High Court overturns MEIS benefits rejection, orders reevaluation of FTP provisions for DTA unit

The High Court set aside the rejection of the petitioner's application for benefits under the MEIS scheme and the suspension of the IEC. The Court directed the Director General of Foreign Trade to re-examine the issue, emphasizing that the petitioner, as a DTA unit, was not excluded from MEIS benefits for exporting through FTWZ. The impugned orders were set aside, pending a reevaluation of the FTP provisions. The Joint Director General was instructed to provide a personal hearing before deciding on the MEIS claim, with the Director General's interpretation of the FTP provisions binding on all relevant authorities. The petitioner was granted the opportunity to submit a fresh representation for MEIS benefits promptly.

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Issues:
Challenge to rejection of application for benefits under MEIS scheme and suspension of IEC without hearing or reasons provided. Interpretation of FTP provisions regarding MEIS benefits for exports through FTWZ by a DTA unit.

Analysis:

1. The petition challenged the rejection of the petitioner's application for benefits under the Merchandise Exports from India Scheme (MEIS) and the suspension of the Import Export Certificate (IEC) without following principles of natural justice, as no hearing or reasons were provided for the actions taken.

2. The Deputy Director General of Foreign Trade informed the petitioner that it would not be entitled to MEIS benefits due to supplies made from Domestic Traffic Area (DTA) units to Free Trade Warehousing Zones (FTWZ) being excluded under the Foreign Trade Policy (FTP) provisions. The petitioner amended the petition to challenge this communication.

3. The petitioner, engaged in exporting telecommunication equipment and fiber optic cables, claimed entitlement to MEIS benefits for exporting goods through FTWZ, not by a unit in FTWZ. The FTP 2015-20 listed categories excluded from MEIS benefits, including exports made by units in FTWZ.

4. The Joint Director General of Foreign Trade rejected the petitioner's claim for duty credit scrips under the MEIS scheme, leading to the suspension of the IEC. The petitioner challenged these actions, leading to the current legal proceedings.

5. The High Court noted that the communication from the Deputy Director General did not consider that the petitioner was not a unit in FTWZ but a DTA unit, and therefore, exports were not by a unit in FTWZ. The Court set aside this communication and directed the Director General of Foreign Trade to re-examine the issue.

6. The Court also set aside the four impugned orders dated 25th October, 2017, pending the Director General's ruling on the interpretation of the FTP provisions. The Joint Director General was directed to dispose of the petitioner's application in accordance with law, giving a personal hearing before deciding adversely on the MEIS scheme claim.

7. The judgment clarified that the interpretation of FTP provisions by the Director General would bind all authorities under the Foreign Trade Development and Regulation Act. The petitioner was given the opportunity to make a fresh representation for MEIS benefits, to be considered expeditiously within a specified timeframe.

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