Customs authorities cannot retroactively reclassify exported goods or deny MEIS benefits without prior cancellation by the DGFT, upholding exporters' rights based on valid issued scrips.

Per: M.M. PARTHIBAN

This appeal has been filed by M/s Bayer Crop Science Limited, Thane (herein after, referred to as ‘the appellants’, for short), assailing the Orders-in-Original No. 190/2023-24/Commr/NS-II/CAC/JNCH dated 06.12.2023 (herein after, referred to as ‘the impugned orders’), passed by the Commissioner of Customs (NS-II), Jawaharlal Nehru Custom House (JNCH), Nhava Sheva.

2.1 Briefly stated, the facts of the case are that the appellants herein, inter alia, is engaged in manufacture of Agrochemicals, Pesticides, Insecticides and Herbicides, and mainly export insecticides viz. ‘ADMIRE’, ‘DECIS’, ‘SHOONA, ‘SOLFAC’, ‘SOLOMON’ by classifying such goods under Customs Tariff Item (CTI) 3808 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 , 1962 and for imposition of penalties on the appellants under Sections 114 (iii), 114AA and 114AB ibid. The Show Cause Notice (SCN) was adjudicated resulting in confirmation of the adjudged demands vide the impugned order dated 06.12.2023. Feeling aggrieved with the said impugned order, the appellants have preferred this appeal before the Tribunal.

3.1 Learned Advocate appearing for the appellants submitted at the outset, that the Special Intelligence and Investigation Branch (SIIB) of the department had earlier initiated similar proceedings in respect of export of Alphacypermethrin in the year 2019 by their group company M/s Bayer Vapi P Ltd. During such investigation, the appellants had represented vide their letters dated 18.02.2020 and 18.03.2020 to Chief Commissioner of Customs, JNCH, Nhava Sheva, and Additional Commissioner of Customs, SIIB Exports, JNCH, Nhava Sheva. After due verification and examination, SIIB vide its letter dated 10.08.2020 informed that they did not find any misdeclaration of the subject goods viz. Alphacypermethrin and these goods have been rightly classified by the appellants under CTI 3808 9199. Under such background, the SIIB wing of the department had again started one another investigation in 2022 in respect to claim of benefit under MEIS on export of subject goods containing Alpha cypermthrin, Deltamethrin and Cyfluthrin for the period 01.04.2017 to 31.12.2020, which they claimed is improper.

3.2 Further, he submitted that the sole basis in the above investigation to revise the classification based on sub-Heading Note 2 to Chapter 38 to the First Schedule (import tariff) to the Customs Tariff, which was in existence when the first investigation was undertaken and concluded by SIIB. Therefore, learned Advocate claimed that such investigation to deny MEIS claim on account of alleged mis-classification and recover the same under Section 28AAA and/ or 28(4) of the Customs Act , 1962 and impose redemption fine and penalty is ab-initio improper and the confirmed demands are not sustainable. In this regard, he further submitted that the en