Case Law Details

Case Name : Inox India Pvt Ltd Vs. Union of India (Gujarat High Court)
Appeal Number : R/Special Civil Application No. 15886 of 2018
Date of Judgement/Order : 12/03/2021
Related Assessment Year :

Inox India Pvt Ltd Vs. Union of India (Gujarat High Court)

Conclusion:  Since on noticing that the declaration of intent on the shipping bill for claiming the benefit under the reward scheme was made mandatory w.e.f 01.06.2015 under the Foreign Trade Policy, 2015-20 or the Handbook of Procedure, 2015-20, therefore, there could be no exclusion of SEZ or non-EDI Port unit for availing the benefit.  Exports made from SEZ unit would come under free shipping bills and here also, export was made from SEZ Kandla unit.  Export was from Kandla SEZ, where there was no explicit mandate of declaration of intent on free shipping bill. And, even if they were treated as shipping bills and not free shipping bills, that initial absence of declaration for want of any obligation might not come in the way of assessee.

Held: The unit of assessee was located at Kandla Special Economic Zone (‘KASEZ’) and they were engaged in the manufacture and export of Cryogenic Tanks and Vessels and such other specially manufactured items as per the Special Economic Act and its allied rules and regulations. The challenge in this petition was to the denial of rewards under the Merchandise Exports from India Scheme (hereinafter referred to as ‘MEIS’) based on technical objections and procedural infractions when the substantial benefits had accrued and available in favour of assessee. Assessee also contended that in Foreign Trade Policy (hereinafter referred to as ‘FTP’) and in Export Import Policy 2015-2020 there were certain rewards as this was a specific scheme by the Government of India introduced for the benefits of exporters and to encourage them since the same was meant for contributing to the earnings of the country. Assessee applied for the registration of license to the KASEZ on 22.04.2016, however, no positive response was received for a long time in this regard and eventually on 08.06.2016, assessee met the Development Commissioner of Kandla Special Economic Zone and apprise him of lapse of seven months where the benefits were not made available. According to assessee, he received a letter on 01.07.2016 suggesting that their authorization had been suspended until further clarification was received from the office of DGFT, New Delhi, on the aspect, whether such SEZ units which were non-Electronic Data Interface (EDI) ports could also receive such benefits on the shipping bills prior to 01.06.2015 and that too, without declaration of the intent on the shipping bills. A communication was sent to the authority concerned meant for claiming the benefits under the reward scheme needed the declaration of the intent on the shipping bill and the same since had been made mandatory w.e.f. 01.06.2015, the benefit should be made available to assessee. It was held that the unit needed to declare its intent for claiming benefit under the MEIS for export made prior to 01.06.2015 i.e. for the period between 01.04.2015 to 31. 05.2015 since as per the Foreign Trade Policy, Handbook of Procedure, 2015-20, the MEIS benefits were available to SEZ units w.e.f. 01.04.2015.  Exports made from SEZ unit would come under free shipping bills and here also, export was made from SEZ Kandla unit. Even if this Court accepted the version of respondent authority that for exports made from 01.04.2015 to 31.05.2015, declaration of intent was a must from 01.06.2015 and that would not exclude the exports made prior thereto, on account of the export having been made, fulfilling all requirements and with no disputes in that regard, the objective of promotion of export could not be overlooked. Again, export was from Kandla SEZ, where there was no explicit mandate of declaration of intent on free shipping bill. And, even if they were treated as shipping bills and not free shipping bills, that initial absence of declaration for want of any obligation may not come in the way of assessee.  Noticing that the declaration of intent on the shipping bill for claiming the benefit under the reward scheme was made mandatory w.e.f 01.06.2015 under the Foreign Trade Policy, 2015-20 or the Handbook of Procedure, 2015-20, there could be no exclusion of SEZ or non-EDI Port unit for availing the benefit. With otherwise no dispute to the export under the Shipping Bill No. 3905 dated 30.03.2015 and the reward under the MEIS License dated 03.12.2015, this Court was of the opinion that the authority was required to be directed to consider the case of assessee.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

1. Rule returnable forthwith. Learned Central Government Standing Counsel Mr. Nikunt Raval waives service of notice of rule for and on behalf of respondent no.1.

2. This is a petition preferred under Article 226 of the Constitution of India with the following prayers: –

“(A) Your Lordships be pleased to issue an appropriate writ, order or direction, including a writ in the nature of mandamus, or any other appropriate writ order or direction, directing the concerned respondent departments and authorities to immediately complete the process of sanctioning and grant of the reward @ 2% of the FOB Value of their Exports under Shipping Bill no 3509 dtd 30-3-2015 within a stipulated time.

(B) Any other reliefs deemed fit proper and incidental in the facts of the present case may kindly be granted.”

3. The brief facts leading to the present petition are as follows: –

3.1. The unit of the petitioner is located at Kandla Special Economic Zone (hereinafter referred to as ‘KASEZ’) and they are engaged in the manufacture and export of Cryogenic Tanks and Vessels and such other specially manufactured items as per the Special Economic Act and its allied rules and regulations.

3.2. The challenge in this petition is to the denial of rewards under the Merchandise Exports from India Scheme (hereinafter referred to as ‘MEIS’) based on technical objections and procedural infractions when the substantial benefits had accrued and available in favour of the petitioner. It is further the say of the petitioner that in Foreign Trade Policy (hereinafter referred to as ‘FTP’) and in Export Import Policy 2015-2020 there are certain rewards as this was a specific scheme by the Government of India introduced for the benefits of exporters and to encourage them since the same is meant for contributing to the earnings of the country.

