Gujarat High Court
M/S Stitchwell Garments vs Union Of India on 21 July, 2022
Author: N.V.Anjaria
Bench: N.V.Anjaria, Bhargav D. Karia
C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17424 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be
allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the
fair copy of the judgment ?
4 Whether this case involves a substantial
question of law as to the interpretation
of the Constitution of India or any order
made thereunder ?
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M/S STITCHWELL GARMENTS
Versus
UNION OF INDIA
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Appearance:
AMAL PARESH DAVE(8961) for the Petitioner(s) No. 1,2
MR PARESH M DAVE(260) for the Petitioner(s) No. 1,2
for the Respondent(s) No. 3
MR DHAVAL D VYAS(3225) for the Respondent(s) No. 3
MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 21/07/2022
ORAL JUDGMENT
Page 1 of 11
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C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 (PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) In the facts and circumstances of the case and having regard to the request and consent of learned advocates appearing for the respective parties, this Special Civil Application was taken up for final consideration.
1.1 Rule returnable forthwith. Learned advocate Mr. Nikunt Raval waives service of Rule on behalf of respondents no.1 and 2 whereas learned advocate Mr. Dhaval D. Vyas waives for respondent no.3.
1.2 Heard learned advocate Mr. Paresh M. Dave for the petitioners and learned advocate for the respective parties.
2. By filing this petition under Article 226 of the Constitution, the petitioners have prayed for direction against Director General of Foreign Trade, Ministry of Commerce and Industry, Government of India and against Additional Director General of Foreign Trade, Ahmedabad, respondents no.1 and 2 herein respectively, to accept the applications of the petitioners for grant of export benefits under the Scheme called Rebate of State and Central taxes and Levies (RoSCTL) Scheme in respect of 70 shipping bills. It is further prayed to grant the Scrips under the aforesaid scheme for the export made under the said shipping bills.
Page 2 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 2.1 By order dated 04.01.2021, the Principal Commissioner of Customs, Mundra approved the conversion of shipping bills from Scheme Code 19(Drawback) to Scheme Code 60 (Drawback and Rebate of State Levies ROSL) under Section 149 of the Customs Act, 1962. It was in respect of the said 70 shipping bills that the petitioners claimed export benefit under the Scheme.
2.2 The petitioners have next prayed to set aside the decision of Director General of Foreign Trade, reflected in communication dated 10.06.2021 and to grant consequential benefits of granting Scrips under the RoSCTL Scheme to the petitioners for the exports made during January 2020 to October 2020 under the aforementioned 70 shipping bills. In the said communication dated 10.03.2011, sent by email, it was communicated to the petitioners that it was not possible to change the Scheme Code from 19 to 60 in the Electronic Data Interchange (EDI) system.
3. The petitioner is engaged in the production and export of textile goods of various kinds and have been exporting large quantity of goods. In respect of export of textile goods during January 2020, October 2020, made by the petitioner from Mundra Port comprised in 70 consignments, it is the grievance of the petitioner that only on the basis of incorrect scheme code number shown in the shipping bills, the export benefit of Drawback and RoSCTL Scheme came to Page 3 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022 C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 be denied to the petitioners.
3.1 In March 2019, the Central Government discontinued the earlier scheme and new scheme called the Rebate of State and Central taxes and Levies (RoSCTL), was introduced. The export benefits thereunder of Electronic Duty Credit Scrips were continued to be granted by the Director General of Foreign Trade for export of textile goods. The exporter was required to file the shipping bill under Section 50 of the Customs Act. The Customs EDI system has prescribed Scheme Codes for various export benefit schemes. For various export benefit schemes, the shipping bills are to be uploaded electronically into the system by declaring such scheme codes.
3.2 For simple Drawback benefit, it is the Scheme Code 19, which is prescribed, whereas for the export benefits of Drawback as well as RoSCTL, Scheme Code 60 is prescribed in the system. The petitioner exported 71 consignments of textile goods from Mundra Port and shipping bills came to be filed by the petitioner in the system. It appears that however, inadvertently, Scheme Code 19 was shown instead of Scheme Code 60 on those shipping bills when initially they were uploaded at the time of export in the system. It was on the said sole ground that Scheme Code 19 was indicated instead of Scheme Code 60, the benefits of Scheme was not granted to the petitioner.
