Karnataka High Court
M/S Biocon Limited vs Director General Of Foreign Trade on 12 January, 2022
Author: S. Sunil Dutt Yadav
Bench: S. Sunil Dutt Yadav
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF JANUARY, 2022
BEFORE
THE HON'BLE MR.JUSTICE S. SUNIL DUTT YADAV
WRIT PETITION No.8862/2021 (T-RES)
BETWEEN:
M/S. BIOCON LIMITED,
20TH KM, HOSUR ROAD,
ELECTRONIC CITY,
BENGALURU,
KARNATAKA - 560 100
(REPRESENTED BY
SHRI AKELLA A.S. PRAKASA RAO,
AGED 52
GENERAL MANAGER - INDIRECT TAXATION).
... PETITIONER
(BY SRI RAVI RAGHAVAN, ADVOCATE)
AND:
1. DIRECTOR GENERAL OF FOREIGN TRADE,
THROUGH THE CHAIRMAN
POLICE RELAXATION COMMITTEE
5TH FLOOR, UDYOG BHAWAN,
NEW DELHI - 110 001.
2. ADDITIONAL DIRECTOR GENERAL OF FOREIGN TRADE
6TH FLOOR, KENDRIYA SADAN
C AND E WING,
KORAMANGALA 2ND BLOCK
17TH MAIN ROAD
BENGALURU - 560 034.
3. DEPUTY DIRECTOR GENERAL OF FOREIGN TRADE
POLICY 3 DIVISION
2
UDYOG BHAWAN
NEW DELHI - 110 001.
4. PRINCIPAL COMMISSIONER OF CUSTOMS
AIRPORT/AIR CARGO COMPLEX,
AI SATS AIR FREIGHT TERMINAL
NEAR AIRPORT, DEVANAHALLI
BENGALURU - 560 300.
5. UNION OF INDIA
REPRESENTED BY ITS SECRETARY
MINISTRY OF COMMERCE & INDUSTRY
UDYOG BHAWAN
NEW DELHI - 110 001.
... RESPONDENTS
(BY SRI AMIT DESHPANDE, ADVOCATE FOR R4;
SRI JEEVAN J. NEERALGI, ADVOCATE FOR
SRI V.C. JAGANNATH, CGC FOR R1, R2, R3;
V/O DATED 11.08.2021, SERVICE OF NOTICE
TO R5 IS DISPENSED WITH)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA, PRAYING TO QUASH AND SET
ASIDE THE IMPUGNED REVIEW ORDER DATED 7.1.2020 READ
WITH ORDER DATED 28.5.2019 AT ANNEXURE-A PASSED BY R1
AND DIRECT THE R2 TO CONSIDER THE CASE OF THE
PETITIONER AND GRANT EXPORT INCENTIVE UNDER MEIS OR
TO RE-OPEN ONLINE PORTAL TO ALLOW THE PETITIONER TO
RECTIFY THE INADVERTENT ERROR OR TO ACCEPT AND
PROCESS PHYSICAL APPLICATION TO GRANT EXPORT
INCENTIVES UNDER MEIS TO THE PETITIONER OR
ALTERNATIVELY DIRECT R-4 TO RECALL AND AMEND THE
SHIPPING BILLS GRANTING THE MEIS BENEFIT.
THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY,
THE COURT, MADE THE FOLLOWING:
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ORDER
Petitioner has sought for quashing of the order dated 28.05.2019 and also the impugned review order dated 07.01.2020 passed by respondent No.1 and has sought for a direction to respondent No.2 to consider the case of the petitioner and grant export incentives under MEIS or to reopen online portal to allow the petitioner to rectify the inadvertent error or to accept and process physical application to grant export incentives under MEIS to the petitioner. The petitioner, in the alternative has sought for a direction to respondent No.4 to recall and amend the shipping bills granting the MEIS benefit and to pass other order or orders as this Court deems fit.
2. Petitioner submits that he had sought for relaxation of the procedural requirements under the Merchandise Exports from India Scheme (MEIS) of selecting 'Yes' in the rewards column in the shipping bills, as due to bonafide and inadvertent error, the Customs House Agent of the petitioner had selected 'No' in the rewards column. 4 Petitioner submits that such error was made only as regards 17 of the shipping bills details of which are furnished at Page No.105.
3. Attention of the Court is drawn to the shipping bill at page No. 108 and it is pointed out that in the said shipping bill there is a declaration that "We hereby declare that we shall claim the benefit under Chapter-3". It is further submitted that in the part of the said document itself, under the column 'scheme reward', inadvertently the word 'No' is mentioned though it ought to have been 'Yes'. It is accordingly submitted that reading the entirety of the shipping bill, the intention of the petitioner that they intended to claim benefits under the scheme is clear and the insertion of the word 'No' is an inadvertent error.
