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[Cites 4, Cited by 6]

Gujarat High Court

Messrs Gokul Overseas vs Union Of India on 21 January, 2020

Author: Harsha Devani

Bench: Harsha Devani, Sangeeta K. Vishen

         C/SCA/7500/2019                                         JUDGMENT




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

             R/SPECIAL CIVIL APPLICATION NO. 7500 of 2019


FOR APPROVAL AND SIGNATURE:


HONOURABLE MS.JUSTICE HARSHA DEVANI

and

HONOURABLE MS. JUSTICE SANGEETA K. VISHEN

================================================================

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 ?

================================================================
                           MESSRS GOKUL OVERSEAS
                                   Versus
                               UNION OF INDIA
================================================================
Appearance:
MR DHAVAL SHAH(2354) for the Petitioner(s) No. 1
MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 2,5
MR NIRZAR S DESAI(2117) for the Respondent(s) No. 6
NOTICE SERVED BY DS(5) for the Respondent(s) No. 3,4
NOTICE SERVED(4) for the Respondent(s) No. 1
================================================================

    CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
           and
           HONOURABLE MS. JUSTICE SANGEETA K. VISHEN

                               Date : 21/01/2020



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         C/SCA/7500/2019                                           JUDGMENT



                                 ORAL JUDGMENT

(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)

1. By this petition under article 226 of the Constitution of India, the petitioner seeks a direction to the respondents to forthwith allow the benefits under the Merchandise Exports From India Scheme (MEIS) by the petitioner under five different applications (Annexure­G collectively) and to accept the amendment in shipping bills with a declaration made by letter dated 22.06.2017 (Annexure­J to the petition). The petitioner also prays that the letter dated 11.02.2019 (Annexure­AC to the petition) whereby the request of the petitioner for acceptance of shipping bill for MEIS has been turned down, be quashed and set aside.

2. The facts as appearing in the memorandum of petition are that the petitioner is a partnership firm situated at Kandla Special Economic Zone (KSEZ) and is duly registered with the Service Tax Department. The petitioner firm is inter alia engaged in the manufacturing of derivatives of Castor Oils and clears its final product to export and is also a certified Three Star Export House.

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           C/SCA/7500/2019                                              JUDGMENT



3.    The         Government             of       India         introduced             the
Merchandise                  Exports              From          India            Scheme

(hereinafter referred to as "the MEIS") through the Foreign Trade Policy (FTP) 2015­2020 with effect from 01.04.2015. It seeks to promote export of notified goods manufactured/produced in India. The MEIS is a major export promotion scheme implemented by the Ministry of Commerce and Industry. Earlier, there were five different kinds of duty scrips with varying conditions attached to their use. Now, all these schemes have been merged into a single scheme, namely the MEIS.

4. The rewards under the MEIS are payable as a percentage of realized FOB value of covered exports, by way of the MEIS duty credit scrip. The scrip can be transferred or used for payment of a number of duties/taxes, including the customs duty/excise duty/service tax. Scrips and inputs imported under the scrips are fully transferable. This has provided much flexibility to the exporters. The earlier schemes had many conditions attached with the scrips about the usage and importability of items.

5. The respondents No.2 and 3 consciously extended the MEIS scheme to the units located in the Special Economic Zones (SEZ) and it is made Page 3 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT fully transferable. The sole motive and intention to introduce this scheme in the nature of reward/incentives is that it makes the exports competitive in the international market, including Europe, the United State of America and Africa. These three markets are covered under the scheme for all notified 5012 tariff lines. In order to give a boost to exports from SEZs, it has been decided to extend the benefit of the reward scheme to units located in SEZs which would benefit the manufacturing sector in terms of both technology transfer and gainful employment.

6. The respondents No.2 and 3 introduced the Scheme under Chapter­3 of the Foreign Trade Policy 2015­2020, which prescribes the procedure for 'Declaration of Intent' on EDI and Non­EDI shipping bills for claiming rewards under the MEIS, including export of goods through courier or foreign post offices using e­Commerce. The Central Board of Excise and Customs (hereinafter referred to as "the Board") issued Circular No.14/2015­Cus. dated 20.04.2015, prescribing the procedure for claiming benefits under said scheme.

