2021 (4) TMI 29 - HC - Customs

Court Orders Extension of Duty Credit Scrips and Benefits for Writ-Applicant

The court allowed the writ-application, directing the respondents to: 1. Revoke the suspension of the Duty Credit Scrips and extend their validity. 2. ... Eligibility for Merchandise Exports from India Scheme (MEIS) - procedural versus mandatory requirement for declaration of intent on shipping bills - discrimination between EDI and non-EDI shipping bills - amendment of shipping bills under Section 149 of the Customs Act, 1962 - ultra vires status of subordinate legislation prescribing time-limit by circularEligibility for Merchandise Exports from India Scheme (MEIS) - procedural versus mandatory requirement for declaration of intent on shipping bills - discrimination between EDI and non-EDI shipping bills - The writ-applicant is entitled to claim MEIS benefits for exports during the period between 1.4.2015 and 31.5.2015 despite the absence of the declaration of intent on non-EDI shipping bills. - HELD THAT: - The Court held that eligibility under the MEIS is determined by the product and destination and not by the mechanical presence of the declaration on the shipping bill. The goods in question were examined and the shipping bills bore endorsements; therefore verification and safeguards under the Customs Act, 1962 were complied with. The requirement of a declaration in Clause 3.14 of the Handbook is a procedural provision introduced for administrative convenience and, particularly for the initial period, the authorities themselves were uncertain about its mandatory application (as reflected in public notices and by seeking DGFT clarification). The distinction in practice between EDI and non-EDI exporters-where relaxation was repeatedly afforded to EDI exporters but denied to non-EDI exporters-was held to be unreasonable and discriminatory. Prior decisions of this Court and other High Courts permitting amendment of free/non-EDI shipping bills and grant of MEIS benefits where substantive eligibility is established were followed as covering the present case. [Paras 31, 33, 35, 36, 39]The writ-applicant's omission to mention the declaration on non-EDI shipping bills is a curable procedural lapse and shall not disentitle it from MEIS benefits.Amendment of shipping bills under Section 149 of the Customs Act, 1962 - no time limit in Section 149 - Amendment of the shipping bills under Section 149 is permissible after export on the basis of documentary evidence existing at the time of export, and no time-limit can be read into Section 149 by way of a circular. - HELD THAT: - The Court noted that Section 149 expressly permits amendment of shipping bills after export when supported by documentary evidence existing at the time of export, and there is no statutory time-limit contained in Section 149. Consequently, respondents cannot impose additional restrictions or time-limits de hors the statute. The authorities themselves invited the applicant to remove the defect and had sought DGFT clarification, which militates against treating the applicant as having unduly delayed. The Court relied on the statutory text and consistent judicial precedent that limits cannot be introduced by subordinate instruments where the parent provision is silent. [Paras 21, 27, 28]The applicant's application for amendment under Section 149 is maintainable and the defect is curable by amendment based on documentary evidence on record.Ultra vires status of subordinate legislation prescribing time-limit by circular - time limit cannot be introduced by circular - Circular No.36/2010 (prescribing a three-month time-limit) cannot be relied upon to bar amendment under Section 149 as it is ultra vires and subordinate legislation cannot impose a limitation not found in the parent statute. - HELD THAT: - The Court observed that when Section 149 contains no time-bar, a circular purporting to fixed a three-month limitation is beyond the powers of subordinate legislation. The Court referred to earlier decisions of this Court holding that time-limits cannot be introduced by way of a circular and to a specific decision (M/s. Mahalaxmi Rubtech) declaring the circular ultra vires Articles 14 and 19(1)(g) and Section 149. In the present facts, the authorities had sought DGFT clarification and had not required the applicant to apply under Section 149 within three months, so reliance on the circular to deny relief was unjustified. [Paras 24, 25, 26, 27]The Circular cannot operate to preclude the applicant from seeking amendment and is not a valid impediment to the amendment sought under Section 149.Final Conclusion: Writ petition allowed: the petitioner is entitled to MEIS benefits for the exports in question and to have its shipping bills amended; the authorities are directed to process and complete the exercise and grant the reliefs claimed within eight weeks from receipt of this order. Issues Involved:1. Revocation of suspension of Duty Credit Scrips.2. Issuance of Duty Credit Scrips under the Merchandise Exports from India Scheme (MEIS).3. Amendment of shipping bills to include the declaration for MEIS benefits.4. Procedural and technical lapses in the declaration of intent for claiming MEIS benefits.5. Legal validity of time limits imposed by Circular No.36/2010 under Section 149 of the Customs Act, 1962.Detailed Analysis:1. Revocation of Suspension of Duty Credit Scrips:The writ-applicant sought the revocation of the suspension of Duty Credit Scrips issued under the MEIS scheme, arguing that the suspension was based on a procedural lapse regarding the declaration of intent on shipping bills. The court noted that the writ-applicant was eligible for MEIS benefits as it had exported notified goods to notified countries. The suspension was deemed arbitrary and unreasonable, especially since the authorities had initially issued the scrips understanding that the declaration was not mandatory for the period in question.2. Issuance of Duty Credit Scrips under MEIS:The writ-applicant requested the issuance of Duty Credit Scrips for its applications, which were denied due to the absence of the MEIS declaration on shipping bills. The court held that the requirement for such a declaration was procedural and not mandatory. The authorities had the power to grant relaxation and had done so for EDI ports. The court found it discriminatory to deny similar relaxation for non-EDI ports.3. Amendment of Shipping Bills:The writ-applicant sought permission to amend the shipping bills to include the MEIS declaration. The court referenced Section 149 of the Customs Act, 1962, which permits amendments based on existing documentary evidence at the time of export. The court found no statutory time limit for such amendments and deemed the procedural lapse curable. The court also noted that previous judgments allowed amendments and directed the authorities to permit the amendment of the shipping bills.4. Procedural and Technical Lapses:The court analyzed the procedural lapse of not including the MEIS declaration on shipping bills. It was noted that the declaration was for internal convenience and not a substantive requirement. The court emphasized that procedural lapses should not result in the denial of substantive benefits, especially when the writ-applicant had complied with all other requirements and had been exporting the same goods under previous schemes.5. Legal Validity of Time Limits Imposed by Circular No.36/2010:The respondents argued that the amendment request was delayed and hit by the three-month time limit prescribed by Circular No.36/2010. The court, however, held that Section 149 of the Customs Act, 1962, did not prescribe any time limit and a subordinate legislation (circular) could not impose restrictions beyond the parent statute. The court referenced previous judgments that invalidated the circular's time limit and upheld the writ-applicant's right to seek amendment without being constrained by the circular's time limit.Conclusion:The court allowed the writ-application, directing the respondents to:1. Revoke the suspension of the Duty Credit Scrips and extend their validity.2. Issue Duty Credit Scrips for the writ-applicant's pending applications.3. Permit the amendment of shipping bills to include the MEIS declaration.The court emphasized that the writ-applicant should not be denied benefits due to procedural lapses and directed the authorities to complete the necessary actions within eight weeks.