CESTAT Mumbai Overturns Customs Order on MEIS Benefits

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 29.01.2026

CESTAT Mumbai Overturns Customs Order on MEIS Benefits

In a landmark decision, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has ruled in favor of Bayer Crop Science Limited, setting aside the impugned order passed by the Commissioner of Customs (NS-II), Jawaharlal Nehru Custom House (JNCH), Nhava Sheva. The case revolved around the classification of exported insecticides and the denial of export benefits under the Merchandise Exports from India Scheme (MEIS). ​

Background of the Case

Bayer Crop Science Limited, a leading research-intensive company in the agricultural industry, exports innovative agrochemical products such as insecticides under Customs Tariff Item (CTI) 3808 91 99. ​ The company availed export incentives under the MEIS scheme, which is part of the Foreign Trade Policy 2015-2020. ​ However, the Customs Department proposed a revision of the classification of these exported goods under CTI 3808 6100/3808 6200/3808 6990, claiming that the goods were misclassified to avail undue MEIS benefits. ​

The department alleged that Bayer Crop Science Limited intentionally misclassified the goods to claim ineligible MEIS benefits. ​ Consequently, the Commissioner of Customs issued an order denying the MEIS benefits, imposing penalties, and confiscating the goods. ​

Key Issues in the Case ​

The Tribunal was tasked with addressing the following critical issues:

1. Classification of Exported Goods: Whether the exported goods were correctly classified under CTI 3808 9199, as claimed by Bayer Crop Science Limited, or under CTI 3808 6100/3808 6200/3808 6990, as determined by the Customs Department. ​
2. Jurisdiction of Customs Authorities: Whether Customs authorities have the power to demand export benefits under Section 28(4) and/or 28AAA of the Customs Act, 1962, when the MEIS scrips have not been canceled by the Directorate General of Foreign Trade (DGFT). ​
3. Extended Period of Limitation: Whether the extended period of limitation for recovery of export benefits was applicable in this case. ​

CESTAT’s Observations and Ruling

After hearing both sides and reviewing the records, the Tribunal made the following observations:

1. Classification of Exported Goods: The Tribunal held that the Customs Department had incorrectly reclassified the exported goods based on Sub-Heading Note 2 to Chapter 38 of the First Schedule to the Customs Tariff Act, 1975. ​ It clarified that the Second Schedule (Export Tariff) governs the classification of exported goods, and the Sub-Heading Notes of the First Schedule (Import Tariff) are not applicable to export goods. ​ The Tribunal concluded that Bayer Crop Science Limited had correctly classified the goods under CTI 3808 9199.
2. Jurisdiction of Customs Authorities: The Tribunal emphasized that the MEIS scheme is governed by the Foreign Trade Policy 2015-2020 and the Foreign Trade (Development & Regulation) Act, 1992. ​ It ruled that Customs authorities do not have the jurisdiction to question the validity of MEIS scrips issued by the DGFT unless the DGFT itself has canceled or invalidated the scrips. ​ The Tribunal cited several judicial precedents, including rulings from the Hon’ble Supreme Court, to support its decision. ​
3. Extended Period of Limitation: The Tribunal found that the Customs Department had incorrectly invoked the extended period of limitation, as the department itself had expressed differing opinions on the classification of the goods in question. ​ It ruled that the charge of suppression or willful misstatement could not be sustained when the department was unclear about the correct classification. ​

Conclusion

The Tribunal set aside the impugned order, ruling in favor of Bayer Crop Science Limited. ​ It held that the Customs Department had overstepped its jurisdiction by reclassifying the exported goods and denying MEIS benefits without proper authority. ​ The Tribunal also emphasized that the extended period of limitation was not applicable in this case. ​

This decision is a significant victory for Bayer Crop Science Limited and sets a precedent for similar cases involving the classification of exported goods and the jurisdiction of Customs authorities in matters related to export incentives. It underscores the importance of adhering to the legal framework governing export benefits and respecting the jurisdiction of the DGFT in matters related to the Foreign Trade Policy.

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Source: CESTAT Mumbai

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