7. The respondent No.3 ­ The Director General of Foreign Trade (DGFT), issued Public Notice Page 4 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT No.40/2015­2020 dated 09.10.2015, whereby eligibility was granted under the MEIS to 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 bills in Customs for exports made between 01.04.2015 to 31.05.2015. Subsequently, the benefit was extended for a period beyond 31.05.2015 by Public Notice No.47/2015­20 dated 08.12.2015. Thus, the condition of the declaration has been relaxed from time to time even if it has been treated as a mandatory condition.

8. The petitioner, by its application dated 21.12.2015, applied for the MEIS for the exports made during the period between April 2015 to January 2016 and it came to be granted MEIS Licence No.3719000578 against the exports made from its factory.

9. The petitioner again applied for the MEIS for the exports made during the period from April 2015 to January 2016, under separate applications. The applications came to be partly allowed, whereby twenty five shipping bills for an amount of Rs.9,10,235/­, were not allowed and were disputed. The petitioner was informed that a reference has been sent to the respondent No.3 ­ Page 5 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT DGFT seeking clarification as to whether the shipping bills (Non­EDI) prior to 01.06.2015 were eligible for the MEIS benefits or not in the absence of the 'Declaration of Intent' for claiming the MEIS benefits by a letter dated 03.08.2016 of the Sr. Accounts Officer, Kandla SEZ. The petitioner requested to allow benefits of the scheme and also requested to allow conversion of the shipping bills in each case.

10. By a letter dated 06.06.2017, the petitioner made a representation to the respondent No.4 ­ Commissioner of Customs, Kandla, requesting him to allow the MEIS benefits on the shipping bills in case the 'Declaration of Intent' was not mentioned prior to 01.06.2015 and also requested to extend the benefit of the Public Notice dated 09.10.2015 to Non­EDI shipping bills also.

11. The petitioner was informed to apply for amendment in the form of conversion of shipping bills from free to MEIS. Thereafter, by a letter dated 22.06.2017, the petitioner applied for conversion of the shipping bills. By a letter dated 18/19.07.2017 of the respondent No.5 ­ Development Commissioner, the petitioner was asked to amend the shipping bills under section 149 of the Customs Act, 1962 (hereinafter referred to as "the Act") to qualify for the Page 6 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT benefits under the MEIS. The petitioner approached the concerned authority for amendment of the shipping bills, as suggested by respondent No.5, but since there was no response thereto, the petitioner sent a reminder letter dated 01.08.2017 to the respondent No.6 ­ Assistant Commissioner of Customs (Exports), to allow amendment without any further delay.

12. It is the case of the petitioner that despite continuous follow up by the petitioner by way of written as well as personal visits, there was no response or any positive outcome, and hence, the petitioner once again sent a reminder letter to respondent No.6 ­ Assistant Commissioner of Customs (Exports) requesting to grant amendment of the shipping bills. The petitioner marked a letter dated 04.09.2017 written by the respondent No.6 to the Deputy Commissioner of Customs, Kandla, whereby comments were sought as to whether amendment of the shipping bills were covered under section 149 of the Act or not so as to enable their Office to process the request.

13. By a letter dated 07/08.09.2017, the Deputy Commissioner of Customs, Kandla replied to the respondent No.6 ­ Assistant Commissioner of Customs (Exports) and confirmed that the petitioner's goods had been exported, which is Page 7 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT evident from the export documents. He further reported that the petitioner has been filing its claim for similar goods regularly under the MEIS for later periods and it appears that their goods are 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.36/2010­Cus. dated 23.09.2010 and Notification No.40/2012­Customs (N.T.) 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. The petitioner was asked to submit documents, which came to be duly submitted by a letter dated 27.09.2017 and it also declared the intention to claim benefits under the MEIS. Since there was no response from the respondents, the petitioner requested the respondent No.6 ­ Assistant Commissioner of Customs (Exports) to grant personal hearing regarding the issue of amendment in the shipping bills pursuant to the claims under the MEIS.