3.3. The petitioner was granted the MEIS License being number 3719000380 dated 03.12.2015 for an amount of Rs. 21.34 lakhs against their exports already from their unit located at KASEZ against the shipping bill no. 3905 LEO dated 22.04.2015. Accordingly, under the above license, reward under the MEIS at the rate of 2% from FOB value of export was the entitlement of the petitioner. It has also under the shipping bill no. 3905 dated 30.03.2015 exported two numbers of cryogenic tanks for liquefied gases for the FOB value of Rs. 10,68,26,000/-equivalent to 17,23,000 US$.

3.4. The petitioner applied for the registration of license to the KASEZ on 22.04.2016, however, no positive response was received for a long time in this regard and eventually on 08.06.2016, the petitioner met the Development Commissioner of Kandla Special Economic Zone and apprise him of lapse of seven months where the benefits were not made available. According to the petitioner, he received a letter on 01.07.2016 suggesting that their authorization has been suspended until further clarification is received from the office of DGFT, New Delhi, on the aspect, whether such SEZ units which are non-Electronic Data Interface (EDI) ports can also receive such benefits on the shipping bills prior to 01.06.2015 and that too, without declaration of the intent on the shipping bills.

3.5. A communication was sent to the authority concerned on 05.07.2016 clarifying at paragraph 3.14 of handbook of procedures of Import Export Scheme 2015-2020 meant for claiming the benefits under the reward scheme needed the declaration of the intent on the shipping bill and the same since had been made mandatory w.e.f. 01.06.2015, the benefit should be made available to the petitioner. It is further his case that under the Foreign Trade Policy 2015-20 or the handbook of procedures 2015-20, there is no exclusion of Special Economic Zone or non-EDI port unit for availing the benefits.

3.6. It is the say of the petitioner that various communications and discussions have taken place however, no specific clarification is made available. In view of that, the petitioner approached the Grievance Cell of DGFT by alleging its grievance on-line on 20.07.2016. Likewise such grievances have been ventilated before the offices of the Department of Commerce and the Central Board of Excise and Customs on 09.08.2016 and 18.07.2016 respectively.

3.7. On 29.09.2016, the petitioner had been intimated denial of the substantial benefit to the petitioner. The petitioner was also advised by the Custom House Agency to seek an amendment in the shipping bills by the customs authorities as the same is permissible for the exports only. Accordingly, the request for amendment certificate for shipping bills for adding declaration of their intent was requested for, so that, the benefit under the MEIS could be made available. This was done on 08.11.2016 to the Commissioner of Customs, Kandla.

3.8. It is the grievance on the part of the petitioner that despite these marathon efforts on the part of the petitioner, nothing concrete had emerged. It is a specific case of the petitioner that declaration of intent was not necessary to be made on the shipping bill as in view of the mandate made applicable under the relevant policy and circular, this came into being only w.e.f. 01.06.2015.

4. On issuance of notice by this Court on 11.10.2018, affidavit-in-reply has been filed for and on behalf of respondent nos. 1 to 5 on 04.12.2018 where they denied each and every allegations and contentions.

4.1. According to the respondents, as per the provisions of FTP/HMP 2015-20 the unit was not eligible for MEIS benefits. According to the respondents, paragraph 3.14(a) of the HBP 2015-20, Export Shipments filed under all categories of the Shipping Bills would need the declaration on the shipping bills in order to be eligible for claiming rewards under the MEIS to an extent that the parties intend to claim rewards under the MEIS. Such declaration would be also required for export shipment under any of the schemes of Chapter 4 (including for drawback), Chapter 5 or Chapter 6 of the FTP and in case of shipping bills other than free shipping bills, such declaration of intent would be mandatory w.e.f 01.06.2015.

4.2. It is contended by the respondent that in the instant case, SEZ unit exported goods under the free shipping bills and all the SEZ exports figure into free shipping bills, therefore, the mandatory declaration of intent w.e.f. 01.06.2015 would not be applicable in this case. Therefore, the unit needed to give declaration of intent for claiming MEIS benefits for exports prior to 01.06.2015 i.e. between the period 01.04.2015 to 31.05.2015.

MEIS benefits as per the FTP/HBP2015-20 were available for SEZ units w.e.f. 01.04.2015.

4.3. It is further the say of the respondent that Ministry of Commerce and Industry while addressing the public grievance vide letter dated 29.09.2016 replied that the window for manual filing for shipping bills for claiming MEIS benefits was allowed for a period from 01.04.2015 to 31.05.2015 due to teething problems in on-line filing. The condition for intimating intent for claiming MEIS benefits had not been waived and the intent must have been indicated for claiming such benefits, therefore, in the instant case, when the unit did not declare its intent for claiming such benefits, such benefits therefore cannot be availed to them.

4.4. It is further the stand of the department that it has taken a right decision by denying the MEIS benefits to the unit. The department has taken the correct action as per the provisions of FTP/HBP 2015-20 and accordingly, the spirit of FTP/HBP 2015-20 is well maintained.

5. The affidavit-in-reply by the Deputy Director General of Foreign Trade, Ahmedabad at the office of Additional Director General of Foreign Trade, Ahmedabad has also come stating therein that requirement of mentioning the declaration of intent was mandatory for the shipping bill no. 3905 dated 30.03.2015 of the petitioner because as per paragraph 3.14(a) of HBP 2015-20 announced on 01.04.2015, it is mandatory to have declaration of intent for being eligible to claim rewards under the MEIS. It is, therefore, the say of the respondent that, if the shipping bills were filed under any of the schemes of Chapters 4, 5 or 6 before 01.06.2015 for such shipping bills, declaration of intent was not mandatory. To have free shipping bills or non-scheme shipping bills, such declaration was mandatory even before 01.06.2015.

