2024 (11) TMI 1360 - HC - Customs

Partial rejection of benefit under Merchandise Exports from India Scheme (MEIS) - mismatch between the description of the goods in the shipping bills and the description in ITC (HS) 87085000 - HELD THAT - No reasons are indicated why the Respondent s case was accepted or why the Petitioner s case was rejected. There is no discussion on the RA report or comments from PC-3 Divisions. On perusing the minutes it is impossible to understand whether there was any application of mind. This is an additional reason to interfere with the impugned decision. In the reply filed on behalf of the Respondents significantly neither is the copy of the RA s report nor the copies of the comments received from PC-3 Divisions annexed. Based of the affidavit or for that matter other averments in the affidavit we cannot uphold the impugned decision considering the serious defects in the decision-making process. Therefore we clarify that we are not addressing the merits of the decision but propose to interfere with it because the decision-making process was grossly defective. In this case the principles of natural justice have been breached and a case is made to set aside the impugned decision. Accordingly we quash and set aside the PRCs impugned decision in Meeting No. 22/AM22 held on 22.03.2022 and 29.03.2022. We direct the PRC to reconsider the Petitioner s claim for benefits under MEIS as expeditiously as possible and in any event within two months from today. Before such a decision is taken a copy of RA s report and comments received from PC-3 Divisions must be furnished to the Petitioner. This may be done within 15 days from today. If the PRC wishes to consider any other material then copies of such material must be furnished to the Petitioner within two weeks from today. If the Petitioner wishes to file any response to this material the Petitioner should file such response within a week of receipt of this material. The PRC must hear the Petitioner or its representative and pass a reasoned order.

Summary

Issues:
Challenge of partial rejection of benefit under Merchandise Exports from India Scheme (MEIS) due to alleged mismatch in goods description and decision by Policy Relaxation Committee (PRC) in Meetings No. 21/AM20 and No. 22/AM22.

Analysis:
The Petitioner exported drivetrain and automotive parts under ITC (HS) 87085000, filing 26 shipping bills and claiming MEIS benefits. Partial denial of benefits occurred due to a supposed mismatch in goods description. The Petitioner contested this denial, leading to involvement of the PRC for redressal (Para. 3-6).

PRC's decision in Meeting No. 21/AM20 requested a detailed report on excluded items and reasons from RA, Pune. However, the subsequent decision in Meeting No. 22/AM22 rejected the Petitioner's request without providing reasons or granting a hearing, violating principles of natural justice (Para. 7-9, 16-18).

The Respondent argued that a hearing was granted earlier and the decision was legally valid. However, the Court found the lack of reasoning in the decision and failure to provide adverse material to the Petitioner as crucial flaws (Para. 10-13, 19-20).

The Court refrained from delving into the merits but emphasized the procedural defects. The impugned decision was set aside due to the breach of natural justice, directing the PRC to reconsider the claim within two months, ensuring the Petitioner receives all relevant materials and a fair hearing (Para. 15, 21-22).

The judgment kept all contentions on merits open for the PRC to decide initially, concluding by making the rule absolute without costs for the parties to comply with the order (Para. 23-25).