4. Learned counsel for the petitioner submits that as the shipping bill was not sent to the DGFT, the plea for consideration of benefit under the reward scheme was not possible and accordingly, the petitioner has approached the Policy Relaxation Committee (PRC) and the Minutes of the 5 Meeting held on 28.05.2019 refers to consideration of the case of the petitioner. The request of the petitioner was registered as F.No.01/60/162/112/AM20/PRC and the committee has examined the case and did not find any genuine hardship and accordingly decided to reject the plea of the petitioner. The committee has referred to the relevant facts which are as follows:
"They have stated that the shipping bills were filed by inadvertently ticking as "NO" instead of "YES" in the "reward" column of shipping bills. However, the intent of claiming the MEIS reward has been declared affirmatively, in writing, in the said shipping bills. Trade notice 24/2018 dated 21.12.2018 was issued by DGFT to collect information of such cases and consider the matter. Later on dated 10.01.2019 received an e-mail confirmation from the office of DGFT that shipping bills were not considered for granting the MEIS reward. Since, the intention of claiming reward was declared in affirmative, in wordings, inadvertent ticking of reward column as "NO"
instead of "YES" while filing shipping bills is a procedural lapse, which can be condoned and 6 MEIS incentive for the aforesaid shipping bills be granted.
Decision: The Committee having examined the case on the basis of justification furnished by the firm found no case of genuine hardship in their case and accordingly decided to reject it."
5. The said rejection by the Committee was taken up before the Appellate Committee and the same was considered by the Appellate Committee in its meeting of 07.01.2020. The said committee has observed as follows:
"The Committee discussed the case and observed that conversion from 'N' to 'Y' is not feasible in the current automated system and transmission of such shipping bills from ICEGATE to DGFT system is not possible. Moreover there is a lapse on the part of the firm. Committee found no merit in the request and hence decided to maintain rejection of the earlier decision of PRC in its meeting No.07/AM20 dated 28.05.2019."
6. It is pointed out by Sri. Jeevan J. Neeralgi, learned counsel appearing on behalf Sri. V.C. Jagannath, learned counsel representing the 7 Director General of Foreign Trade and others, that the order of the Committee dated 07.01.2020 is in fact correct in light of the technical difficulty that the automated system in which applications are processed would make it technically not feasible for permitting any changes. It is further contended that scheme is so designed and the software created for the purpose of processing the scheme is such that any defect on the part of the petitioner cannot provide any window for reconsidering the claim made by the petitioner.
7. Learned counsel for the petitioner has however drawn attention to various judgments passed by the different High Courts wherein under similar factual matrix, the Courts have afforded relief and drawn attention to the judgment of the Orissa High Court in W.P.No. 29635/2020 in the case of Indian Metals and Ferro Alloys Limited vs. Director General of Foreign Trade and Others.
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8. Sri. Amit Deshpande, learned counsel appearing for respondent No.4 has sought for time to file objections and has also opposed for grant of relief.
9. However, it must be noted that it is the order of the PRC that is in question and the said committee is represented by learned counsel for respondents 1 to 3, who are the answering respondents and they have been heard in the matter.
10. The facts are not in dispute as are noted by the PRC as well as by the Appellate Committee as are reproduced above and would point out that the applicant has ticked 'No' instead of 'Yes' in the reward column of the shipping bill. In the very same shipping bill, in another portion of the shipping bill, intension of the petitioner to claim MEIS reward has been reflected by declaration made as is evident on perusal of the document produced by the petitioner at Page No.108, wherein as against the column "Marks and Nos." the following words are found 9 "We hereby declare that we shall claim the benefit under Chapter-3".
11. In essence, the petitioner submits that despite their intention to avail the benefit under the scheme, due to inadvertent error, ticked the reward column as 'no' instead of 'yes'. The procedural lapse caused has prejudiced the petitioner to claim benefit under the MEIS scheme. The committee and the Appellate Committee have observed that the automated system does not permit conversion of "No" to "Yes" and accordingly, question of transmission of shipping bills from ICEGATE to DGFT system is not possible. It is further pointed out that lapse on the part of the firm cannot be a ground to redo the process for which the System does not have any scope.
12. The Orissa High Court in the judgment passed on 16.09.2021 in the case of Indian Metals (Supra) had an occasion to consider challenge to the orders passed by the PRC, whereby the reward under the MEIS scheme was denied as the shipping bills were not forwarded to the 10 DGFT. The Orissa High Court after detailed consideration of the similar factual matrix has affirmed the views of the High Courts of Kerala, Madras and Bombay which provide for extension of benefit of MEIS scheme if the applicant has inadvertently typed "N" instead of "Y" in the shipping bill in the reward column. The Court refers to the judgments of the other High Courts from paragraph Nos. 18 to 22, and the said paragraphs are referred for the purpose of convenience as below:
"18. In Anu Cashews and Mangalath Cashews (supra), learned Single Judge of the Kerala High Court was dealing with an identical situation where in the shipping bill the exporter had inadvertently ticked 'No' while clearly mentioning in the shipping bill, as has been done in the present case that "he intended to claim reward under MEIS". The learned Single Judge perused the screen shot which confirmed that indeed the exporter had indicated the above intention in the shipping bill although inadvertently "No" had been ticked in the reward column. The learned Single Judge observed as under:11
"Under such circumstances, I am of the view that the denial of a claim for export benefit could not have been done in a mechanical manner merely because there was a technical lapse on the part of the exporter concerned in not checking a particular box in the web portal, more so when there was sufficient indication from the other details entered therein that pointed to the exporter's intention to claim the reward."
