Gujarat High Court
Bombardier Transportation India Pvt ... vs Directorate General Of Foreign Trade on 17 February, 2021
Author: Ilesh J. Vora
Bench: J.B.Pardiwala, Ilesh J. Vora
C/SCA/11038/2020 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 11038 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE ILESH J. VORA
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law NO
as to the interpretation of the Constitution of India or any
order made thereunder ?
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BOMBARDIER TRANSPORTATION INDIA PVT LTD
Versus
DIRECTORATE GENERAL OF FOREIGN TRADE
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Appearance:
ROHAN LAVKUMAR(9248) for the Petitioner(s) No. 1
MR DEVANG VYAS(2794) for the Respondent(s) No. 1, 2, 3
MR MITESH AMIN, SENIOR ADVOCATE WITH MS SHRUTI S
PATHAK(5619) for the Respondent(s) No. 4
NOTICE NOT RECD BACK(3) for the Respondent(s) No. 3
NOTICE SERVED(4) for the Respondent(s) No. 2
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CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 17/02/2021
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C/SCA/11038/2020 JUDGMENT
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE ILESH J. VORA)
1. By this writapplication under Article 226 of the Constitution of India, the writapplicant has prayed for the following reliefs: 36(a) Issue a writ of mandamus or any other appropriate writ, order or direction, quashing and setting aside the Respondent's rejection contained in email dated 12th March 2020 (Annexure17 hereinabove) and direct Respondent No.1 and 2 to allow the MEIS benefits in a time bound manner to the petitioner in relation to the exports made under the Relevant Shipping Bills (List of which is annexed at Annexure - 4) on the basis of Amendment Certificate issued by the office of Commissioner and pass any other consequential orders as it may deem fit;
(b) Alternatively, issue a writ of mandamus or any other appropriate writ, order or direction, directing Respondent No.3 and 4 to amend the concerned Relevant Shipping Bill (List of which is annexed at Annexure4) on EDI System, online or otherwise, in line with the Amendment Certificate dated 09.10.2019 and further directing Respondent No.1 and Respondent No.2 to allow MEIS benefit to the petitioner in relation to the exports made on the basis of such amendment in EDI System;
(c) Pass any other consequential writ, order or direction as the Court may deem fit.
2. The facts giving rise to this writapplication may be summarized as under: BRIEF FACTS 2.1 The writapplicant is a private limited company incorporated in India, is engaged in the business of manufacturing and exporting metro coaches from India. The manufacturing unit of the writapplicant company is located in Vadodara, Gujarat. The writapplicant was contracted for the supply of 450 coaches to Australia under a project called Queensland New Generation Rolling Stock (QNGR). Pursuant to this Page 2 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021 C/SCA/11038/2020 JUDGMENT contract, the writapplicant has been manufacturing and exporting the metro coaches to Australia. The writapplicant appointed Geodis, a company engaged in the business of providing transport and logistic service, for providing services in relation to customs clearance, customs duty payment, statutory documents management vide Contract dated 30.11.2015.
2.2 The Metro coaches are notified goods and Australia is a notified market under the Appendix 3B of the Foreign Trade Policy 20152020. The entitlement of writapplicant for MEIS benefit is thus not in dispute.
2.3 The writapplicant had instructed the Geodis to file shipping bills with declaration of intent to avail the MEIS benefits after marking 'Yes' in the reward column of such shipping bills on EDI System so that it can avail the MEIS benefits. Accordingly, from 13.10.2016 onwards, the Geodis regularly filed shipping bills after marking 'Yes' in the reward column, based on which the writapplicant availed the MEIS benefits.
2.4 However, for the Relevant Period i.e 13.07.2017 - 24.07.2018, the writapplicant realised that it did not receive the MEIS benefits on export of metro coaches to Australia. Upon inquiry, the Geodis informed the writapplicant that it had filed checklist on ICEGATE portal with reward column marked 'Yes' [Annex. 5 at pg. 77]. However, the print outs of the Relevant Shipping bills did not reflect such declaration.
