Karnataka High Court
M/S Suretex Prophylactics (India) Pvt ... vs Director General Of Foreign Trade on 21 March, 2022
Author: B. M. Shyam Prasad
Bench: B. M. Shyam Prasad
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF MARCH 2022
BEFORE
THE HON'BLE MR. JUSTICE B. M. SHYAM PRASAD
WRIT PETITION NO.2617/2022 (T-CUS)
BETWEEN :
M/S SURETEX PROPHYLACTICS (INDIA) PVT LTD
FACTORY PLOT NO.74 TO 91,
KIADB INDUSTRIAL ESTATE, JIGANI II PHASE,
ANEKAL TALUK,
BENGALURU-560105
REPRESENTED BY SHRI K R SUMESH,
MANAGING DIRECTOR,
AGED ABOUT 48 YEARS,
S/O K N RAMACHANDRAN.
... PETITIONER
(BY SRI.V. RAGHURAM, SENIOR ADVOCATE FOR;
SRI. RAGHAVENDRA C.R, ADVOCATE)
AND :
1. DIRECTOR GENERAL OF FOREIGN TRADE
THROUGH THE CHAIRMAN,
POLICY RELAXATION COMMITTEE (PRC)
UDYOG BHAVAN,
H WING GATE NO.2,
MAULANA AZAD ROAD,
NEW DELHI-110 001.
2. PRINCIPAL COMMISSIONER OF CUSTOMS
AIRPORT AND AIR CARGO COMPLEX, 2ND FLOOR,
AIR INDIA SATS AIR FREIGHT TERMINAL
KEMPEGOWDA INTERNATIONAL AIRPORT,
DEVANAHALLI, BENGALURU - 560 300.
2
3. DEPUTY COMMISSIONER (EXPORTS)
AIRPORT AND AIR CARGO COMPLEX, 1ST FLOOR,
AIR INDIA SATS COOLPORT,
KEMPEGOWDA INTERNATIONAL AIRPORT,
DEVANAHALLI, BENGALURU - 560 300.
4. ADDITIONAL COMMISSIONER OF CUSTOMS
INLAND CONTAINER DEPOT,
WHITEFIELD,
BENGALURU-560 066.
5. UNION OF INDIA
MINISTRY OF FINANCE,
REPRESENTED BY SECRETARY,
NORTH BLOCK, NEW DELHI - 110 001.
... RESPONDENTS
(BY MISS K. SAROJINI MUTHANNA, ADVOCATE;
CENTRAL GOVT. SENIOR PANEL COUNSEL FOR
R1 AND R5;
SRI. JEEVAN J. NEERALGI, ADVOCATE AND
CGC FOR R2 TO R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH SL.NO.27 OF THE MINUTES OF MEETING
NO.14/AM22 OF THE R-1 HELD ON 26.10.2021
(UPLOADED ON 02.11.2021) VIDE ANNX-A FOR THE
REASONS STATED IN THE GROUNDS; DIRECT THE R-1 TO
ALLOW THE BENEFIT OF THE REWARD UNDER THE MEIS
TO THE PETITIONER IN RESPECT OF THE ALL THE
SHIPPING BILLS MENTIONED IN THE ANNEXURE-U
APPLICATION WHICH WAS SUBMITTED TO THE R-1 IN
FORM ANF-2D DATED 23.12.2020 AND DIRECT THE
ORDER RESPONDENTS TO IMPLEMENT THE SAME;
QUASH (i) ORDER/LETTER OF THE DEPUTY
COMMISSIONER (EXPORT) DATED 22.10.2020 BEARING
C.NO. VIII/48/350/2019EXP ASSMT, ENCLOSED AS VIDE
ANNX-B, (ii) ORDER-IN-ORIGINAL NO.89/2020 DATED
28.10.2020 PASSED BY ADDITIONAL COMMISSIONER OF
3
CUSTOMS (INLAND CONTAINER DEPOT), VIDE
ANNEXURE-C AND (iii) ALL PENDING PROCEEDINGS
PURSUANT TO THE SAID ORDERS.
THIS WRIT PETITION COMING ON FOR ORDERS,
THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioner is engaged in the manufacture of industrial rubber goods as also rubberized fabrics and miscellaneous rubber specialties that are suitably classified under the Customs Tariff. The petitioner has not been able to avail the benefit of Merchandise Exports from India Scheme (MEIS) introduced under chapter III of the Foreign Trade Policy (FTP) for the financial years between 2015 - 2016 and 2017 - 2018. The petitioner has not been able to avail such benefit because the petitioner, who operates under the Electronic Data Interchange (EDI), has not indicated the option of intent to avail the benefit as required in law. 4
2. The petitioner to avail this MEIS benefit had to choose the option of 'Y' as against the option of 'N' in the EDI Shipping Bills but the petitioner has chosen the option of 'N' indicating that it will not avail the benefit. The petitioner's case is that there is an inadvertent error in choosing 'N' over 'Y', and the petitioner has been repeatedly approaching the Customs Department for amendment of the shipping bills to avail the benefit. While the Deputy Commissioner [Exports] by order dated 22.10.2020 has rejected the petitioner's application for amendment of the EDI Shipping Bills on the ground that the application is filed beyond the period of three [3] years, the Joint Commissioner of Customs, ICD, Whitefield has rejected another set of the petitioner's application for correction of the shipping bills by the order dated 28.10.2020. The petitioner has called in question both these orders before the competent Appellate Authority and these appeals are pending consideration.