5.1. It has also emphasized on the clarification made by the Department of Commerce vide its communication dated 29.09.2016 that a window for manual shipping bills for claiming MEIS benefits was allowed for a period from 01.04.2015 to 31.05.2015 due to short-term problems in on-line filing, the condition for intimating intent for claiming MEIS benefits had not been waived and the intent must have been indicated for claiming the benefits on the shipping bills dated 30.03.2015. The petitioner does not become eligible as per the existing procedure at para 3.14.

5.2. It has also denied that due to procedural infraction, these benefits have been denied. Solely on the basis of absence of declaration of intent which is mandatory in the shipping bills as per para 3.14(a) of the HBP 2015-20 that such denial is there.

5.3. It is further the say of the respondent that condition for intimating the intent had not been waived at any point of time. There cannot be a subsequent declaration as has been done by the petitioner in the instant case and hence, it has urged to dismiss the petition.

6. Rejoinder affidavit has been filed by the petitioner which is not required to be reiterated. It has added that CBEC itself had first clarified in the circular dated 28.04.2015 which is binding to one and all that such declaration of intent is mandatory to all shipping bills filed after 01.06.2015 and in view of teething problem in the earlier period of time, the public notice was issued by the Ministry of Commerce on 09.10.2015 to declare that MEIS benefits were not granted due to technical error for the period from 01.04.2015 to 31.05.2015 and the feasible copies of the free shipping bills can be submitted to claim the same and accordingly, they were granted to one and all. Therefore, the question of denying the benefit to the petitioner under the shipping bill dated 30.03.2015 is completely out of place. It is w.e.f. 01.04.2015 it has been stated that such declaration of intent shall be mandatory for all shipping bills other than free shipping bills w.e.f. 01.06.2015, meaning whereby that for free shipping bills, such mandate may be waived.

7. After elaborate pleadings on the part of the parties, this Court has heard extensively learned advocate Mr. Hasit Dave appearing for the petitioner and learned Central Government Standing Counsel Mr. Nikunt Raval for the respondents.

8. It is emphasized on the part of learned counsel for the petitioner that the petitioner was duly granted MEIS license on 3. 12.2015 for an amount of Rs. 21.34 lakhs against their export already made from their unit located at Kandla SEZ, against the shipping bill no. 3905 having LEO dated 22.04.2015. Much emphasis is laid on HBP para 3.14(a) which, according to the petitioner, have been made effective from 01.04.2015 and the declaration of intent had been made mandatory for all shipping bills w.e.f. 01.06.2015 however, for free shipping bills, such mandate was not made and even otherwise, the Board Circular and Public Notice of the Department of Commerce, Government of India provided that for the period in question of the shipping bill dated 30.03.2015, such declaration of intent was not mandated and therefore, the subsequent benefit cannot be admitted or denied because of mere technical reasons. It is further urged that the public notice was issued on 08.12.2015 in furtherance of the same and the interpretation on the part of the authorities vide its letter dated 29.09.2016 is itself contrary to the very policy. He has urged that when the purpose of such policy is to encourage the export and when there is no doubt about the export having been made as declared by the petitioner, the technicality should not rule the substantial entitlement.

8.1. Learned advocate Mr. Dave has sought to rely on the decision of this Court rendered in case of Messrs Gokul Overseas vs. Union of India, reported in (2020) 373 ELT 49, the decision of the Madrash High Court rendered in case of Pasha International vs. Commissioner of Customs, Tuticorin, reported in 2019 (365) E.L.T. 669(Mad.) and also of Saint Gobain India Pvt. Ltd. vs. Union of India, reported in 2018 (361) E.L.T.1000(Ker.).

9. Per contra, Mr. Nikunt Raval, learned Central Government Standing Counsel appearing for the respondent has along the line of affidavit-in-reply emphasized that this is concerning the export which has been made on 30.03.2015. Paragraph 3.14 of HBA 2015-20 mandates the declaration of intent for getting the rewards under the MEIS. Such declaration was also a must for export shipment under the scheme of Chapter 4 (for drawback), Chapter 5 or Chapter 6 of the FTP and in case of shipping bills other than free shipping bills, the declaration of intent was a must from 01.06.2015, however, the applicability of mandatory declaration from 01.06.2015 would have no bearing as that was for the exports made between 01.04.2015 to 31.05.2015 whereas, in the instant case, the export has been carried out on 30.03.2015.

9.1. He has further urged that the department has no malice in denying the benefits and in fact, this is the only interpretation which is feasible. He further has urged that the SEZ devision of Department of Commerce already clarified the grievance and for a short time from 01.04.2015 to 31.05.2015 when the on-line filing was a problem, manual shipping bills for claiming MEIS benefits were allowed, however, the conditions for intimating the intent for claiming the MEIS benefits have not been relaxed. According to him, the petitioner had not intimated the intent for claiming the MEIS benefits initially for shipping bill dated 30.03.2015 and by no stretch of imagination, it can be said that there is any ill intent on the part of the authority for allowing him the benefits of DGFT.

10. Having thus heard both the sides and also having closely examined the material on record, we notice that admittedly the petitioner is granted MEIS license bearing no. 3719000380 on dated 03.12.2015 for an amount of Rs. 21.34 lakhs against their export from the unit located at Kandla SEZ. Against the shipping bill no. 3905 LEO dated 30.03.2015, the entitlement of the petitioner was 2% from the FOB value of export under the MEIS. There are two numbers of cryogenic tanks of liquefied gases for the FOB value of Rs. 10,68,26,000/- where such benefits were made available.