2.5 The writapplicant has produced a list of the shipping bills erroneously marked as 'N' instead of 'Y; at Annex. 4 at pg. 67. It is pertinent to state that even though such shipping bills were not marked "Y", they did carry a declaration of intent to avail the MEIS benefits in the following words "WE INTEND TO CLAIM REWARDS UNDER Page 3 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021 C/SCA/11038/2020 JUDGMENT MERCHANDISE EXPORTS FROM INDIA SCHEME" [Annex. At pg. 69]. Further, the export documents such as commercial invoices, checklist etc. pertaining to the metro coaches exported during the Relevant Period clearly mention that the writapplicant had intention to avail the MEIS benefits.
2.6 The writapplicant promptly approached the Deputy Commissioner of Customs vide letters dated 10.8.2018; 23.8.2018 and 27.8.2018 seeking a manual amendment to the relevant shipping bills 2.7 On 9.10.2018, the respondent no.4 amended the relevant shipping bills by changing the "MEIS SCHEME NO" to MEIS SCHEME - YES". The said amendment was issued after the concerned officer scrutinised the export documents such as commercial invoices, checklist for shipping bills and other documentary evidence in this regard and issued Amendment Certificate dated 09.10.2018 in accordance with Section 149 of the Customs Act, 1962. The Amendment Certificate issued by the office of the Commissioner clarifies that, since the corrections could not be carried out in the EDI System, a manual amendment certificate is being issued to the writapplicant.
2.8 Even after submitting the said amendment certificate and regular follow up with the concerned respondents, the MEIS benefits were not granted to the writapplicant on the pretext that the MEIS benefits for EDI shipping bills will not be granted where the rewards column has not been marked/ticked as "Yes".
3. Being dissatisfied with the aforesaid action, the writapplicant is here before this Court with the present writapplication.
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4. Mr. Shashank Shekhar, the learned counsel appearing with Mr. Rohan Lavkumar, the learned counsel for the writapplicant submitted that the benefits under the MEIS cannot be denied to the writapplicant solely on the ground of a seeming technical error especially when the eligibility of the writapplicant is not disputed, and the office of the Commissioner has already allowed amendment to the Relevant Shipping Bills.
5. According to Mr. Shekhar, the Shipping Bills along with various other documents clearly establish that the writapplicant intended to claim the MEIS benefits in relation to the Relevant Shipping Bills. Reference may be made to documents such as invoice and checklist pertaining to the Relevant Shipping Bills which clearly mentioned that the writapplicant intends to avail the MEIS benefits. Further, the writ applicant has been exporting the metro coaches and availing the benefits under the MEIS in relation to such exports since 2014.
6. Mr. Shekhar would submit that it is only during the Relevant Period that the shipping bills were filed without marking 'Yes' in reward column. Therefore, the writapplicant humbly submits that its intention to claim the MEIS benefits cannot be disputed, and it is merely an unintended error that the Relevant Shipping Bills were marked incorrectly on EDI System.
7. Mr. Shekhar further submitted that only after considering the aforementioned factors and "after scrutiny of the documentary evidence which was produced at the time of export of goods", did Respondent No.4 Customs Authorities, issued an Amendment Certificate dated 9th October 2018, and alter the declaration of intention from 'No' to 'Yes' in the Page 5 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021 C/SCA/11038/2020 JUDGMENT Relevant Shipping Bills in accordance with Section 149 of Customs Act, 1962. It is pertinent to note that the said certificate also records that "since the correction could not be carried out in the EDI system, so this manual certificate is issued at the request of the exporter".
8. Mr. Shekhar, the learned counsel appearing for the writapplicant submits that once the office of the Commissioner of Customs has permitted amendment of the Relevant Shipping Bills by issuing the Amendment Certificate, the writapplicant cannot be deprived of the MEIS benefits due to limitations of the EDI System. It is a trite law that a substantive benefit cannot be denied to the eligible applicant by the government due to the administrative difficulty or limitation of the online portal.
