The cancellation of MEIS scrips requires strict adherence to statutory provisions, and retrospective cancellation without proper legal grounds is invalid.

COMMON ORDER

This batch of writ petitions assails the order passed by the Additional Director General of Foreign Trade, confirming the order in original passed by the Deputy Director General of Foreign Trade, partially canceling the Merchandise Exports Incentive Scheme (MEIS) scrip to the extent of excess amount availed by the licensee in all these writ petitions.

2.The petitioners are engaged in the activity of designing, manufacturing and selling Commercial Vehicles [trucks and buses] in India for domestic sales, as well as for exporting the said vehicles abroad. The petitioners exported the subject goods, which refer to commercial vehicles consisting of chassis, engine, driver cabin, wheel, fuel tank and obtained MEIS benefits from the year 2015 onwards.

3.The subject goods were classified under ITC(HS) code 87060042 in the shipping bills, and the petitioners had been classifying the subject goods under this code right from the inception of exports from the year 2013. For the export of the said goods, the petitioners claimed MEIS benefits at the rate of 3%.

4.For the export of subject goods, made between March 2016 to October 2019, the Audit Commissionerate, Customs, Chennai had initiated an enquiry into the exports made by the petitioners, and they were prima facie of the view that the goods, as declared in the shipping bills are to be classified under ITC(HS) codes 87012090, 87042219 and 87054000 and not under ITC(HS)87060042.

5.Based on the inputs received from the Commissioner of Customs, Chennai, the DGFT, Chennai issued a show cause notice dated 25.08.2023 stating that the petitioners had obtained an excess amount of MEIS benefits by way of misclassification of commercial vehicles consisting of chassis, engine, driver cabin, wheel, fuel tank etc., under CTH 87060042 and hence the authority was proposing to take penal action under the Foreign Trade [Development and Regulation] Act, 1992 [for brevity referred to as "FTDR Act"]. In the show cause notice, it was informed to the petitioners that they had obtained MEIS incentives at the rate of 3% instead of 2% by way of misclassification of the subject goods under CTH 87060042.

6.The petitioners submitted their reply to the show cause notice, and thereafter, they were called for personal hearings and ultimately the Adjudicating Authority passed the order in original, retrospectively partially cancelling the MEIS scrips issued in excess of 1%. The Adjudicating Authority ordered the partial cancellation of MEIS scrip in each case which is equal to the excess amount availed by the petitioners and arrived at the revised value of the scrip. The order was passed on the ground that the licensee had claimed the MEIS benefits at 3% instead of 2% as per Appendix 3B of the MEIS Schedule during the period from 2016 to 2021 by misclassification of the subject goods.

7.Aggrieved by the order passed by the Adjudicating Authority, an appeal was filed before the Appellate Authority and the Appellate Authority, viz., the first respondent, dismissed the appeal and confirmed the order passed by the Adjudicating Authority and also directed the petitioner to deposit the excess benefits availed by them to the exchequer. Aggrieved by the same, all these writ petitions have been filed before this Court.

8.The 1st and 2nd respondents have filed counter affidavits and it has been adopted in all the writ petitions, since the issue involved is the same. They have taken a stand that initially, the MEIS incentives were provided based on both the product description and the IT