14. It appears that thereafter, there were communications inter se between different Departments of the respondents as to who was the proper officer to cancel the LEO and to grant amendment in the shipping bills. Thereafter, the Page 8 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT petitioner received a communication dated 01.02.2018 addressed by the respondent No.6 ­ Assistant Commissioner of Customs (Exports) to the Deputy Commissioner of Customs, Kandla, stating that since the application for amendment of shipping bills has been made beyond three months, the amendment could not be permitted in view of the Circular No.36/2010­Cus. dated 23.09.2010 as the same is barred by time.

15. However, despite the fact that the respondent No.6 ­ Assistant Commissioner of Customs (Exports), had already opined that the amendment of shipping bills made beyond three months is not permissible, a copy of the letter dated 08.03.2018 addressed by the respondent No.6 to the respondent No.5 - Development Commissioner was forwarded to the petitioner, whereby the respondent No.6 had requested the respondent No.5 to submit specific report on the points set out therein. By a letter dated 02.04.2018 of the Appraiser, Kandla SEZ, Gandhidham from the Office of the Development Commissioner, respondent No.5 herein, the petitioner has been informed that its request for amendment in the shipping bills to incorporate 'Declaration of Intent' has not been considered by the competent authority in terms of the Board's Circular No.36/2010­Cus. dated 23.09.2010.

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C/SCA/7500/2019 JUDGMENT

16. By a letter dated 21.05.2018, the petitioner made a representation to the respondent No.3 and requested to consider and extend the benefit of the MEIS similar to the instructions issued for incorporation of the MEIS declaration and allowing the MEIS benefits on the shipping bills filed prior to 01.06.2015. The petitioner also addressed a representation dated 07.06.2018 and requested the respondent No.3 ­ DGFT to accept the declaration and to extend the benefits in terms of the Public Notice issued for the EDI shipping bills. The petitioner also lodged an online grievance before the respondent No.3 ­ DGFT and requested to follow the instructions issued for the EDI Ports, which came to be rejected.

17. It is the case of the petitioner that the authorities had not examined the fact that there is neither any revenue loss nor is any prejudice caused to the Government if such benefit is extended to Non­EDI Ports as well.

18. In response to various representations made by the petitioner to the respondent No.2 ­ Under Secretary, SEZ Division, Government of India, a direction came to be issued to the respondent No.5 - Development Commissioner to send comments Page 10 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT on the issues raised by the petitioner. Despite various representations and directions to the authority to submit comments, there was no response thereto.

19. Subsequently, by a letter dated 31.10.2018/01.11.2018 of the Joint Development Commissioner addressed to the respondent No.2 ­ Under Secretary, Government of India, it was opined that no procedural relaxation has been prescribed in case of Non­EDI shipping bills. Since there was no communication to the petitioner pursuant to the above referred letter, the petitioner addressed yet another representation to the respondent No.2 ­ Under Secretary, Government of India, vide letter dated 22.01.2019, requesting to allow benefits under the MEIS. By a letter dated 11.02.2019, the petitioner was informed that a detailed report with regard to the MEIS has been sought from the Kandla SEZ authority and that the request of the Unit cannot be considered, as the request had been made beyond three months from the date of the LET export order and hence, the same is time barred in view of the Circular No.36/2010­Cus. dated 23.09.2010. Being aggrieved, the petitioner has filed the present petition.

20. Mr. Dhaval Shah, learned advocate for the Page 11 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT petitioner, submitted that rejection of the request of the petitioner to extend benefits under the MEIS on the technical ground of delay is ex facie illegal. It was submitted that the petitioner is eligible for the benefits under the MEIS subject to compliance of all the requirements prescribed under Chapter 3 of the Foreign Trade Policy 2015­20. The petitioner did not declare its intention to claim rewards under the MEIS while filing shipping bills; however, on realising such mistake, the petitioner immediately approached the concerned authorities for amending the shipping bills and clarified its intention, but it was not considered on the ground of delay.