9. It is pertinent to submit that the respondent no.4 in its affidavitin reply dated 11th February 2021 at Paragraph6, internal Page3, to the present writapplication has confirmed the Amendment and reiterated its stand that such Amendment was issued after scrutiny.
10. In such circumstances referred to above, Mr. Shekhar prays that there being merit in his application, the same be allowed and to direct the respondents to grant the MEIS benefits to the writapplicant.
11. On the otherhand, this writapplication has been vehemently opposed by Mr. Devang Vyas, the learned Additional Solicitor General of India appearing for the respondents nos.1, 2 and 3 and Mr. Mitesh Amin, the learned senior counsel assisted by Ms. Shruti Pathak, the learned AGP appearing for the respondent no.4.
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12. Mr. Vyas, the learned Additional Solicitor General of India by its affidavitinreply dated 12th February 2021 has opposed the present petition on the limited ground that only those shipping bills marked as "Y" in the EDI system would be available for the MEIS benefit. It is the Respondent's case that as per paragraph 3.14 (a) of the Handbook of Procedure to the FTP 201520 "marking/ticking of "Y" (for Yes) in "Reward" column of shipping bills against each item, which is mandatory, would be sufficient to declare to intent to claim rewards under the scheme." It is further the Respondent's case that no amendment can be carried out in the EDI system, which is electronic.
13. In the above circumstance, the writapplicant submits that the Customs Act, 1962 as well as the Foreign Trade Policy 20152020 are substantive provisions. The Act, as well as the Policy confer substantive benefit on the writapplicant. The Handbook of Procedure is merely a procedural document that enables the implementation of the Policy. It is a settled position that Handbook of Procedures is an administrative guideline, as would appear from a combined reading of para 2.4 of the FTP and Section 6 of the Foreign Trade (Regulation and Development) Act, 1992. It is therefore submitted that the handbook of Procedure cannot take away any right conferred either by the Act, or the FTP.
14. It is submitted that the same has already been decided by this Hon'ble Court in Asahi Songwon Colors Ltd. v. Union of India, Order dated 6th July 2017 in SCA 16301 of 2016.
"21. Even otherwise, the Handbook of Procedures and in particular Appendix14II contained therein nowhere aims to lay down any policy but prescribes the procedure to be followed for reimbursement of CST. It is undoubtedly true that para 2 of this Appendix restricts the CST reimbursement on purchases made by an EOU from a DTA unit. However, this restriction in our opinion would run counter to the Page 7 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021 C/SCA/11038/2020 JUDGMENT terms of FTP itself and ultra vires the powers of the Director General of Foreign Trade. The title of the Appendix itself provides that it is a procedure to be followed for reimbursement of Central Sales Tax. Para 1 further clarifies that the procedure given in the said annexure shall be applicable for reimbursement of CST. There is little doubt therefore, that Appendix 14II aimed to lay down the procedure for claiming the benefit. In any case, such procedure could not have restricted the benefit by excluding the purchases from certain source which exclusion did not flow from the Foreign Trade policy itself."
15. A similar finding has also been rendered by the Hon'ble Delhi High Court in the case of Kedia (Agencies) Pvt Ltd. v. Commissioner of Customs, Order dated 07 December 2016 in CUSAA 41 of 2014.
"7. ....It is now settled law that the provisions of the Foreign Trade (Development and 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..."
16. It is further submitted that Section 149 of the Customs Act, 1962 permits amendment of the Shipping Bills if the conditions of the said section are fulfilled. Section 149 of the Customs Act, 1962 is reproduced below:
"149. Amendment of documents.--Save as otherwise provided in sections 30 and 41, the proper officer may, in his discretion, authorise any document, after it has been presented in the customs house to be amended:
Provided that no amendment of a bill of entry or shipping bill or bill of export shall be so authorised to be amended after the imported goods have been cleared for home consumption or deposited in a warehouse, or the export goods have been exported, except on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported, as the case may be."Page 8 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021
C/SCA/11038/2020 JUDGMENT
17. Thus, as stated hereinabove, the respondent no.4, after due verification of the documentary evidence existing at the time of the export duly amended the shipping bills manually from "MEIS SCHEME - "No" to MEIS SCHEME "YES" by way of Amendment Certificate dated 09.10.2018. Hence, the writapplicant now having satisfied the MEIS conditions i.e. exported Notified Goods (Metro Coaches) to Notified Territory (Australia) cannot be deprived of the necessary MEIS benefits.