3.3 Application of the petitioner dated 14.10.2020 Page 4 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022 C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 made to the competent Customs Authority at Mundra was filed for amendment of 70 shipping bills invoking Section 149 of the Customs Act.
3.4 On 04.01.2021, the Principal Commissioner of Customs, Mundra allowed conversion of 70 shipping bills by approving change in the Scheme Code from 19 to Scheme Code 60. The decision was also communicated to the petitioner. The application of the petitioner for RoSCTL benefit for 70 shipping bills was still not accepted. The ground was that the shipping bills uploaded in the EDI system at the time of export with Scheme Code 19 cannot be changed. It was therefore that the authorities declined to give the benefit of RoSCTL treating the claim of the petitioner for such benefit to be unacceptable.
4. Learned advocate for the petitioner submitted that refusal on the part of Customs Authorities to grant the benefit under the scheme and not issuing duty free Scrip in favour of the petitioner for exports was illegal and arbitrary. It was submitted that the decision was based only on the technical ground that earlier the petitioner had entered the Scheme Code 19, which was not applicable and that the newly changed Scheme Code 60 was not entered in the system by the petitioner.
4.1 In support of the plea that such technical hindrance should not be allowed to override the substantive entitlement of the petitioner, decisions Page 5 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022 C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 in Bombardiar Transportation India Pvt. Ltd. Vs. Directorate General of Foreign Trade [2021(377) ELT 489 (Guj.)], in Vishnu Aroma Pouching Pvt. Ltd. Vs. Union of India [2020(38) GSTL 289(Guj)], in P.A. Footwear Pvt. Ltd. Vs. Director General of Foreign Trade, New Delhi [2020(372) ELT 660 (Madras)] were pressed into service.
4.2 On the other hand, learned advocate for the respondent relied on the contents and contentions of the affidavit-in-reply filed on behalf of the respondents. It was contended that Ministry of Textiles issued notification notifying the Scheme of Rebate of State and Central Taxes and Levies on exports of garments. Though the scheme was notified by the Ministry of Textiles, it was submitted, the implementation is of Director General of Foreign Trade. It was stated that in order to claim benefits under the Scheme, the exporter was required to mention Scheme Code as prescribed at the time of exports, while filing the shipping bills. The Circular dated 12.03.2019 so provided was referred, to submit that the said Circular was in public domain.
4.3 In the affidavit-in-reply, following main contention was raised, In the case of the petitioner, for the shipping bills, for which the petitioner is agitating, scheme code had been mentioned as "19" but has later been manually amended by the Customs Page 6 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022 C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 (Respondent No. 3) from "19" to "60". It is submitted that as per procedure notified for claim of ROSCTL benefits (Public Notice 58 dated 29.01.2020-Annexure R2), only online applications are allowed to be submitted by exporters/ applicants. Manual amendments done by Customs, do not flow electronically and has not been electronically transmitted from the Customs online server i.e. ICEGATE to DGFT server. Due to this, petitioner firm has not been able to submit a claim, within the stipulated deadline, which was initially 31.12.2021 but was later extended through Notification no. 58 dated 07.03.2022 to 15.03.2022. Thus, it may be noted that there is no application materially present for the impugned shipping bills, before the DGFT for any claim under ROSCTL.
5. The controversy lies in narrow compass. The petitioner claimed the benefit of scheme called Rebate of State and Central Taxes and Levies in respect of 70 shipping bills generated for the export. The Principal Commissioner of Customs, Mundra, manually approved the conversion of shipping bills from earlier scheme by permitting the change of Scheme Code 19 to Scheme Code 60. This was done as noted above by order dated 04.01.2021. It appears that when the goods were exported, Scheme Code 19 was inadvertently indicated while filling up the details in the system electronically. The stand is evidently too technical and pedantic.
5.1 In exercise of powers under Section 157 read with Section 46 of the Customs Act, 1962, the Central Board of Excise and Customs have made regulation, Page 7 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022 C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 namely Bill of Entry (Electronic Integrated Declaration) Regulations, 2011. Bill of Entry is defined under Regulation 2(c) whereas Regulation 3 says that authorised person may enter electronic integrated declaration in the Indian Customs Electronic Data Interchange System (EDI system) by himself through ICEGATE or by way of data entry through the service centre by furnishing the particulars. It was based on the above requirement that the authorities have been taking a stand that since wrong code was entered in the electronic data interchange system, the petitioner could not be given the benefit of Rebate Scheme.