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3. However, the petitioner, in the light of the observation in the aforesaid Joint Commissioner's order dated 28.10.2020, has simultaneously approached the Policy Relaxation Committee under the Director General of Foreign Trade (the first respondent is hereafter referred to as PRC - DGFT) for allowing MEIS benefit. The petitioner's request is considered by PRC on 26.10.2021 and is rejected by the decision, which reads as under:
"The Committee having discussed the case at length observed that conversion from 'N' to 'Y' as well as reflection of such manual amendments in the automated system is not possible. Accordingly, it found no merit in it and hence decided to reject the request of the firm."
Hence, the petitioner has called in question both the rejection of the applications by the Custom authorities for correction of the EDI Shipping bills and the decision of the PRC-DGFT.
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4. Sri. V.Raghuraman, the learned Senior counsel for the petitioner, submits that the choice of 'N' while entering the data in EDI Shipping Bills is an inadvertent error. The petitioner, who is undisputedly an exporter of rubber products as aforesaid and is entitled for the MEIS benefits, has submitted an application before the Customs Authorities, and has later submitted an application with the PRC-DGFT. The petitioner did not realize that its ministerial staff had erred in making this choice until 2017 and the moment this error is realized, representations are submitted to the Customs Authorities..
5. Sri. V.Raghuraman submits that in cases where there is bonafide or inadvertent error, the different High Courts, including this High Court, has directed the Director General of Foreign Trade (DGFT) to allow the benefit under MEIS. He submits that while 7 this Court in M/s. Biocon Limited Vs. Director General of Foreign Trade and Others1 has granted relief as aforesaid in the case of Non-EDI Shipping Bills, the other High Courts, more specifically, the High Court of Orissa in Indian Metals and Ferro Alloys Ltd Vs. Director General of Foreign Trade and Others2 has granted similar benefit even for EDI Shipping Bills with the concerned establishing inadvertence in the choice. He emphasizes that this Court, in the circumstances of the present case, must also be persuaded to grant similar relief to the petitioner.
6. Ms. K.Sarojini Muthanna, the learned Senior Panel counsel for the DGFT and the Ministry of Finance, Union of India, submits that a declaration by an exporter of the intent to claim reward under MEIS was mandatory until 05.12.2017 and it is only after this date, the declaration for EDI transactions are dispensed 1 W.P.No.8862/2021 (T-RES) 2 W.P.(C) No.29635/2020 8 with. The petitioner, with the error as admitted, has not filed the necessary declaration and in the absence of this declaration, the petitioner cannot contend that the error is inadvertent.
7. Ms. K.Sarojini Muthanna also submits that the petitioner has an alternative remedy and in elaboration she submits that the petitioner has impugned the orders of PRC, but given the provisions of Clause 2.58 and 2.59 of the Handbook of procedures, the petitioner could approach the DGFT for appropriate relief. The petitioner has not established exceptional circumstance to justify interference under Article 226 of the Constitution of India when an alternative remedy is available.
8. Sri. Jeevan J Neeralgi, the learned Central Government Counsel for the Custom Department/its Authorities, does not dispute that the petitioner's appeal 9 as against the orders dated 22.10.2020 and 28.10.2020 are pending consideration and he also does not dispute that the petitioner has approached PRC - DGFT after the observation in the order dated 28.10.2020 that the petitioner must approach PRC - DGFT if there is any error in exercising the choice. Sri. Jeevan J Neeralgi submits that the petitioner's transactions on EDI is between years 2015 and 2018 and the applications before the Customs Authorities under Section 149 of the Customs Act 1962 for correction of the shipping bill is filed only in the year 2019. The petitioner as such, should have sufficiently explained the delay but the same has not been explained.
9. In rejoinder, Sri. V.Raghuraman submits that the question of delay must be examined in the light of the undisputed fact that the petitioner bonafide first tried to resolve the difficulty approaching the competent Authorities under the Customs Act 1962 for amendment 10 of the shipping bills stating that the choice of entering on the EDI mode is by the ministerial staff and this error was not immediately noticed. He reiterates that the other Courts in similar circumstances have directed the DGFT to extend the benefit, and in this regard, Sri. V.Raghuraman refers to the decision of the High Court of Kerala in Saint Gobain India Pvt. Ltd Vs. Union of India3.