18. The entitlement to MEIS benefits is governed by the ChapterIII of the Foreign Trade Policy 201520 (FTP 201520) and accordingly, the scheme for the grant of the benefit will be governed thereunder. In other words, the substantive rights and obligations are created by the MEIS Scheme under ChapterIII of the FTP. It also becomes apparent from Para 3.04 of the Policy that once the notified goods are exported to a notified market, the exporter becomes entitled to the MEIS benefits.
Thus, entitlement, restriction thereof and conditions, if any, have to be found within the letters of the ChapterIII of the FTP 201520. Thus, the writapplicant becomes entitled to the MEIS benefits once it exports the notified goods to the notified market. This benefit cannot be defeated due to procedural infirmity of missing to mark/tick "Y" in the rewards column.
19. It is further submitted that the issue in the present writ application is no longer res integra. Various High Courts including this Hon'ble High Court have already permitted the amendment of shipping bills that have been erroneously ticked as 'No' instead of 'Yes' in the MEIS benefit column.
A Division Bench of the Hon'ble Kerala High Court in the case of Commissioner of Customs v. Mangalnath Cashews, Order dated 4th Page 9 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021 C/SCA/11038/2020 JUDGMENT March 2020 in W.A. Nos. 97 and 118 of 2020; 2020 (3) TMI 1066 was considering a similar issue. The Kerala High Court held as follows: "2. Denial of a claim for export benefit under the Merchandise Exports from India Scheme(MEIS) envisaged under the Foreign Trade Policy,201520, was under challenge in these writ petitions. The reason for denial of the claim was that, the writ petitioners have omitted to check the Box stating 'Yes', indicating their intention to avail reward under the Scheme, in the specific Box provided in the software intended for uploading details to the web portal of the Central Government. The learned Single Judge found that, the default setting in the software indicate 'No', and it is only due to an inadvertent mistake on the part of the writ petitioners that the box stating 'Yes' was omitted to be checked. But it was noticed that, in the column meant for description of the goods, the writ petitioners had clearly indicated their intention to avail the benefit of MEIS. The learned Single Judge specifically noted that, in the shipping bill produced that the writ petitioners have specifically mentioned that 'WE INTEND TO CLAIM REWARD UNDER MEIS'. Therefore it was found that the denial of the claim to avail the benefit could not have been done in a mechanical manner, merely because there was a technical lapse on the part of the exporter in not checking a particular box in the web portal; more so when there was sufficient indication in other details entered therein about the intention of the exporter to claim the rewards. Therefore the writ petitions were disposed of by directing the appellants as well as the Director General of Foreign Trade to consider the claim of the writ petitioners for export benefit, afresh, in the light of the observations contained in the judgment and to the grant export benefits, if on an overall consideration of the details furnished by the writ petitioners the intention to claim the benefit of the MEIS was seen manifested at the time of export. The claim was directed to be considered afresh within a period of one month from the date of receipt of a copy of the judgment, after hearing the writ petitioners. In the meanwhile, the Customs Authorities were directed to issue necessary 'No Objection Certificate' in favour of the writ petitioners for processing the claim afresh.
3. Learned counsel for the appellants contended that, since the writ petitioners have not checked the 'Yes' Box in the relevant column, indicating their intention with respect to claiming of the benefit under MEIS, necessary verification of the export consignment was not done at the relevant time; and that verification of the consignment is not possible as of now.