10.1. It is also not in dispute that the communication on the part of the petitioner dated 22.04.2016 seeking the registration of license for KASEZ has not been responded to and the authorization has been suspended as the clarification was needed whether the SEZ unit which is non-EDI port can receive such benefit for any shipping bill prior to 01.06.2015, more particularly, when the clear declaration of intent of availing the benefit of MEIS was missing on the shipping bill. The communication of the authority concerned on 05.07.2016 clarified that paragraph 3.14 of the Handbook of Procedure of Import Export Scheme 2015-20 mandates the declaration of the intent on the shipping bill mandatory from 01.06.2015, this Handbook of Procedure would not permit any benefit to the petitioner in absence of any declaration of intent of his availing these benefits, for this being absent in the shipping bill itself.

11. There are three impediments which can be culled out from this communication (i) the export was made by the petitioner on shipping bill dated 30.03.2015 which is prior to 01.04.2015, (ii) the declaration of intent for claiming MEIS benefits of export is needed for the period between 01.04.2015 to 31.05.2015, (iii) the export was from SEZ unit which exports the goods under the free shipping bills and therefore, the mandatory declaration of intent w.e.f. 01.06.2015 would not be applicable in the instant case.

12. Taking into account all the three aspects together, firstly, as a lot hinges on the policy HBP paragraph 3.14 relating to the declaration of intent for reward on goods which requires the exporter to mandatorily declare the intent for reward on shipping bills, for the shipping bills filed from 01.06.2015 onwards, paragraph 3.14(a) requires reproduction at this stage: –

“3.14 Declaration of Intent on shipping bills for claiming rewards under MEIS including export of goods through courier or foreign post offices using e-Commerce.

(a) Export shipments filed under all categories of the Shipping Bills would need the following declaration on the Shipping Bills in order to be eligible for claiming rewards under MEIS: “ We intend to claim rewards under Merchandise Exports From India Scheme (MEIS)”. Such declaration shall be required even for export shipments under any of the schemes of Chapter 4 (including drawback), Chapter 5 or Chapter 6 of FTP. In the case of shipping bills (other than free shipping bills), such declaration of intent shall be mandatory with effect from 1st June 2015.”

12.1. It is quite clear from this para that mandatory declaration of intent is made a necessity for claiming reward under the MEIS under any of the schemes for export shipment. Such declaration is a must and in case of shipping bills other than free shipping bills, such declaration was made mandatory w.e.f. 01.06.2015. It is also vital to notice that the SEZ Devision, Department of Commerce in its communication dated 29.09.2016 has declared that though window for manual shipping bills for claiming MEIS benefit was allowed for the period between 01.04.2015 to 31.05.2015 due to short term problem in on-line filing, the condition for intimating the intent for claiming MEIS benefits had not been waived and the intent must have been clear for claiming the benefits. It is only because initially the petitioner has not declared intent for claiming the MEIS benefits on the shipping bills dated 30.03.2015 therefore, the petitioner was not considered eligible as per para 3.14(a) of the HBP 2015-20 announced on 01.04.2015 for MEIS rewards.

13. Undoubtedly, the petitioner had not intimated the intent for claiming MEIS benefits initially on their shipping bills dated 30.03.2015. There is so much of impact prevailing on the export being made from SEZ unit as it was from Kandla SEZ that the export has been made by the petitioner even after the petitioner was granted license in the month of December for having exported the goods worth 17,23,000 US$, there was still a confusion as to whether this mandate would be applicable in case of free shipping bills and whether any export made by Kandla SEZ would be covered.

14. It is to be noted that two of these aspects are already covered by the decision of this Court rendered in case of Gokul Overseas (supra) as also in case of M/s Raj and Company vs. Union of India delivered by this Court in Special Civil Application No. 17804 of 2019 on 08.02.2021. In case of Gokul Overseas (supra) the Court dealt with extensively the provisions of paragraph 3.14 of the Handbook of Procedure of Foreign Trade Police, 2015-20 where the declaration of intent in the manner provided in EDI shipping bills have been made mandatory, whereas, in case of non-EDI shipping bills, such declaration was not mandatory. It was argued before the Court by the respondent in the affidavit-in-reply that it was a case of SEZ unit which exported the goods under the free shipping bills and all the SEZ exports come under the free shipping bills, therefore, the mandatory declaration of intent w.e.f. 01.06.2015 would not be applicable, in case before the Court and the unit had needed to declare its intent for claiming benefit under the MEIS for exports made prior to 01.06.2015 as per the Foreign Trade Policy Handbook of Procedure, the MEIS benefits were available to SEZ w.e.f. 01.04.2015. The Court also has dealt with the case of EDI shipping bills where it was mandatory to file declaration of intent under the manner provided in para 3.14 of the Handbook of Procedure to Foreign Trade Policy vide Public Notice dated 09.10.2015.

14.1. In the matter before this Court thus, in case of Gokul Overseas (supra), the petitioner was not permitted conversion of shipping bills from free shipping bills to MEIS shipping bills because of the circular no. 36 of 2010 of the customs dated 23.09.2010 which provided for conversion, if the request was made within three months from the date of the export order. The Court found it apposite to refer to the decision of Delhi High Court in case of Kedia (Agencies) Pvt. Ltd. vs. Commissioner of Customs [2017 (348) ELT 634 (Del.), wherein the question that arose for consideration was whether the tribunal fell in error in upholding the denial of the petitioner’s claim for amendment of its shipping document under section 149 of the Customs Act. The Court relying on this decision has held that, in a matter before it, the request for conversion of the shipping bills to MEIS shipping bills had been made beyond the time prescribed in the circular no. 36 of 2010 of the customs dated 23.09.2010 and there was no objection raised on behalf of the respondent authority. The Court, therefore found that the omission in the declaration of intent may not be held fatal to the case of the petitioner when otherwise all relevant materials were available with the authority. In case of Gokul Overseas (supra), the Court has held and observed thus:-

“23. Chapter 3 of the Foreign Trade Policy 201520 has introduced the Merchandise Exports From India Scheme. The procedure for claiming benefit under the said scheme has been provided under the Handbook of Procedure to Foreign Trade Policy 201520. Para 3.14 thereof provides for the procedure for ‘Declaration of Intent’ on EDI and NonEDI shipping bills for claiming benefits under the MEIS, including export of goods through courier or foreign post offices usingeCommerce. Subclause (I) of clause

(a) thereof provides the procedure for ‘declaration of intent’ in case of EDI shipping bills; and subclause

(ii) of clause (b) thereof provides the procedure for ‘declaration of intent’ on any EDI shipping bills.

