2021 (3) TMI 9 - HC - Customs

Court orders grant of MEIS benefits, emphasizing substance over procedure.

Bombardier Transportation India Pvt Ltd Versus Directorate General of Foreign Trade

The court allowed the writ-application, directing the respondents to grant MEIS benefits to the writ-applicant within four weeks. The judgment emphasized ... Benefits under the MEIS denied - denial solely on the ground of a seeming technical error especially when the eligibility of the writ-applicant is not disputed, and the office of the Commissioner has already allowed amendment to the Relevant Shipping Bills - HELD THAT:- The respondent no.4, after due verification of the documentary evidence existing at the time of the export duly amended the shipping bills manually from “MEIS SCHEME – “No” to MEIS SCHEME “YES” by way of Amendment Certificate dated 09.10.2018. Hence, the writ-applicant now having satisfied the MEIS conditions i.e. exported Notified Goods (Metro Coaches) to Notified Territory (Australia) cannot be deprived of the necessary MEIS benefits. The entitlement to MEIS benefits is governed by the ChapterIII of the Foreign Trade Policy 201520 (FTP 201520) and accordingly, the scheme for the grant of the benefit will be governed thereunder. In other words, the substantive rights and obligations are created by the MEIS Scheme under ChapterIII of the FTP. It also becomes apparent from Para 3.04 of the Policy that once the notified goods are exported to a notified market, the exporter becomes entitled to the MEIS benefits - Thus, entitlement, restriction thereof and conditions, if any, have to be found within the letters of the ChapterIII of the FTP 2015-20. Thus, the writ-applicant becomes entitled to the MEIS benefits once it exports the notified goods to the notified market. This benefit cannot be defeated due to procedural infirmity of missing to mark/tick “Y” in the rewards column. The writ-applicant submits that as per its understanding, the EDI system, which is an electronic system developed and managed by the respondent no.3 with an objective to digitalize transmission of shipping bills between Respondents, suffers from lacunae that it does not permit amendment, which is specifically permitted in terms of Section 149 of the Customs Act, 1961, to be carried electronically through EDI system - It is a settled law that the benefit which otherwise a person is entitled to once the substantive conditions are satisfied cannot be denied due to a technical error or lacunae in the electronic system. A reference is made to the decision in the case of DARSH PHARMACHEM PVT. LTD. VERSUS SUPERINTENDENT, CENTRAL GST [2020 (3) TMI 696 - GUJARAT HIGH COURT] wherein this Court, having regard to the fact that the TRAN-1 could not be filed on account of technical glitches in the electronic system, directed the respondents therein to permit the writ-applicant therein to file form in TRAN-1. The present writ-application succeeds and is hereby allowed. Issues Involved:1. Denial of MEIS benefits due to technical error in shipping bill declaration.2. Authority to amend shipping bills under Section 149 of the Customs Act, 1962.3. Procedural vs. substantive provisions in the context of Foreign Trade Policy and Handbook of Procedures.Detailed Analysis:Issue 1: Denial of MEIS benefits due to technical error in shipping bill declarationThe writ-applicant, engaged in manufacturing and exporting metro coaches, sought MEIS benefits for exports made to Australia. The entitlement to MEIS benefits was undisputed. However, for the period from 13.07.2017 to 24.07.2018, the shipping bills were erroneously marked 'N' instead of 'Y' in the reward column on the EDI System. Despite the error, the shipping bills carried a declaration of intent to claim MEIS benefits. The applicant sought manual amendments to the shipping bills, which were granted by the Customs Authority through an Amendment Certificate dated 09.10.2018. However, the MEIS benefits were still denied on the grounds that the EDI system did not reflect the 'Y' marking.Issue 2: Authority to amend shipping bills under Section 149 of the Customs Act, 1962Section 149 of the Customs Act, 1962, permits amendments to shipping bills based on existing documentary evidence at the time of export. The Customs Authority issued an Amendment Certificate after scrutinizing the relevant documents, changing the declaration from 'No' to 'Yes'. The respondents argued that the EDI system could not accommodate such amendments electronically. The court held that substantive benefits could not be denied due to technical limitations of the EDI system.Issue 3: Procedural vs. substantive provisions in the context of Foreign Trade Policy and Handbook of ProceduresThe court emphasized that the Foreign Trade Policy (FTP) and Customs Act confer substantive rights, while the Handbook of Procedures is a procedural guide. The Handbook cannot override the substantive provisions of the FTP. The court referenced previous judgments, including Asahi Songwon Colors Ltd. v. Union of India and Kedia (Agencies) Pvt Ltd. v. Commissioner of Customs, which supported the view that procedural errors should not defeat substantive rights.Conclusion:The court allowed the writ-application, directing the respondents to grant MEIS benefits to the writ-applicant within four weeks. The judgment underscored that substantive benefits should not be denied due to procedural errors or technical limitations of the electronic system.