Summary
An exporter's MEIS claim on 54 shipping bills was rejected because its customs broker had left the 'declaration of intent to claim reward' field at the default 'No', even though the Customs authority had later permitted amendment of the bills to 'Yes' under Section 149 of the Customs Act, 1962. The Supreme Court held that an inadvertent procedural error, once rectified under statutory authority, cannot defeat a substantive entitlement under a beneficial export-incentive scheme, quashed the unreasoned rejection by the Policy Relaxation Committee and directed the claim to be processed.
Issues
- Whether an inadvertent error in shipping bills, permitted to be corrected under Section 149 of the Customs Act, 1962, can defeat an exporter's claim under the Merchandise Exports from India Scheme (MEIS).
- Whether the Policy Relaxation Committee's rejection of the claim without reasons or a hearing could be sustained.
- Whether the High Court was right to relegate the exporter to remedies against its customs broker instead of granting relief in writ jurisdiction.
Provisions considered
- Section 149, Customs Act, 1962The Deputy Commissioner of Customs had, under Section 149, allowed amendment of all 54 shipping bills so that the declaration 'No' was substituted by 'Yes'; this correction was undisputed. The Court held that once the bills were corrected under statutory authority, the error could not be treated as fatal to the MEIS claim, and that the DGFT's insistence that only bills originally transmitted with 'Yes' could be processed amounted to systemic rigidity defeating substantive rights. (¶¶ 5, 8, 10, 12, 13, 14)
- Chapter 3 (Merchandise Exports from India Scheme) and Appendix 3B, Serial No. 467, Foreign Trade Policy 2015-20The exports of corn starch fell within the notified category eligible for MEIS reward. The Court characterised Chapter 3 as a beneficial scheme intended to incentivise and reward exporters, to be construed liberally, so that genuine exports within the notified category are not denied reward on account of a rectified procedural lapse. (¶¶ 3, 11, 13, 14)
Held
- A distinction must be drawn between procedural formalities and substantive entitlements. Where exports are genuine and fall within the notified category under Chapter 3 of the Foreign Trade Policy, an inadvertent mistake of procedure (here, failing to change the default 'No' to 'Yes' in the reward-intent column of the shipping bill) cannot be treated as fatal to the MEIS claim, especially where it has been corrected under Section 149 of the Customs Act. The Court approved the Bombay High Court's line of decisions in Portescap, Technocraft Industries and Larsen and Toubro to this effect. (¶¶ 11, 12, 13, 14)
- Beneficial schemes must be construed liberally; procedural lapses, once rectified, cannot be allowed to defeat substantive rights, and technical or systemic constraints in the DGFT's electronic system cannot override statutory entitlements. Administrative technology must aid, not obstruct, the implementation of the law. (¶¶ 12, 13, 14)
- The Policy Relaxation Committee's rejection of the claim by a cryptic email, without assigning reasons and without affording a hearing, fell foul of the principles of natural justice and was quashed. (¶¶ 6, 14, 15)
- The High Court's view that the exporter should pursue remedies against its customs broker failed to address the statutory entitlement that accrues to the exporter under the scheme; the error being clerical, relief could not be refused on that ground. (¶¶ 2, 14)
- Given the recurrence of such disputes despite authoritative pronouncements, the Union of India, through the DGFT and the CBIC, must take systemic measures, by comprehensive instructions or technological adjustments, so that genuine exporters are not driven to litigation over inadvertent procedural lapses rectified in accordance with law. (¶ 16)
Result
Appeal allowed; High Court judgment dated 02.08.2021 set aside; rejection by the Policy Relaxation Committee quashed; respondents directed to process the MEIS claim on the basis of the amended shipping bills and pass appropriate orders within twelve weeks; no order as to costs.