“Para 3.14 of the Handbook of Procedure, reads as under: “3.14 Procedure for Declaration of Intent on EDI and Non EDI shipping bills for claiming rewards under MEIS including export of goods through courier or foreign post offices using e-Commerce:

(a) (I) EDI Shipping Bills: Marking/ticking of “Y” (for Yes) in “Reward” column of shipping bills against each item, which is mandatory, would be sufficient to declare intent to claim rewards under the scheme. In case the exporter does not intend to claim the benefit of reward under Chapter 3 of FTP exporter shall tick “N’ (for No). Such marking/ticking shall be required even for export shipments under any of the schemes of Chapter 4 (including drawback), Chapter 5 or Chapter 6 of FTP.

(ii) NonEDI Shipping Bills: In the case of non EDI Shipping Bills, Export shipments would need the following declaration on the Shipping Bills in order to be eligible for claiming rewards under MEIS: “We intend to claim rewards under Merchandise Exports From India Scheme (MEIS)”. Such declaration shall be required even for export shipments under any of the schemes of Chapter 4 (including drawback), Chapter 5 or Chapter 6 of FTP.

(b) Whenever there is a decision during the financial year to include any new product/goods or new markets then to avail such rewards:

(I) For exports of such products/goods, to such markets, a grace period of one month from the date of notification/public notice will be allowed for making this declaration of intent.

(ii) After the grace period of one month, all exports (of such products/goods or to such markets) would have to include the declaration of intent on all categories of shipping bills.

(iii) For exports made prior to date of notification/ public notice of products/markets, such a declaration would not be required since such exports would have already taken place.”

24. On a plain reading of the provisions of para 3.14 of the Handbook of Procedure to Foreign Trade Policy 201520, it is apparent that the ‘declaration of intent’, in the manner provided for EDI shipping bills, has been made mandatory, whereas in the case of NonEDI shipping bills, such ‘declaration of intent’ is not stated to be mandatory. The respondents, in their affidavit in reply, have stated that the instant case is of a SEZ unit which exported the goods under free shipping bills. All the SEZ exports come under free shipping bills. Therefore, the mandatory ‘declaration of intent’ with effect from 01.06.2015 will not be applicable in this case. Therefore, the unit has to declare its intent for claiming benefits under the MEIS for exports made prior to 01.06.2015, that is, for the period between 01.04.2015 to 31.05.2015. As per the Foreign Trade Policy/Handbook of Procedure 201520, MEIS benefits were available to SEZ units with effect from 01.04.2015.

25. In case of EDI shipping bills, where it was mandatory to file the ‘declaration of intent’ in the manner provided in para 3.14 of the Handbook of Procedure to FTP (201520), vide Public Notice 40/20152020 dated 9th October,2015, it has been provided thus:

“2. As per para 3.14 of Hand Book of Procedure to FTP (201520), all exporters while filling export shipments under all categories of the shipping bills are required to declare the following intent to claim benefit under MEIS: “We intend to claim rewards under Merchandise Exports from India Scheme (MEIS)”. Declaration of intent is mandatory with effect from June 1, 2015. CBEC has also issued a circular no. 14/2015 dated April 20, 2015, which requires mandatory declaration of intent from 1.6.2015 onwards. In EDI generated shipping bills, exporters are required to tick mark “Y” in case they intend to claim benefits under MEIS and “N” in case they do not intend to claim benefit under MEIS.

3. In light of these circumstances and to address thematter, in exercise of powers conferred under paragraph 1.03 of the Foreign Trade Policy (20152020) read with reference to para 3.14 of Handbook of Procedures of FTP 201520, the Director General of Foreign Trade hereby allows the following procedure to be followed where exports have been made between 1.4.2015 to 31.5.2015, and where the exporter has inadvertently marked “N” in the “reward item box” and wishes to seek MEIS benefits:

Exporters shall submit physical copies of free shipping bills after electronic filing Of application to RA at the time of submission of application for MEIS rewards in these cases. RA shall grant MEIS rewards after examination of such shipping bills in accordance with other provisions of FTP/HBP.

4. From 01.06.2015, only those shipping bills, which are transmitted by Custom Authorities to DGFT, shall be considered under MEIS. Effect of this Public Notice:

Shipping bills, where declaration of intent ‘Y’ has not been marked and ‘N’ has been ticked inadvertently in the ‘reward item box’ while filing shipping bill in Customs for exports made between 1.4.2015 to 31.5.2015, shall be transmitted by CBEC to DGFT.”

26. Vide Public Notice No.47/20152020 dated 8. 12.2015, the procedure prescribed vide Public Notice No.40 dated 09.10.2015 has been extended beyond 31.05.2015 for the period from 01.06.2015 to 30. 09.2015.