5.2 The entitlement of the petitioner for availment under export scheme is not in dispute. Entering a particular code to receive the benefit was only part of procedure. It could not overreach or obliterate the substantive right claimable by the petitioner once the petitioner was eligible under the scheme to get the benefit. The decisions relied on by the learned advocate for the petitioner lay down that technical glitch ought not to have been permitted to take toll of the petitioner's rights under the scheme to avail the benefits.
5.3 Supreme Court in Saiyad Mohammad Bakar El-Edroos (Dead) By Lrs. Vs. Abdulhabib Hasan Arab & Ors. [(1998) 4 SCC 343], held that procedure cannot operate to defeat the ends of justice, it must stand Page 8 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022 C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 to the aid of justice, "8. A procedural law is always in aid of justice, not in contradiction or to defeat the very object which is sought to be achieved. A procedural law is always subservient to the substantive law. Nothing can be given by a procedural law what is not sought to be given by a substantive law and nothing can be taken away be the procedural law what is given by the substantive law."
5.4 Even if the petitioner had entered wrong scheme code, it was only an irregularity and not illegality. In Solanki Parvatikumari Rameshbhai Vs. State of Gujarat being Special Civil Application No. 22981 of 2017, Single Judge of this Court explained the differentiation between illegality and irregularity, "5.2 Law conceives a clear differentiation between illegality and irregularity. This nice distinction brings home the case of the petitioner. An illegality is something which amounts to substantial failure in compliance of requirement. It denotes such breach of rule or requirement which alters the position of a party in terms of his right or obligation. Illegality denotes a complete defect in the jurisdiction or proceedings. Illegality is properly predictable in its radical defects. It is a situation contrary to the principle of law. As against this, an irregularity as defined lexicographically, is want of adherence to some prescribed rule or mode of proceedings. It consist in omitting the rule something that is necessary for due and orderly conducting of a suit or doing it in an unreasonable time or improper manner. In Law Lexicon by R. Ramanatha Aiyar, 1997 Edition, irregularity is defined as "a neglect of order or method; not according to regulations; the doing of an act at an unreasonable time, or in an improper manner; the technical term for every defect in practical proceedings or the mode of conducting Page 9 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022 C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 an action or defence, as distinguished from defects in pleading. Irregularity is failure to observe that particular course of proceedings which, conformable with the practice of the court, ought to have been observed".
5.4.1 It was further stated that irregular conduct or procedure could not have debilitating effect on the substantive rights of the party, "5.3 A thing irregularly done is not regularly done. It is not in conformity of rule or principle. The concepts "illegal", "irregular" and "procedurally irregular", are often understood in terms of their degree which they bear to be not in conformity with rule of particular course of action. The illegality is a highest kind of breach of law which will taint and vitiate the action. One who commit "illegality" has to be denied the assertion of his right and he stands disentitled to relief in law. Irregularity, as noticed, is breach of procedure of rule or some orderly conduct but not of such nature which could be said to be in the nature of a debilitating defect. It is pardonable in law. The concept of procedural irregularity is indicative of lapse of minor nature in procedure which could not affect adversely rights of a party, nor would exceptionally reverse the obligation of the other side."
6. In the aforesaid view, the petition deserves to be allowed. Resultantly, the decision of Respondent Director General of Foreign Trade reflected in email communication dated 10.06.2021 refusing to change the Scheme Code from 19 to 60 in EDI shipping bills is hereby set aside. Respondents no.1 and 2 herein are directed to accept the application of the petitioner Page 10 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022 C/SCA/17424/2021 JUDGMENT DATED: 21/07/2022 for export benefits under the Scheme of Rebate of State and Central taxes and Levies (RoSCTL) in respect of 70 shipping bills referred to in order dated 04.01.2021, the Principal Commissioner of Customs, Customs House, Mundra. The acceptance of the petitioner's application may be by manual mode if the system does not permit the correction. The application of the petitioner for the above purpose shall be deemed to have been filed with Code 60.
6.1 This exercise shall be completed within 12 weeks from the date of receipt of this order.
7. Petition is allowed accordingly. Rule is made absolute.
As the main petition is disposed of, the Civil Application would not survive and shall stand disposed of.
(N.V.ANJARIA, J) (BHARGAV D. KARIA, J) BIJOY B. PILLAI Page 11 of 11 Downloaded on : Sat Dec 24 21:36:59 IST 2022