20.1 It was submitted that there are no restrictions in Chapter 3 of the Foreign Trade Policy 2015­20 to claim benefits under the MEIS and therefore, the time limit imposed for claiming such benefit is not justified.

20.2 It was submitted that the respondents are not justified in not extending the benefit of the MEIS to the petitioner on the ground that prior to 01.06.2015 the shipping bills did not have the 'Declaration of Intent' to claim benefits under the MEIS. It was submitted that the respondents have failed to appreciate the Page 12 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT fact that for EDI shipping bills, the Board has extended the date of correction in the shipping bills if, by mistake, exporters have ticked 'N' instead of 'Y' for claiming benefits under the MEIS, whereas no such circular/instructions have been issued for Non­EDI shipping bills. It was contended that if the said condition can be regularised or extended for EDI shipping bills also, then there is no reason for not extending the same benefit to Non­EDI shipping bills and that such discrimination between online system and manual system cannot be permitted.

20.3 It was urged that the respondents have accepted that the goods have been exported and the said goods are eligible under the MEIS and also that, for the subsequent periods, benefit under the scheme has also been allowed. It was submitted that therefore, merely on account of not claiming benefit under the scheme at the time of filing the shipping bills, the petitioner should not be deprived from the benefits under the scheme if the conditions of the Foreign Trade Policy 2015­20 have, otherwise, been complied with.

20.4 It was contended that the condition of declaration in the shipping bills is procedural in nature inasmuch as the shipping bills are Page 13 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT filed with all the relevant documents and the concerned authorities have permitted clearance of the goods after examination of all these documents. Therefore, non­declaration of the intent to avail benefits under the MEIS cannot come in the way of the petitioner in claiming such benefits. It was submitted that the intention of the legislature to introduce the scheme is to boost exports and therefore, the respondent authorities are not justified in adopting such a rigid stand.

20.5 It was further submitted that since the MEIS was introduced in the month of April 2015, the petitioner was not familiar with the procedure and therefore, due to mistake, declarations were not made in the shipping bills. However, subsequently, the petitioner was able to establish that it is, even otherwise, eligible to claim benefits under the scheme and, therefore, merely because the petitioner had not mentioned the declaration on the shipping bills, would not be a valid ground to deny the benefits thereof.

20.6 Lastly, it was contended that section 149 of the Act does not provide for any period of limitation for amending the shipping bills. It was submitted that it was on account of the conduct of the respondent authorities in not Page 14 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT deciding the issue in question that there was a delay in making the application for amendment of the shipping bills. It was, accordingly, urged that the petition deserves to be allowed by directing the respondents to amend the shipping bills by permitting the same to be converted into MEIS and grant the benefits thereof.

21. Opposing the petition, Mr. Nikunt Raval, learned senior standing counsel for respondents No.2, 3 and 5, invited the attention of the court to the Foreign Trade Policy 2015­20, whereby the MEIS came to be introduced. It was submitted that one of the prerequisites for claiming benefits under the said scheme in respect of Non­EDI shipping bills has been provided in para 3.14 of the Handbook of Procedure to the Foreign Trade Policy 2015­20, which requires that all exporters, while filing export shipments under all categories of shipping bills, are required to declare the following intent to claim benefit under the MEIS: "We intend to claim rewards under Merchandise Exports from India Scheme". It was submitted that in case of Non­EDI shipping bills, there is no question of tick­marking 'Y' or 'N'. The exporter may either declare the intent or not.



21.1          Reference          was     made        to     Public           Notice


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         C/SCA/7500/2019                                                   JUDGMENT

No.40/2015­2020 dated 09.10.2015, to submit that benefit under the said public notice is given only in cases of EDI generated shipping bills, which require the exporters to tick mark "Y" in case they intend to claim benefits under the MEIS and "N" in case they do not intend to claim benefit under the MEIS. It was submitted that this is a case of Non­EDI shipping bills and that unless there is a 'Declaration of Intent' on the shipping bills, the same do not undergo any scrutiny for the grant of benefit under the MEIS. It was submitted that the purport of seeking waiver of such declaration on Non­EDI shipping bills would be larger as it would cover every Non­EDI shipping bills.