27. From the facts and contentions noted above, it emerges that the petitioner is not permitted conversion of the shipping bills from free shipping bills to MEIS shipping bills for the reason that Circular No.36/2010 Customs dated 23.09.2010 provides that conversion may be allowed provided that request has been made within three months from the date of the Let Export Order. The facts as recorded hereinabove reveal that the Deputy Commissioner of Customs, Kandla SEZ, Gandhidham (Office of the Development Commissioner, Kandla Special Economic Zone) has, in the context of the petitioner’s request for amending the shipping bills to incorporate ‘declaration of intent’, has furnished comments on the issue to the respondent No.6 – Assistant Commissioner (Exports), Office of the Commissioner of Customs, Kandla, stating that the petitioner has been regularly filing its claim for similar goods under the MEIS for later periods and it appears that the petitioner is otherwise eligible for benefits under the said scheme. Therefore, in the light of the provisions of section 149 of the Act read with the provisions of Circular No.36/2010 Customs dated 23.09.2010 and Notification No.40/2012 (NT) dated 02.05.2012, the decision regarding conversion may be taken on the basis of documentary evidence which was in existence at the time when the goods were exported subject to the satisfaction of the competent authority.

28. Thus, the eligibility of the petitioner to claim benefits under the MEIS has not been doubted. The sole hurdle in the case of the petitioner is that since the shipping bills are free shipping bills, wherein no ‘declaration of intent’ has been made, the petitioner is required to get the shipping bills amended by incorporating the following ‘declaration of intent’: “We intend to claim rewards under Merchandise Exports From India Scheme (MEIS)”.

29. In this case, the petitioner applied for the MEIS for the exports made during the period April 2015 to January 2016, under separate applications. The said applications were partly allowed and twenty five shipping bills were disputed. Vide letter dated 3.08.2016, the petitioner was informed by the respondent No.5 – Development Commissioner, that since there is no ‘declaration of intent’ on the shipping bills for claiming benefits under the MEIS, a reference has been sent to the respondent No.3 DGFT for a clarification whether such shipping bills (NonEDI) prior to 01.06.2015 were eligible for benefits under the MEIS benefits or not. Therefore, till that time, its claim will be kept pending. Thus, the claim was kept pending by the concerned authorities.

30. Vide letter dated 06.06.2017, the petitioner requested the respondent No.4 – Commissioner of Customs, Kandla, to allow benefits under the MEIS on the shipping bills in case the ‘declaration of intent’ was not mentioned on exports made prior to 01.06.2015, whereupon the petitioner was advised/informed to comply with the amendment in the form of conversion of shipping bills from free to MEIS, whereafter, the petitioner applied for conversion of shipping bill.

31. Subsequently, vide communication dated 18/19.07.2017, the petitioner was informed that the shipping bills are required to be amended by the competent authority under section 149 of the Act and was requested to approach the proper officer of Customs under section 149 of the Act, whereupon the petitioner, on 01.08.2017, requested the competent authority to amend the shipping bills under section 149 of the Act at the earliest.

32. Thus, the respondents had not informed the petitioner immediately to get the shipping bills converted into one under the MEIS. It was only after a lot of inter se communication, that the petitioner was advised to get the shipping bills amended and converted to MEIS shipping bills. Upon the petitioner making such application for amendment, after prolonged inter se communications between the respondents as to who had the jurisdiction to decide said application, the same came to be turned down on the ground that the application for amendment had been made beyond three months as stipulated in Circular 36/2010Customs dated 23rd September, 2010.

33. Circular 36/2010 Customs dated 23rd September, 2010 provides for conversion of free shipping bills to Advance Authorisation/DEPB/Drawback shipping bills and from one export promotion scheme to another. Clause (a) of paragraph 3 thereof provides that the conversion may be allowed subject to the conditions laid down thereunder. Condition (a) thereof reads thus: “Request for conversion is made by the exporter within three months of the date of the Let Export Order (LEO)”. From paragraph 4 of the circular, the reason for providing such time limit appears to be that free shipping bills (shipping bills not filed under any export promotion scheme) are subject to ‘nil’ examination norms.

34. In the facts of the present case, as noticed earlier, it is not the case of the respondents that the petitioner is not otherwise covered by Circular No.36/2010Customs dated 23.09.2010. The sole ground on which the application has been rejected is for non compliance of condition (a) of paragraph 3 of the said circular, namely that the application has been filed beyond a period of three months from the date of filing the Let Export Order.

35. At this juncture, it may be apposite to refer to the decision of the Delhi High Court in Kedia (Agencies) Pvt. Ltd. v. Commissioner of Customs, 2017 (348) ELT 634 (Del.), on which reliance has been placed by the learned advocate for the petitioner, wherein the question that arose for consideration was: “Did the CESTAT fall into error in upholding the denial of the petitioner’s claim for amendment of its shipping document under section 149 of the Customs Act.” The court held thus:

“7. In the present case, the appellant had been consistently dealing with the same goods and exporting them previously for over three years. The precondition of a declaration along with the relative forms, for grant of benefit was introduced on 142008 through an amendment to the Handbook of Procedures. It is now settled law that the provisions of the Foreign Trade (Development & Regulation) Act, 1992, the rules or regulations framed thereunder and the export import policy have the force of law. Handbook of Procedures and the amendments carried out thereto are per se not declaration of law but only impose conditions which are to be fulfilled and otherwise conform to the requirements of law. Without making a deeper analysis of these legal provisions, the facts of this case reveal that the export goods are essentially agricultural produce and continued to be covered as an item eligible for benefit. At the time, just prior to 142008, the goods had been exported as free shipping bills. The exporter/appellant’s fault here is that it did not file the requisite declaration. In all other respects, I.e. as to whether they conform to the description in the shipping documents and the value, etc. continues to be ascertainable because the concerned bills, invoices and other shipping documents are available with the customs authorities.

8. Having regard to these, we are of the opinion that in the peculiar circumstances of the case, the omission to file the declaration of the kind we are concerned with, when all other relative materials are present was not vital to the appellant’s case. The material which did and does exist is substantial; the appellant should, therefore, be permitted to amend its shipping bill. The respondents are directed to give effect to this order within the next two months. The appeal is consequently allowed.”

