2020 (3) TMI 167 - HC - Customs

Court directs conversion of shipping bills to MEIS; respondents' rejection unjustified. Petition allowed, letter quashed.

The court concluded that the respondents were not justified in rejecting the petitioner's request for conversion of shipping bills from free to MEIS ... Benefits under MEIS scheme - amendment in shipping bills - It is the case of the petitioner that despite continuous follow up by the petitioner by way of written as well as personal visits, there was no response or any positive outcome, and hence, the petitioner once again sent a reminder letter to respondent No.6 ­ Assistant Commissioner of Customs (Exports) requesting to grant amendment of the shipping bills - section 149 of the Customs Act, 1962. HELD THAT:- On a plain reading of the provisions of para 3.14 of the Handbook of Procedure to Foreign Trade Policy 2015­-20, it is apparent that the ‘declaration of intent’, in the manner provided for EDI shipping bills, has been made mandatory, whereas in the case of Non-­EDI shipping bills, such ‘declaration of intent’ is not stated to be mandatory. The respondents, in their affidavit in reply, have stated that the instant case is of a SEZ unit which exported the goods under free shipping bills. All the SEZ exports come under free shipping bills. Therefore, the mandatory ‘declaration of intent’ with effect from 01.06.2015 will not be applicable in this case. Therefore, the unit has to declare its intent for claiming benefits under the MEIS for exports made prior to 01.06.2015, that is, for the period between 01.04.2015 to 31.05.2015. As per the Foreign Trade Policy/Handbook of Procedure 201520, MEIS benefits were available to SEZ units with effect from 01.04.2015. It emerges that the petitioner is not permitted conversion of the shipping bills from free shipping bills to MEIS shipping bills for the reason that Circular No.36/2010­-Customs dated 23.09.2010 provides that conversion may be allowed provided that request has been made within three months from the date of the Let Export Order. The facts as recorded hereinabove reveal that the Deputy Commissioner of Customs, Kandla SEZ, Gandhidham (Office of the Development Commissioner, Kandla Special Economic Zone) has, in the context of the petitioner’s request for amending the shipping bills to incorporate ‘declaration of intent’, has furnished comments on the issue to the respondent No.6 – Assistant Commissioner (Exports), Office of the Commissioner of Customs, Kandla, stating that the petitioner has been regularly filing its claim for similar goods under the MEIS for later periods and it appears that the petitioner is otherwise eligible for benefits under the said scheme. Therefore, in the light of the provisions of section 149 of the Act read with the provisions of Circular No.36/2010­-Customs dated 23.09.2010 and Notification No.40/2012­(NT) dated 02.05.2012, the decision regarding conversion may be taken on the basis of documentary evidence which was in existence at the time when the goods were exported subject to the satisfaction of the competent authority. The eligibility of the petitioner to claim benefits under the MEIS has not been doubted. The sole hurdle in the case of the petitioner is that since the shipping bills are free shipping bills, wherein no ‘declaration of intent’ has been made, the petitioner is required to get the shipping bills amended by incorporating the following ‘declaration of intent’: “We intend to claim rewards under Merchandise Exports From India Scheme (MEIS)”. It is not the case of the respondents that the petitioner is not otherwise covered by Circular No.36/2010­-Customs dated 23.09.2010. The sole ground on which the application has been rejected is for non compliance of condition (a) of paragraph 3 of the said circular, namely that the application has been filed beyond a period of three months from the date of filing the Let Export Order. The impugned letter dated 11.02.2019 of the respondent No.2, Under Secretary, Government of India, is hereby quashed and set aside. The respondents are directed to permit the petitioner to convert the shipping bills in question from free shipping bills to MEIS shipping bills subject to the satisfaction of the competent authority - Petition allowed - decided in favor of petitioner. Issues Involved:1. Eligibility for benefits under the Merchandise Exports From India Scheme (MEIS).2. Amendment of shipping bills to include 'Declaration of Intent'.3. Time limit for applying for conversion of shipping bills.4. Discrimination between EDI and Non-EDI shipping bills.5. Procedural requirements under section 149 of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Eligibility for benefits under the Merchandise Exports From India Scheme (MEIS):The petitioner, a partnership firm located in Kandla Special Economic Zone (KSEZ), engaged in manufacturing derivatives of Castor Oils, sought benefits under the MEIS for exports made between April 2015 to January 2016. The MEIS, introduced by the Foreign Trade Policy (FTP) 2015-2020, aims to promote exports of notified goods manufactured in India. The petitioner had previously been granted MEIS benefits but faced rejection for twenty-five shipping bills due to the absence of a 'Declaration of Intent'.2. Amendment of shipping bills to include 'Declaration of Intent':The petitioner applied for amendment of shipping bills to include the 'Declaration of Intent' to claim MEIS benefits. Despite continuous follow-ups and representations, the petitioner faced delays and eventual rejection on technical grounds. The court noted that the 'Declaration of Intent' is procedural and not mandatory for Non-EDI shipping bills, unlike EDI shipping bills where it is mandatory.3. Time limit for applying for conversion of shipping bills:The petitioner's request for conversion of shipping bills was rejected based on Circular No.36/2010-Customs, which mandates that such requests must be made within three months from the date of the Let Export Order (LEO). The court observed that the delay was due to the respondents' prolonged inter-departmental communications and not the petitioner's fault.4. Discrimination between EDI and Non-EDI shipping bills:The petitioner argued that the respondents discriminated between EDI and Non-EDI shipping bills by allowing corrections for EDI shipping bills but not for Non-EDI shipping bills. The court found this differentiation unjustified, especially since the petitioner’s goods were eligible for MEIS benefits and had been regularly claiming them for later periods.5. Procedural requirements under section 149 of the Customs Act, 1962:Section 149 allows amendments to documents presented in the customs house at the discretion of the proper officer. The court highlighted that the petitioner had submitted all necessary documents and the goods conformed to the description in the shipping documents. The court relied on the Delhi High Court's decision in Kedia (Agencies) Pvt. Ltd. v. Commissioner of Customs, which permitted amendments to shipping bills when all other relevant materials were present.Conclusion:The court concluded that the respondents were not justified in rejecting the petitioner's request for conversion of shipping bills from free to MEIS shipping bills. The court allowed the petition, quashed the impugned letter dated 11.02.2019, and directed the respondents to permit the conversion of the shipping bills subject to the satisfaction of the competent authority within two months. The rule was made absolute with no order as to costs.