10. This Court must observe at the outset that it is undisputed that the Handbook of Procedures [HoP], with effect from 01.06.2015, mandated a declaration that an exporter intends to claim rewards under MEIS. But this HoP did not enable this declaration under the EDI Shipping Bills until the HoP was amended with effect from 05.12.2017. The only manner of indicating the choice in the EDI Shipping Bill was to choose the option as aforesaid unlike in manual or non-EDI mode. 3 2018 (361) E.L.T. 1000 (Ker.) 11 The terms of the HoP on declaration, prior to amendment in 05.12.2017 and subsequent thereto read as under:
Prior to Amendment w.e.f Post Amendment w.e.f 05.12.2017 05.12.2017
(a) Export shipments filed a(i) EDI Shipping Bills:
under all categories of the Marking/ticking of 'Y' (for Yes) Shipping Bills would need in "Reward" column of the following declaration on shipping bills against each the Shipping Bills in order to item, which is mandatory, be eligible for claiming would be sufficient to declare rewards under MEIS: "We intent to claim rewards under intend to claim rewards the scheme. In case the under Merchandise exporter does not intend to Exports From India claim the benefit of reward Scheme (MEIS)". Such under Chapter 3 of FTP declaration shall be required exporter shall tick 'N' (for No). even for export shipments Such marking/ticking shall be under any of the schemes of required even for export Chapter 4 (including shipments under any of the drawback), Chapter 5 or schemes of Chapter 4 Chapter 6 of FTP. In the (including drawback), Chapter case of shipping bills (other 5. than free shipping bills), such declaration of intent shall be mandatory with (ii) Non-EDI Shipping Bills: In effect from 1st June 2015. 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 12 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.
11. It is undisputed that this Court and the other Courts have granted benefits to certain exporters directing the DGFT to extend the benefit of the MEIS reward where an exporter, transacting under the Non- EDI Shipping Bills, had chosen 'N' over 'Y' but has declared the intent to avail remedy under MEIS on the ground of inadvertent error. It is also undisputed that the EDI Shipping Bills do not provide for a separate declaration that the exporter intends to avail the MEIS benefit as is provided for Non-EDI Shipping Bills.
12. In the light of the rival submissions, the question for consideration would be: whether the petitioner, who relies on EDI Shipping Bills, must be denied the MEIS benefit if inadvertence is established 13 and the delay in seeking the benefit is also explained. This would be in addition to the question: whether this Court must interfere under Article 226 of the Constitution of India or direct the petitioner to approach DGFT.
13. This Court must opine that if inadvertent error is the premise in which the Courts have directed DGFT to extend MESI reward where option 'N' is chosen but with the declaration to avail benefit in the case of Non-EDI shipping bills, the similar benefit to an exporter operating under EDI shipping bills cannot be denied only because a declaration of the intent to avail the benefit is not made. This would be especially so if it is uncontested that an exporter under the EDI shipping bills did not have the option of making the declaration other than in choosing 'Y' over 'N' to the intent to avail the MEIS benefit under the EDI mode. There would be no reasonable justification to sustain this classification. Therefore, this Court is not persuaded to opine that an 14 exporter operating under EDI shipping bills would not be entitled for the MEIS benefit if there is an inadvertent error in choosing the option.
14. The petitioner has first approached the Customs Authorities under Section 149 of the Customs Act 1962 with different applications for amendment of the shipping bills. One application is rejected on the ground of limitation and the other application is rejected with the opinion that the petitioner should approach PRC - DGFT. It is thereafter the petitioner has approached PRC - DGFT which has rejected the request for extension of the MESI benefit only because the online data cannot be corrected manually. The fact that the petitioner first approached the Customs Authorities and later the PRC of the DGRT would be one of the circumstances that could point to an inadvertent error. 15
15. Further, it undisputed that the petitioner, but for the error in making a choice of entering 'N' over 'Y', would be entitled for the benefit of the MESI Scheme. It would be difficult to believe that the petitioner, even if entitled for MESI benefit, would have chosen to give up the benefit unless it was for inadvertent error. These must also be relevant factors in assessing whether there is a bonafide and inadvertent error in making the choice. The PRC of the DGRT has not considered these circumstances in rejecting the petitioner's request for MESI rewards.
16. The respondent contends that the petitioner must be relegated to the alternative remedy before the DGFT under the relevant HoP. However, mere existence of an alternative remedy cannot be a reason for refusal to exercise the jurisdiction under Article 226 of the Constitution of India under all circumstances. This Court has opined that refund must be allowed to the 16 petitioner because inadvertence is established and that the delay is sufficiently explained. As such, the ground for exercise of jurisdiction under Article under 226 of the Constitution of India is established.
For the foregoing, the following:
ORDER The writ petition is allowed quashing the decision dated 26.10.2021 by the Policy Relaxation Committee under the Director General of Foreign Trade (the first respondent) and observing that insofar as the orders dated 22.10.2020 and 28.10.2020 (Annexures - B and C) by the Deputy Commissioner [Exports], Airport and Air Cargo, Commissionerate and the Joint Commissioner of Customs, ICD, Whitefield must yield and cannot be a reason to refuse the MESI benefits to the petitioner.17
It is declared that the petitioner would be entitled for the MESI benefits but subject to the condition that the petitioner shall furnish, within a period of eight [8] weeks from the date of receipt of a certified copy of this order, proof of withdrawal of the pending appeals. It would be needless to observe that the respondents must complete necessary formalities to facilitate the extension of MESI rewards to the petitioner consequent to this order.
SD/-
JUDGE RB