Orissa High Court
Indian Metals And Ferro Alloys vs Director General Of Foreign Trade .... ... on 16 September, 2021
Author: B.P. Routray
Bench: B.P. Routray
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.29635 of 2020
Indian Metals and Ferro Alloys .... Petitioner
Limited
Mr. T. Jarwal, Advocate
-versus-
Director General of Foreign Trade .... Opp. Parties
and others
Mr. R.S. Chimanka,
Sr. Standing Counsel
CORAM:
THE CHIEF JUSTICE
JUSTICE B.P. ROUTRAY
ORDER
Order No. 16.09.2021
03. Dr. S. Muralidhar, CJ.
1. The challenge in the present petition is to the orders dated 6th and 13th August, 2020 passed by the Policy Relaxation Committee and communicated to the Petitioner by the Director General Foreign Trade (DGFT) (Opposite Party No.1) on 20th August, 2020 declining to allow the claim for reward under the Merchandise Exports From India Scheme (MEIS) in respect of shipping bill dated 14th June, 2018.
2. The background facts are that the Petitioner is engaged in the export of ferro alloys to various countries. The Petitioner holds a valid importer exporter code.
Page 1 of 113. Chapter 3 of the Foreign Trade Policy (FTP) is titled 'Exports from India Schemes'. It is stated that there are two schemes namely (i) Merchandise Exports from India Scheme (MEIS) and (ii) Service Exports from India Scheme (SEIS) with an underlying objective to provide rewards to exporters to offset infrastructural inefficiencies and associated costs. It is stated that while MEIS covers exporters of goods, SEIS covers the exporters of services.
4. Paragraph 3.02 of the FTP provides that Duty Credit Scrips (DCS) shall be granted as rewards under the MEIS and SEIS. These DCS and goods imported/domestically procured against them are freely transferable. The DCS could be used also for payment of basic customs duty, additional customs duty, central excise duties etc. Under Notification dated 1st April, 2015 the specific list of goods and markets (countries) has been notified, the exports to which are eligible for issuance of the rewards under the MEIS.
5. Paragraph 3.14 of Handbook of Procedures (HBP) requires the exporter to declare its intent under the shipping bill by marking/ticking "Y" (for Yes) in 'reward column'. The relevant extract of Paragraph 3.14 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 e-Commerce.Page 2 of 11
(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."
6. It is stated that an Electronic Data Interchange (EDI) system has been introduced which is meant to digitize the process of filing of shipping bills. This is an addition to the manual filing of bills which are referred to as non-EDI shipping bills. It is further stated that to ease the process of availing benefits, a Shipping Bill Repository (SBR) has been introduced in the DGFT online system in terms of which the shipping bills and Bank Realization Certificate (BRC) both EDI and non-EDI could be stored at one place. The SBR contains the shipping bills and BRCs which can be linked online with the applications for the purpose of claiming benefits under the MEIS.
7. The linking of the shipping bill from the repository to the ECOM portal is dependent on the exporter marking "Yes" in the reward column of the shipping bill. If it is marked "No" then the concerned shipping bill in the repository would be not be Page 3 of 11 reflected in the ECOM portal and the automated portal will not allow the exporter to claim the MEIS benefit.
8. In the present case, the Petitioner exported Ferro Alloys from the Paradip Sea Customs port to South Korea by a shipping bill dated 14th June 2018 (hereafter 'the shipping bill in question'). It is stated that under Appendix 3B, South Korea is notified as a country the exports to which are eligible for a reward of 2% on FOB value in terms of the notification dated 1st April, 2015.
9. The Petitioner states that at the time of filing, the shipping bill in question mentioned the Petitioner's intent to claim the MEIS benefit. The words 'To claim reward under Merchandise Export from India Scheme' were prominently written on the shipping bill in question. However, the Petitioner inadvertently ticked "N" in the reward column of the shipping bill, instead of "Y".
As a result the Petitioner was unable to file its claim under the MEIS.
10. In the manual filing of shipping bills, a provision was made to allow exporters to amend the shipping bill under Section 149 of the Customs Act. With the shift to the EDI system, such amendment is no longer possible. As a result, the shipping bill in question was not shown under the relevant E COM repository for claiming the benefit under the MEIS.
Page 4 of 1111. On 20th July, 2019, the Petitioner wrote to the Deputy DGFT pointing out the above difficulty and enclosing the relevant screen shot of the shipping bill status in the MEIS module. No response was, however, received.
