Karnataka High Court
M/S Silver Crest Clothing Private ... vs Deputy Commissioner Of Customs on 20 February, 2024
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
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NC: 2024:KHC:7052
WP No. 3308 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION NO.3308 OF 2023 (T-CUS)
BETWEEN:
M/S SILVER CREST CLOTHING PRIVATE LIMITED
(REPRESENTED BY SHRI PARAMASIVAM K ,
SENIOR MANAGER, INDIRECT TAXES)
REGD OFFICE PLOT NO.4E1 AND 4E2 KIADB
INDUSTRIAL AREA
ATTIBELE, ANEKAL TALUK,
BANGALORE-562107,
REPRESENTED BY PARAMASHIVAM K
SENIOR MANAGER,
INCORPORATED UNDER THE COMPANIES ACT, 1956
...PETITIONER
(BY SRI L S KARTHIKEYAN, ADVOCATE)
AND:
1. DEPUTY COMMISSIONER OF CUSTOMS
O/O THE ADDITIONAL COMMISSIONER OF CUSTOMS
Digitally
signed by BENGALURU CITY CUSTOMS COMMISSIONERATE
VANDANA S INLAND CONTAINER DEPOT, WHITEFIELD
Location: BANGALORE-560 066
HIGH COURT
OF
KARNATAKA 2. PRINCIPAL COMMISSIONER OF CUSTOMS
BANGALORE CITY CUSTOMS COMMISSIONERATE,
C.R. BUILDING, P.B. NO. 5400,
QUEEN'S ROAD, BANGALORE-560 001.
3. PRINCIPAL DIRECTOR GENERAL
DIRECTORATE GENERAL OF SYSTEMS
AND DATA MANAGEMENT
INDIRECT TAXES AND CUSTOMS,
4TH AND 5TH FLOOR, HOTEL SAMRAT,
CHANAKYAPURI, NEW DELHI-110 021.
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NC: 2024:KHC:7052
WP No. 3308 of 2023
4. DIRECTOR GENERAL OF FOREIGN TRADE
UDYOG BHAVAN HI WING, GATE NO.2,
MAULANA AZAD ROAD,
NEW DELHI-110 011.
...RESPONDENTS
(BY SRI JEEVAN J. NEERALGI, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE
RESPONDENTS TO ALLOW THE PETITIONER TO AMEND THE 28
SHIPPING BILLS AND TO CREDIT RoSCTL BENEFIT AMOUNTS TO
THE PETITIONER'S CUSTOMS E-SCRIP LEDGER VIDE ANNEXURE-
H.
THIS WRIT PETITION, COMING ON FOR ORDERS, THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
In this petition, petitioner seeks direction to the respondents to allow the petitioner to amend the 28 Shipping bills for the period between January 2021 to September 2021 vide Annexure - H and to credit ROSCTL benefit amounts to the petitioner's Customs E-
Scrip Ledger and for other reliefs.
2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
3. The material on record discloses that on 07.03.2019, RoSCTL Scheme was announced by the Ministry of Textiles for the Textile Sector. On 01.01.2021, the RoDTEP Scheme was announced which was supposed to subsume the RoSCTL Scheme -3- NC: 2024:KHC:7052 WP No. 3308 of 2023 but the same was not done and Notifications dated 13.08.2021, 17.08.2021, 23.09.2021 and 24.09.2021 as well as Circular dated 30.09.2021 in relation to the procedures under the RoSCTL Scheme and RoDTEP Scheme were issued by the respondents, pursuant to which, exporters of textile articles were supposed to declare 'Yes' against the column for RoDTEP in the shipping bills for the purpose of availing RoSCTL benefits. The petitioner who exported textile during the period January 2021 to September 2021 vide subject 28 Shipping bills at Annexure - H was supposed to declare 'Yes' against the column for RoDTEP in the Shipping bills, but due to oversight and inadvertence, the Customs broker of the petitioner declared 'N' in the RoDTEP column. However, a perusal of the 'Marks and numbers' column and 'Reward benefit' column indicated that the petitioner intended to claim drawback benefits under the RoSCTL Scheme. It is the grievance of the petitioner that his request to amend the Shipping bills were not acceded to by the respondents despite repeated representations, letters, personal meetings, etc., and instead, the respondents addressed a Communication dated 24.11.2022 to the petitioner informing him that the said request could not be considered since it was prior to the Notification dated 22.02.2022. Aggrieved by the impugned -4- NC: 2024:KHC:7052 WP No. 3308 of 2023 Communication and requesting this Court to issue appropriate directions to allow the petitioner to amend the subject 28 Shipping bills, petitioner is before this Court by way of the present petition.