36. In the opinion of this court, the above decision would be squarely applicable to the facts of the present case. As is evident from the letter dated 07/08.09.2019 (AnnexureO to the petition), the Deputy Commissioner of Customs, Kandla SEZ, Gandhidham (Office of the Development Commissioner, Kandla Special Economic Zone) has, in the context of the petitioner’s request for amendment in the shipping bills to incorporate ‘declaration of intent’, furnished comments for specific recommendations on the issue to respondent No.6 – Assistant Commissioner (Exports), Office of the Commissioner of Customs, Kandla, stating that the petitioner is filing regularly its claim for similar goods under MEIS for later periods and it appears that the petitioner is, otherwise, eligible for the said scheme. Therefore, in the light of the provisions of section 149 of the Act read with the provisions of Circular No. 36/2010Customs dated 23.09.2010 and Notification No.40/2012 (NT) dated 02.05.2012, the decision regarding conversion may be taken on the basis of documentary evidence which was in existence at the time when the goods were exported, subject to the satisfaction of the competent authority.

37. Thus, except for the fact that the request for conversion of the free shipping bill to MEIS shipping bill has been made beyond the time prescribed in Circular No.36/2010Customs dated 23.09.2010, no other objection has been raised on behalf of the respondents. In the opinion of this court, having regard to the peculiar facts of the present case, the omission to file ‘declaration of intent’ when all other relevant material is available, is not fatal to the petitioner’s case. As in the case of Kedia (Agencies) Pvt. Ltd. v. Commissioner of Customs (supra), in the facts of the present case also, in all other respects, that is, as to whether the goods conform to the description in the shipping documents and the value, etc. continues to be ascertainable because the concerned bills, invoices and other shipping documents are available with the customs authorities. The respondents are, therefore, not justified in turning down the request to convert the shipping bills of the petitioner from free to MEIS and thereby depriving the petitioner of the benefits under the MEIS in respect of exports made under such shipping bills.

38. In the light of the above discussion, the petition succeeds and is, accordingly, allowed. The impugned letter dated 11.02.2019 of the respondent No.2, Under Secretary, Government of India, is hereby quashed and set aside. The respondents are directed to permit the petitioner to convert the shipping bills in question from free shipping bills to MEIS shipping bills subject to the satisfaction of the competent authority. The respondents shall give effect to this order within two months from the date of receipt of copy of this order. Rule is made absolute accordingly, with no order as to costs.”

14.2. So far as the case of M/s Raj and Company (supra) is concerned, the petitioner was a Merchant Exporter and exported various items purchased from different manufactures and traders. He had exported various consignments to Sri Lanka from the year 2015 to 2020, but on account of his lack of knowledge, he did not claim any benefit of MEIS scheme. After he realized the same from the Public Notice, he made a request to allow to amend the shipping bills under Section 149 of the Customs Act. This since was rejected by the concerned authority, he approached this Court with an emphasis that the lapse in procedurality shall not take away his substantial right. This Court regarded the decisions of Gokul Overseas (supra), Pasha International (supra) and Saint Gobain India Pvt. Ltd. (supra) to allow such request. Following paragraphs profitably deserve reproduction: –

“9. It is thus made clear from both subsequent notices that the procedure in case of the EDI has been simplified as the whole object is to facilitate and promote export and simplify the procedure and for getting the benefits from the policy which has been declared by the Union of India, both the Public Notices shall need to be regarded.

10. Apt would be to refer to the decision of Saint Gobain India PVT.LTD (supra) where the petitioner was private limited company, which had approached the competent respondents for correcting the bill of entry under Section 149 of the Customs Act, 1962 and the respondents had expressed their inability to permit the amendment of the shipping bills. This was necessitated as the petitioner company was at the time of making such a request was an amalgamated company and was entitled to the benefit under the Foreign Trade Policy, 201520, which was enjoyed by the SEPR Refractories India Ltd. and the private limited company undergone the process of amalgamation with SEPR Refractories India Ltd. The statement had been made for and on behalf of the respondent there that the petitioner had approached competent respondents for amendment of the name and undergone the process of amalgamation with SEPR Refractories India Ltd. from that of SEPR to Saint Gobain India Pvt. Ltd., to avail the benefits under the Foreign Trade Policy and the contention raised was that after the introduction of electronic process in shipping bills, the amendments under Section 149 of the Customs Act,1962 cannot be done in the EDI system as no notification can be done in the system after the Export Order’ is given. It is stated, however, that the 3rd respondent can issue a ‘No Objection Certificate’ to the petitioner for availing the MEIS benefit and the 4th respondent before Madras High Court was the authority to relax the policy which needed to consider the said certificate to serve the petitioner’s purpose. The Court directed the 3rd respondent to issue necessary ‘No Objection Certificate’ to the petitioner which the petitioner was directed to produce to the 4th respondent and seek the benefit from him which was directed to consider such claim and pass orders thereon expeditiously within a period of three months.

10.1 This was also referred to in case of Pasha International vs. Commissioner of Customs, Tuticorin (supra) where the writ petitioner was manufacturer and exporter of “Bags and madeups. It intended to claim benefit under MEIS and while filling up the shipping bills, the Writ petitioner inadvertently opted for “No” instead of “Yes”. When the system was done manually, the corrections can be made in view of the enabling provision of Section 149 of the Customs Act, 1962 but with the EDI system the correction was not done and the Court held that the petitioner cannot be allowed to suffer for an inadvertent mistake committed by him. It referred to the decision of Saint Gobain India PVT. LTD.(supra). The respondent was directed to issue N.O.C. To enable the petitioner to avail the benefit and thereafter to consider the benefit as may be available to the petitioner expeditiously.