21.2 Reference was made to Circular No.36/2010­Cus. dated 23.09.2010, which provides for conversion of free shipping bills to Advance Authorisation/DEPB/Drawback shipping bills and from one export promotion scheme to another. It was submitted that clause (a) of para 3 thereof, specifically provides that the request for conversion can be made by the exporter within three months from the date of the Let Export Order (LEO). Attention was invited to para 4 of the said circular, which provides that free shipping bills (shipping bills not filed under any export promotion scheme) are subject to 'nil' Page 16 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT examination norms. Conversion of free shipping bills into EP scheme shipping bills (advance authorization, DFIA, DEPB, reward schemes, etc.) should not be allowed. It was submitted that it is in these circumstances that the 'Declaration of Intent' is a prerequisite for claiming the benefit of incentive scheme and is not procedural and that what the petitioner seeks is the waiver of the prerequisite for obtaining the incentive.

21.3 It was submitted that the precondition for filing of 'Declaration of Intent' is applied on the class as a whole to Non­EDI shipping bills and that even otherwise, the petitioner is not entitled to the benefit in respect of some of the shipping bills, as they have been filed beyond the period of limitation. It was submitted that if the intention to avail benefits under the scheme is not declared in the shipping bills, the necessary process required for clearing the goods will be missed out.

21.4 It was, accordingly, urged that the mandate of the Circular dated 23.09.2010 for making application for conversion of shipping bills within a period of three months from the date of the Let Export Order cannot be waived and that the applications filed beyond the period of limitation have rightly been rejected by the Page 17 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT respondent authorities. It was, accordingly, urged that the petition, being devoid of merits, deserves to be dismissed.

22. Mr. Nirzar Desai, learned senior standing counsel for respondents No.1, 4 and 6 submitted that the Customs Department is concerned with the amendment under section 149 of the Customs Act, 1962. It was submitted that the Circular dated 23.09.2010 provides that for the purpose of making amendment, the application should be made within a period of three months from the date of the Let Export Order. Referring to section 149 of the Act, it was submitted that the same permits the proper officer, in his discretion, to authorise any document, after it has been presented in the customs house to be amended. It was submitted that for conversion of shipping bills from free shipping bills to one under the export promotion scheme, the provisions of the Circular dated 23.09.2010 have to be satisfied, namely that the application has to be made within three months from the date of the Let Export Order. The Customs Department is bound by the said circular and more particularly, condition No.3 (a) thereof, which specifies a particular time limit for entertaining an application thereof.

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        C/SCA/7500/2019                                              JUDGMENT



22.1         It          was     submitted             that    the         Customs

Department has no discretion to extend the time limit, and hence, the said authorities were justified in not accepting the application made by the petitioner, which was filed beyond the time limit prescribed by the circular.

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 using e­Commerce. 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 e­Commerce :
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C/SCA/7500/2019 JUDGMENT
(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 non­EDI 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) Page 20 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT 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 2015­ 20, MEIS benefits were available to SEZ units Page 21 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT 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 the matter, 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 Page 22 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT 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 08.12.2015, 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 Page 23 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT conversion of the shipping bills from free shipping bills to MEIS shipping bills for the reason that Circular No.36/2010­Customs 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.36/2010­Customs 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.
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C/SCA/7500/2019 JUDGMENT
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 03.08.2016, 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 (Non­ EDI) 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.

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C/SCA/7500/2019 JUDGMENT

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.

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C/SCA/7500/2019 JUDGMENT 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 36/2010­Customs 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 Page 27 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT 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 Page 28 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT 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 Page 29 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT 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 Page 30 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT 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 Page 31 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020 C/SCA/7500/2019 JUDGMENT absolute accordingly, with no order as to costs.

(HARSHA DEVANI, J) (SANGEETA K. VISHEN, J) PRAVIN KARUNAN Page 32 of 32 Downloaded on : Mon Jun 15 00:36:06 IST 2020