In support of its contention, the petitioner placed reliance upon the following judgments:
(i) Paramount Textiles Mills Pvt. Ltd., Vs. Deputy DGFT, Directorate General of Foreign Trade, New Delhi - 2022 (381) ELT 375 (Mad.) ;
(ii) Suretex Prophylactics (India) Pvt. Ltd. Vs. Director General of Foreign Trade - 2022 (03) LCX 0287
4. The respondents have contested the present petition and contend that the same is liable to be dismissed.
5. The issue / question whether an inadvertent error in the Shipping bills by affixing 'No' instead of 'Yes' under the RoSCTL Scheme can be amended came up for consideration before the Madras High Court in Paramount Textiles' case supra wherein it was held as under:
"The petitioner has filed this writ petition for a Certiorari filed Mandamus to call for the records relating to the impugned order of the 2nd respondent in its proceedings in F.No.HQRPRCAPPLY00114193AM22 in the PRC Meeting -5- NC: 2024:KHC:7052 WP No. 3308 of 2023 No.05/AM22 dated 09.07.2021, to quash the same as illegal and to grant the refund to the petitioner company under the ROSCTL scheme in respect of its Shipping Bill No.2523603 on 30.04.2020.
2. The petitioner had made export under Rebate of State and Central Taxes and Levies (herein after referred to as ROSCTL) and the Foreign Trade Policy issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. While filing the Shipping Bill on the exports made by the petitioner, the petitioner had inadvertently put 'NO' instead of 'YES' while opting for ROSCTL scheme i.e., by filling the scheme code as 19 instead of 60.
3. The impugned order is challenged on the ground that the aforesaid scheme is a beneficial scheme available to an exporter under the Foreign Trade Policy and therefore, the benefit of the aforesaid scheme announced vide a Notification No.14/26/2016~IT (Vol.II) dated 08.03.2019 cannot be denied.
4. The learned counsel for the petitioner has placed reliance on the decision of this Court in W.P.(MD) No.16328 of 2020 (K.I. International Limited Vs. Commissioner of Customs and another) dated 23.06.2021 [(2021 (378) E.L.T. 285 (Mad)] and yet another decision of this Court in W.P.(MD) No.2085 of 2022 (Tractors and Farm Equipment Limited Vs. Directorate General of Foreign Trade, New Delhi and others) dated 21.02.2022.-6-
NC: 2024:KHC:7052 WP No. 3308 of 2023
5. The learned counsel for the petitioner submits that though these cases were in the context of MEIS scheme under the Foreign Trade Policy 2015 - 2020, the ratio therein will squarely apply to the facts of the present case, as ROSCTL scheme is another scheme under the Foreign Trade Policy.
6. Opposing the prayer, the learned counsel for the respondents submits that the petitioner has an alternate remedy by way of review before the 2nd respondent / the DGFT Policy Relaxation Committee, in terms of paragraph No.2.58 of the Foreign Trade Policy and therefore, it is submitted that the writ petition is without merits and the petitioner should be directed to approach the 2nd respondent to file appropriate application in terms of the aforesaid provisions under the Foreign Trade Policy. Hence, the learned counsel for the respondents prays for dismissal of this writ petition.
7. I have considered the arguments advanced by the learned counsel for the petitioner and the learned counsel for the respondents.
8. The petitioner has exported a consignment of organic cotton and had filed a Shipping Bill No.2523603 on 30.04.2020. The export value of the consignment declared in the Shipping Bill was Rs.1,02,88,745.99/-. The Shipping Bill was filed by the petitioner through the petitioner's custom house agent. However, inadvertently chose the option 'NO' (scheme code 19) instead of 'YES' (scheme code 60) while -7- NC: 2024:KHC:7052 WP No. 3308 of 2023 filing the ROSCTL claim of the petitioner in the said Shipping Bill.
9. It is the case of the petitioner that such an error never occurred during the filing of IECGATE portal. It is submitted that there was an inadvertent error while filing the Shipping Bill and that upon realizing the same, the petitioner addressed the communication to the 3rd respondent on 06.05.2020 informing the inadvertent error with a request to amend the Shipping Bill. The 3rd respondent also appears to have given a certificate on 07.06.2021 to the effect that the petitioner is entitled to ROSCTL scheme. Hence, the request of the petitioner may be considered favorably. Despite the same, the 2nd respondent has rejected the request of the petitioner by conveying the decision of the Committee on 09.07.2021, vide e-mail dated 20.07.2021.