12. The Court thus had recognised the fact that the eligibility of the petitioner to claim benefits under the MEIS scheme has not been questioned. The only hurdle was that the shipping bills were free shipping bills and there was no declaration of intent made. The petitioner needed to get the shipping bills amended by incorporating the declaration of intent as provided under the MEIS and it had taken aid of various circulars to allow that petition.

13. In the instant case, as noted hereinabove, there is no doubt with regard to the exports having been made under the FTP 201520 where, initially, Sri Lanka was not one of the countries where such reward was available on export to the said country. The petitioner has already exported its product ‘vitrified tiles’ to Sri Lanka and 73 shipping bills have also been produced before the respondent authorities. What has been pleaded all through out by the petitioner is of lack of knowledge of subsequent public notices which had included Sri Lanka as a country for seeking the reward under the MEIS and entire procedure having been simplified, instead of getting the declaration produced for the purpose of the reward, the ticking of N/Y would suffice in case of the EDI. The ticking itself had been made equivalent to such declaration. It is quite clear that for the purpose of the reward, the EDI has been simplified more particularly, by way of the Public Notice No.9 of 2015 dated 16.05.2016 and the marking of tick in pursuance of the earlier Public Notice No.47 dated 08.12.2015 had been treated as a declaration of intent in case of EDI shipping bills.

14. What we notice is that in case of Messrs Gokul Overseas (supra) even the conversion has been permitted by the Court, whereas in the instant case, it is only the question of the EDI bills where inadvertently instead of ‘Yes’ the ticking was on ‘N’.

As provided in case of Pasha International vs. Commissioner of Customs (supra) by Madras High Court, this has to be construed as pure and simple mistake on the part of the exporter, when otherwise the respondent has not questioned any of the shipping bills and it is only because the declaration of intent on the said shipping bills for claiming the benefits under the MEIS, the subsequent claim made by him on the EDI is questioned on the ground that Section 149 of the Customs Act would not be applicable.

15. We are of the opinion that the decisions which have been discussed hereinabove coupled with the very object of the MEIS would not allow us to endorse to the stand taken by the respondent authority, even if, the subsequent notices, which have been relied upon for denying the benefits by virtue of the communication dated 10.06.2019 do not prescribe the time limit, the reasonable time could be regarded as this request is made at the end of one year.

16. We also agree with the submissions made by the learned advocate for the petitioner that Section 149 of the Customs Act, 1962 which has been taken recourse to by the petitioner does not prescribe any time limit. It is a discretion of the concerned officer, which can authorize any document after it has been presented in the Custom House to be amended. Of course, this has not to be amended after once the imported goods have been cleared for the home consumption and deposited in the warehouse where export goods have been exported, except on the basis of the documentary evidences, which are in existence at the time of the clearance, deposit or the export of the goods, as the case may be. In the electronic age, all procedures have been simplified and the EDI is essentially keeping pace with the electronic age. The simplification of this process shall have to be viewed for the benefit of the exporters for whose benefit the scheme has been brought by the Centre as availment of benefits is in no manner going to have any bearing adversely on the exchequer; And, even otherwise, it is essentially to avail the exporter the benefits prescribed under the MEIS that the request has been sent by the petitioner to make the same available to it. Therefore, it is also expected of the respondent authority to adopt an approach, giving progressive interpretation to all these provisions and the policy decisions rather than having conventional outlook.”

15. As held in case of Gokul Overseas (supra) all the SEZ exports come under the free shipping bills and hence, the mandatory declaration of intent w.e.f. 01.06.2015 would not be applicable. In the instant case also, the unit needs to declare its intent for claiming benefit under the MEIS for export made prior to 01.06.2015 i.e. for the period between 01.04.2015 to 31. 05.2015 since as per the Foreign Trade Policy, Handbook of Procedure, 2015-20, the MEIS benefits were available to SEZ units w.e.f. 01.04.2015.

15.1 Exports made from SEZ unit would come under free shipping bills and here also, export was made from SEZ Kandla unit. For free shipping bills to be converted in to MEZS bill, ratio of Messrs Gokul Overseas (supra) would be applicable. Even if this Court accepts the version of respondent authority that for exports made from 01.04.2015 to 31.05.2015, declaration of intent was a must from 01.06.20215 and that would not exclude the exports made prior thereto, on account of the export having been made, fulfilling all requirements and with no disputes in that regard, the objective of promotion of export cannot be overlooked.

15.2 Again, export is from Kandla SEZ, where there was no explicit mandate of declaration of intent on free shipping bill. And, even if they are treated as shipping bills and not free shipping bills, that initial absence of declaration for want of any obligation may not come in the way of the petitioner, more particularly, in wake of peculiar facts and circumstances and the discussion of law on the subject.

16. Noticing that the declaration of intent on the shipping bill for claiming the benefit under the reward scheme is made mandatory w.e.f 01.06.2015 under the Foreign Trade Policy, 2015-20 or the Handbook of Procedure, 2015-20, in wake of the aforementioned decision, there could be no exclusion of SEZ or non-EDI Port unit for availing the benefit. The decision of this Court in case of M/s. Raj & Company (supra), where the Court has emphasized on procedurality not to hamper the substantive right of the party. With otherwise no dispute to the export under the Shipping Bill No. 3905 dated 30.03.2015 and the reward under the MEIS License dated 03.12.2015, this Court is of the opinion that the respondent authority is required to be directed to consider the case of the petitioner. Let the process be undertaken and the same be completed within a period of eight (8) weeks from the date of receipt of copy of this order.

17. Accordingly, the present petition is allowed. Rule is made absolute, accordingly.

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