We are not persuaded to accept the said contention. Even if there exists Page 10 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021 C/SCA/11038/2020 JUDGMENT no claim for the benefit under the MEIS, naturally there will be physical verification with respect to the goods consigned by the exporter. Therefore the details of the shipping as well as the necessary verification preceding the export were already done at that time would clearly indicate the identity of the goods exported. If the identity of the goods exported would reveal that the goods exported are those goods with respect to which the benefit under MEIS is allowable, there is no necessity for further physical verification for deciding the question of allowing the claim.
4. Learned counsel further pointed out that, by virtue of a Circular issued by the Director General of Foreign Trade, instruction was given to allow such claims in cases where the exporters had omitted to tick 'Yes' in the portal, only for a limited period of six months from the date of introduction of the Scheme. We do not find any logic in putting such a limitation. As already found by the learned Single Judge, the intention was explicit from other details uploaded in the portal and also from the documents relating to the shipping. Therefore, the omission seems to have been quite inadvertent.
There is no justification in denying the claim, based on such an inadvertent omission. In the matter of condoning such an omission, there cannot be a discrimination between exporters who made the claim within six months and those who have raised the claim after six months of introduction of the Scheme. "
20. The Madras High Court in the case of M/s. Pasha International v. The Commissioner of Customs, Order dated 10th January 2019 in WP (MD) No. 25252 of 2018 and 22857 of 2018; 2019 (2) TMI 1187 has also decided the issue similarly.
21. The issue has also been decided in various other cases namely:
(i) M/s. P.A. Footwear Pvt. Ltd. Vs. DGFT and Ors., 2020 (3) TMI 273 Madras High Court
(ii) M/s. Davinci Leather Pvt. Ltd. Vs. The Commissioner of Customs, 2020 (2) TMI 1266 Madras High Court
(iii) M/s. Global Calcium Private Limited Vs. The Assistant Page 11 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021 C/SCA/11038/2020 JUDGMENT Commissioner of Customs (EDC) and Ors., 2019 (6) TMI 811 Madras High Court
(iv) Saint Gobain India Pvt. Ltd. V. Union of India, 2018 (11) TMI 536 - Kerala High Court
(v) Commissioner of Customs, Cochin v. NC John and Sons, 2020 (374) ELT 465 - Kerala High Court
22. The decisions rendered by various High Courts have not been appealed before any higher forum by any of the respondent till date.
23. The writapplicant submits that as per its understanding, the EDI system, which is an electronic system developed and managed by the respondent no.3 with an objective to digitalize transmission of shipping bills between Respondents, suffers from lacunae that it does not permit amendment, which is specifically permitted in terms of Section 149 of the Customs Act, 1961, to be carried electronically through EDI system.
It is a settled law that the benefit which otherwise a person is entitled to once the substantive conditions are satisfied cannot be denied due to a technical error or lacunae in the electronic system.
24. In this regard, a reference is made to the decision in the case of Darsh Pharma Chem Pvt Ltd. v. Superintendent, Central GST, Order dated 11 March 2020 in SCA 18051 of 2019; 2020 (3) TMI 696 wherein this Court, having regard to the fact that the TRAN1 could not be filed on account of technical glitches in the electronic system, directed the respondents therein to permit the writapplicant therein to file form in TRAN1. We quote the relevant observations:
"8. Having regard to the fact that the TRAN1 could not be filed on account of technical glitches. We direct the respondent No.2 to permit the writ applicant to file form in TRAN1.
9. In view of the order referred to above, let this exercise be undertaken Page 12 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021 C/SCA/11038/2020 JUDGMENT and completed within a period of two weeks from the date of the receipt of the writ of this order."
25. In view of the above, the present writapplication succeeds and is hereby allowed. The respondents nos.1 and 2 are directed to grant the benefits of the MEIS to the writapplicant within a period of four weeks from the date of the receipt of this order.
(J. B. PARDIWALA, J) (ILESH J. VORA,J) A. B. VAGHELA Page 13 of 13 Downloaded on : Sun Feb 28 01:45:28 IST 2021