19. The above judgment was affirmed by the DB in The Commissioner of Customs v. Anu Cashews and Mangalath Cashews (supra). The DB observed as under:
"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 12 who made the claim within six months and those who have raised the claim after six months of introduction of the Schemes"
20. The above decisions appear to have attained finality. There no indication that any of the above decisions has been challenged before the Supreme Court.
21. To the same effect is the decision of the Madras High Court in Pasha International. v. The Commissioner of Customs and others (supra) and M/s .K.I. International Limited v. The Commissioner of Customs (Appeal-II) (supra). In the latter judgment, the shipping bills were for the period from 6th February, 2017 to 2nd January, 2018 and in Pasha International V. The Commissioner of Customs (supra) the shipping bills were dated 26th May, 2018.
22. The Bombay High Court came to a similar conclusion in Portescap India Private Limited v. Union of India (supra) where the shipping bills were of 2017. After a thorough analysis the aforementioned decisions, it was observed as under:
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"We find that the facts in the present case are identical to the facts of Pasha International (supra) and M/s. Greenglobe Exports India Pvt Ltd (supra) decided by the Madras High Court and see no reason as to why the petitioner herein should not be extended the benefit under MEIS considering that the only lapse on the part of the petitioner was that it had inadvertently mentioned in the reward column "N" (for No) instead of "Y" (for Yes). This is a procedural defect and is curable considering the fundamental objective of the scheme under Chapter 3 of the FTP 2015-20. The basic objective of the Exports from India Schemes is to provide reward to the exporters and to promote manufacture and export of notified goods / products to notified markets. Once this is done, the party is entitled and eligible to claim its reward. For claiming the reward, procedure as envisaged under the policy, handbook of procedure (HOP), rules and various public notices like public notice No. 47/2015-20 dated 08.12.2015 and public notice No. 9/2015-20 dated 16.05.2016 are required to be complied with. In the instant case, while doing so, petitioner had inadvertently committed an error 14 while filing up the claim form on the DGFT portal and entered its declaration of intent as "N" (for No) instead of "Y" (for Yes) resulting in rejection of petitioner's claim for reward under MEIS.
Except for this inadvertent mistake, petitioner is otherwise eligible and entitled to the reward under MEIS. In our considered opinion, such a procedural mistake on the part of petitioner should not deprive the petitioner from the benefit of the reward under MEIS. We note that a similar situation was in fact considered by the respondents in respect of shipping bills for the period 01.04.2015 to 31.05.2015 at the time of inception of the FTP, when exporters had inadvertently marked "N" in the "reward item box" and wished to seek MEIS benefit. Public Notice 47/2015-20 dated 08.12.2015 was issued by the DGFT to which we have referred to hereinabove to give the benefit of MEIS reward in such cases."
13. Taking note of the stand of the other High Courts, it is to be noticed that in the shipping bill, there is an intention of the petitioner to avail the benefit under the MEIS scheme as is revealed from the declaration extracted 15 above which is part of shipping bill at page No.108 and in the reward column, there is an entry which shows 'No'. Accordingly, the assertion of the petitioner that they inadvertently ticked "NO" instead of "YES" in the reward column is an assertion that is to be accepted. The Committee also accepts the factual assertion though concludes that in light of the automated system and noticing the mistake of the petitioner question of allowing rectification of the shipping bill did not arise.
14. It must be noted that "to err is human" and wherever such bonafide mistakes have happened procedures so designed ought to provide for a way to rectify such bonafide mistakes. An error arising out of lapse and where parties seek to have the same rectified, the system must accommodate necessary procedure to rectify it.
15. In light of the facts as made out above, while noticing that mistake that has happened is a technical mistake and is bonafide, on such technicalities, to deny substantive relief to the petitioner would amount to denial 16 of justice. Accordingly, the Court sets aside the impugned decision of the PRC dated 28.05.2019 as well as the review order dated 07.01.2020 passed by respondent No.1. The respondent No.1 to allow the benefit under MEIS to the petitioner in respect of the 17 shipping bills, which is the subject matter of the present petition as detailed at Page
105. Necessary formalities to facilitate extension of benefit under the MEIS to be made by the respondents.
16. Accordingly, petition is disposed off.
Sd/-
JUDGE VP