12. On 25th February, 2020 the Petitioner approached the Policy Relaxation Committee (PRC) headed by DGFT by filing form ANF 2D. The Petitioner prayed for relaxation of condition in paragraph 3.14 of the HBP which requires the exporters to mark "Y" in the shipping bill to claim the benefit under the MEIS. After a personal hearing was afforded to the Petitioner, the decision of the PRC taken on 13th August, 2020 was uploaded of the DGFT on 20th August, 2020. The said order held that the Petitioner was not eligible to claim the benefit under the MEIS since 'No' was ticked in the shipping bill. The operative portion of the order reads as under:
"The Committee heard and examined the case on the basis of justification furnished by the firm and discussed the matter at length. The Committee observed that the Shipping Bills where 'No' is ticked (for whatsoever reason) do not get electronically transmitted on-line in the automated environment. Accordingly, it decided to reject the case."
13. Aggrieved by the impugned order, the present petition has been filed.
Page 5 of 1114. In response to the notice issued in the petition, Opposite Party No.3 has filed a reply reiterating the stand of the PRC and stating that in order to claim reward under MEIS it is mandatory for exporter to declare intent of claim/reward at the time of export on shipping bill filed on or after 1st June, 2015.
15. Mr. T. Janwal referred to a circular issued on 21st February, 2018 by the DGFT acknowledging the difficulties faced by exporters who had inadvertently ticked 'N' instead of 'Y' in the reward column in the shipping bill. The one time relaxation was afforded in the shipping bill which had a let export date from 1st October, 2015 to 31st March, 2016. Shipping bills having the above dates were permitted to avail the reward by manual amendment. The grievance of the Mr. Janwal is that the shipping bills beyond the above dates have been deprived of the same benefit. He placed reliance on the decision of the Kerala High Court in Anu Cashews and Mangalath Cashews v. The Commissioner of Customs 2019 (11) TMI 795 (Ker) (SB) which was affirmed by the judgment dated 23rd June, 2021of the Division Bench (DB) of that High Court in The Commissioner of Customs v. Anu Cashews and Mangalath Cashews 2020 (3) TMI 1066 (Kerala) (DB). He also placed reliance on the decision of the Madras High Court in Pasha International v. The Commissioner of Customs 2019(2) TMI 1187 and the judgment dated 23rd June, 2021 of the Madras High Court in W.P.(C) No.16328 of 2020 (M/s. K.I. International Ltd. v. The Commissioner of Customs (Appeal-II)). Lastly he relied on the Page 6 of 11 decision of the Bombay High Court dated 2nd March, 2021 in W.P. No.2532 of 2019 (Portescap India Private Limited v. Union of India).
16. Mr. Chimanka, learned Sr. Standing Counsel for the Opposite Parties on the other hand reiterated the submission in the counter affidavit and maintained that in an automated system the Petitioner could not be granted the reward under the MEIS even if it inadvertently ticked 'N' in the shipping bill.
17. The Court finds that the decisions of the High Court of Kerala, Madras and Bombay referred by the Petitioner indeed support its case for extension of the benefit of the reward scheme if it ticked inadvertently 'N' instead of 'Y' in the shipping bill in the reward column.
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:
Page 7 of 11"Under such circumstances, I am of the view that he 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 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 is 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 Page 8 of 11 others (supra) and M/s. K.I. International Ltd. 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:
"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 titled and eligible to claim its reward. For claiming the reward, procedure as envisaged under the policy, handbook of procedure Page 9 of 11 (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 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."
23. In the present case too, with the basic facts not being disputed viz., that the Petitioner declared its intent to claim the reward in as many words in the shipping bill in question itself, and indavertently ticked 'N' in the reward column in the shipping bill in question, the Court finds no reason to deny the relief claimed for by the Petitioner which has been granted by the High Courts in all of the above cases.
Page 10 of 1124. For all the aforementioned reasons, the Court sets aside the impugned decision dated 6th and 13th August, 2020 of the PRC as communicated by the DGFT on 20th August, 2020 and directs the Opposite Parties, the sub-ordinate agents to allow the benefit of the reward under the MEIS to the Petitioner in respect of the shipping bill in question dated 14th June, 2018. The concerned no objection certificate will be issued by Opposite Party No.3 within a period of four weeks from today.
25. The writ petition is allowed in the above terms. But in the circumstances, no order as to costs.
26. An urgent certified copy of this order be issued as per rules.
(Dr. S. Muralidhar) Chief Justice (B.P. Routray) Judge KC Bisoi Page 11 of 11