Delhi High Court Rules Against Retrospective Action On Export Incentive Misclassification

(MENAFN- KNN India)
New Delhi, Nov 26 (KNN) The Delhi High Court has delivered a significant judgment that provides crucial guidance on the interpretation of goods classification and export incentive schemes.

In a detailed 91-page ruling, a division bench comprising Justices Yashwant Varma and Ravinder Dudeja addressed the nuanced relationship between customs authorities and export benefit mechanisms.

The case centred on exporters of handcrafted stone articles who had classified their goods under Customs Tariff Heading (CTH) 6815, which entitled them to rewards under the Merchandise Exports from India Scheme (MEIS).

The customs department challenged this classification, arguing that the goods should have been classified under CTH 6802, which pertains to worked monumental or building stone.

Critically, the High Court established that a misclassification of goods does not automatically constitute collusion, wilful misstatement, or suppression of facts under Section 28AAA of the Customs Act, 1962.

The court emphasised that any action to recover duties must be preceded by a definitive determination of intentional misrepresentation.

The judgment also clarified the jurisdictional boundaries of customs authorities regarding export benefit certificates.

The court unequivocally stated that customs officials cannot independently question or invalidate certificates issued under the Foreign Trade (Development and Regulation) Act, 1992.

Such power exclusively resides with the Directorate General of Foreign Trade (DGFT).

Referencing previous judicial precedents, including cases from the Allahabad and Bombay High Courts, the bench reinforced the principle that export benefit certificates should not be arbitrarily challenged by customs authorities based on their own classification interpretations.

In this specific case, the court noted that the customs department was attempting to reopen export transactions that had been completed and assessed decades ago.

The petitioners argued, and the court agreed, that such retrospective action would cause significant financial hardship.

The ruling provides a crucial framework for interpreting trade regulations, emphasising procedural fairness and the need for clear, transparent processes in international trade classification and benefit allocation.

It serves as an important guideline for exporters, customs officials, and trade policy administrators navigating complex regulatory landscapes.

(KNN Bureau)

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