – Cancellation of expired MEIS Scrips - Petitioner exported commercial vehicles and obtained MEIS benefits - Dept found that the goods exported by the petitioners were misclassified under ITC(HS) code 87060042 instead of codes 87012090, 87042219 and 87054000. Consequently, the authorities initiated proceedings to cancel the excess MEIS scrips issued to the petitioners at the rate of 3% instead of 2% - Whether the MEIS scrips, which were already availed of and whose validity period of 24 months had expired, can be cancelled by exercising jurisdiction under Section 9(4) of the Foreign Trade (Development and Regulation) Act, 1992 read with Rule 10 of the Foreign Trade (Regulation) Rules, 1993 – HELD - Even if the validity period of the MEIS scrips has expired, the authorities can still cancel the scrips as the cancellation is not merely of the document but of the effectiveness of the decision that resulted in the issuance of the scrip. The Court disagreed with the judgment of the Punjab and Haryana High Court in M/s. Supreme Castings Ltd. case, which held that something cannot be cancelled when it has already ceased to exist - The Section 9(4) of the FTDR Act must be given a wider meaning to enable the authorities to recall an order or a decision which resulted in the issuance of the scrip, when it is ultimately found that such order or decision requires reconsideration - 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 - 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 - The alleged contravention against the petitioners does not pertain to the law relating to customs or foreign exchange or the rules and regulations made thereto - the impugned order passed by the Appellate Authority is quashed and the matter is remanded back to the file of the appellate authority to deal with the appeal on its own merits – The writ petitions are allowed - 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 - 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 – HELD - The alleged contravention against the petitioners does not pertain to the law relating to customs or foreign exchange or the rules and regulations made thereto. It is a clear case of contravention of a foreign trade policy. The question is whether it will come within the scope of Rule 10 (d) - Since the Appellate Authority has not applied its mind and stated the reasons as to how the order is sought to be justified in line with Section 9(4) of the FTDR Act r/w Rule 10 of the Foreign Trade (Regulation) Rules, 1993, this Court does not want to substitute its mind and assign reasons in the place of the Appellate Authority - the impugned order passed by the Appellate Authority is quashed and the matter is remanded back to the file of the appellate authority to deal with the appeal on its own merits and in accordance with law.
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