10. The aforesaid decisions of this Court (referred supra) though deal with export under the MEIS scheme, nevertheless it would apply to the facts of the case inasmuch as ROSCTL scheme announced vide Notification No.14/26/2016-IT (Vol.II) dated 08.03.2019 has been given to promote export. The Ministry of Textile has decided to rebate embedded State and Central taxes and levies to support exporters from India. The fact that the petitioner has exported goods out of India and the petitioner was otherwise entitled to the aforesaid scheme is not in dispute.
11. Considering the above, I am inclined to allow this writ petition by directing the respondents 2 and 3 to grant the aforesaid benefit to the petitioner in terms of the Foreign -8- NC: 2024:KHC:7052 WP No. 3308 of 2023 Trade Policy within a period of 6 weeks from the date of receipt of a copy of this order.
12. The writ petition stands allowed, in terms of the above observation. No costs. Consequently, connected miscellaneous petition is closed."
6. As can be seen from the aforesaid judgment, the Madras High Court allowed the petition and granted the benefit of the RoSCTL Scheme in favour of the writ petitioner by permitting amendment of the Shipping bills.
7. Under similar circumstances arising out of the Merchandise Exports from India Scheme (MEIS) which was also introduced under the Foreign Trade Policy, this Court in Suretex's case supra has held as under:
"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. The terms of the HoP on declaration, prior to amendment in 05.12.2017 and subsequent thereto read as under:-9-
NC: 2024:KHC:7052 WP No. 3308 of 2023 Prior to Amendment Post Amendment w.e.f 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) in Shipping Bills would need the "Reward" column of shipping bills following declaration on the against each item, which is Shipping Bills in order to be mandatory, would be sufficient to eligible for claiming rewards declare intent to claim rewards under under MEIS: "We intend to the scheme. In case the exporter claim rewards under does not intend to claim the benefit Merchandise Exports From of reward under Chapter 3 of FTP India Scheme (MEIS)". Such exporter shall tick 'N' (for No). Such declaration shall be required marking/ticking shall be required even for export shipments even for export shipments under any under any of the schemes of of the schemes of Chapter 4 Chapter 4 (including (including drawback), Chapter 5. drawback), Chapter 5 or Chapter 6 of FTP. In the case (ii) Non-EDI Shipping Bills: In the of shipping bills (other than case of non-EDI Shipping Bills, free shipping bills), such Export shipments would need the declaration of intent shall be following declaration on the Shipping st mandatory with effect from 1 Bills in order to be eligible for June 2015. 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.
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.
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NC: 2024:KHC:7052 WP No. 3308 of 2023
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 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 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
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NC: 2024:KHC:7052 WP No. 3308 of 2023 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. 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 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
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NC: 2024:KHC:7052 WP No. 3308 of 2023 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.
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."
8. In the instant case, the material on record discloses that except for the inadvertent error that had crept into the Shipping bills, wherein the petitioner had declared 'N' in the RoDTEP column instead of 'Yes', its intention to claim benefits under the RoSCTL Scheme is evident from the other material on record including the Shipping bills. Under these circumstances, in the light of the judgment of the Madras High Court in Paramount's case supra and this Court in Suretex's case supra, I am of the considered opinion
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NC: 2024:KHC:7052 WP No. 3308 of 2023 that the petitioner would be entitled to amend the subject 28 Shipping bills and necessary directions are to be issued to the respondents in this regard by quashing the Communication at Annexure - N dated 24.11.2022 issued by the 1st respondent.
9. In the result, I pass the following:
ORDER
(i) The petition is hereby allowed.
(ii) The impugned Communication at Annexure - N dated 24.11.2022 issued by the 1st respondent is hereby quashed.
(iii) The concerned respondents are directed to permit / allow the petitioner to amend the 28 Shipping bills vide Annexure - H of the petitioner for the period from January 2021 to September 2021 and to grant the RoSCTL Scheme benefits to the petitioner and credit the said benefits to his Customs E-Scrip Ledger as expeditiously as possible.
Sd/-
JUDGE SA / SV List No.: 1 Sl No.: 6