2022 (1) TMI 819 - HC - Customs

MEIS Benefits Rejection Upheld but Petitioner Given Chance to Reapply for

The court upheld the rejection of the Petitioner's applications for MEIS benefits due to insufficient documentary evidence. However, the Petitioner was ... Rejection of applications for issuance of Duty Credit Scrips under the Merchandise Export from India Scheme (MEIS) - rejection on the ground that the transaction was between the Petitioner and the FTWZ unit in an SEZ and thus ineligible for claiming benefit under MEIS - overriding effect of SEZ Act over all provisions of all other Acts as per Section 51 of the said Act - HELD THAT:- Paragraph 3.06 of the FTP 2015-20 refers to exported goods which shall be ineligible for Duty Credit Scrips under MEIS. Clause (vi) of paragraph 3.06 states that SEZ/FTWZ products exported through DTA units shall be ineligible for benefit under MEIS. Similarly clause (xix) states that the exports made by units in FTWZ shall be ineligible for benefit under MEIS. The Competent Authority / Respondents have denied benefit to the Petitioner under the aforesaid two clauses on the premise that the transaction of the Petitioner is with the FTWZ unit (Siddhartha Logistics Co. Pvt. Ltd.). In the present case, Petitioner has pleaded that the transaction in question for supply of export goods (Single Mode Optical Fibers G642D) is with its foreign overseas buyer (Technocraft Engineering LLC, Dubai, UAE), and that it is on the instructions of the overseas buyer the Petitioner delivered the export goods to the FTWZ unit (Siddhartha Logistics Co. Pvt. Ltd.) in India - it is seen that in Paragraph 3, the reference to the Overseas Buyer is to a company called “Ashteck Global FZE”, which on scrutiny shows that it is located in Ajman, UAE. There is no reference to Technocraft Engineering LLC, Dubai, UAE in the written propositions and annexures to the Petition, the written propositions as well as the compilation of documents tendered across the bar. Applying the ratio of the decision in JINDAL DRUGS PRIVATE LIMITED VERSUS THE UNION OF INDIA, THE DEPUTY COMMISSIONER OF CUSTOMS, THE ADDITIONAL DIRECTOR GENERAL OF FOREIGN TRADE [2021 (7) TMI 1034 - MADRAS HIGH COURT], in the absence of necessary documentary evidence as alluded to hereinabove, the Petitioner cannot claim MEIS benefit merely on the basis of pleadings. If the Petitioner claims that the export goods are delivered to the FTWZ unit and thereafter exported to Taiwan on the instructions of its Overseas Buyer, the burden of proof is on the Petitioner to produce the contractual agreement / authorization / transaction details with the Overseas Buyer to substantiate the same - In the Jindal Drugs case, though the facts are similar to the case in hand, the Madras High Court therein looked into the principal transaction between the parties to ascertain the role of the parties, it confirmed receipt of foreign exchange from Ireland and the BRC evidencing this position, it referred to the supporting documentation pertaining to onward shipment by the FTWZ unit therein to the location of choice of the overseas buyer and then concluded that the FTWZ unit therein merely offered a facility of warehousing to the Petitioner therein to facilitate the export. None of the above issues have been pleaded, and effectively proved by the Petitioner, save and except one shipping bill which does not evidence the aforesaid position in the case of the Petitioner. It is a settled proposition of law that a party has to plead the case and produce/adduce sufficient evidence to substantiate his submissions made in the petition. In the absence of the same, the Court need not entertain the pleadings and submissions so made. In view of absence of documentary evidence, and the findings and discussion, the Petitioner cannot be granted MEIS benefit merely on the basis of pleadings which are prima facie insufficient on the face of record. Hence the Petition must fail - petition dismissed. Issues involved:1. Eligibility for MEIS benefits under FTP 2015-20.2. Nature of transactions between Petitioner and FTWZ unit.3. Documentation and evidence required for MEIS benefits.4. Interpretation of Paragraph 3.06 of FTP 2015-20.5. Legal precedents and their applicability.Detailed Analysis:1. Eligibility for MEIS benefits under FTP 2015-20:The Petitioner, a manufacturer of optical fibers, applied for MEIS benefits under the FTP 2015-20. The Petitioner supplied goods to an Overseas Buyer, which were delivered to an FTWZ unit in India before being exported to Taiwan. The Petitioner claimed that the transaction was with the Overseas Buyer, making them eligible for MEIS benefits.2. Nature of transactions between Petitioner and FTWZ unit:The Respondents rejected the Petitioner’s applications, asserting that the transactions were between the Petitioner and the FTWZ unit, not directly with the Overseas Buyer. Paragraph 3.06(i) of FTP 2015-20 deems supplies from DTA units to SEZ units ineligible for MEIS benefits. The Petitioner contended that the FTWZ unit was merely a custodian of the goods, and the principal transaction was with the Overseas Buyer.3. Documentation and evidence required for MEIS benefits:The court emphasized the importance of documentary evidence to substantiate the Petitioner’s claims. The Petitioner failed to provide sufficient documentation, such as Bills of Receipt, Bills of Export, Export Invoices, Authorization from the Overseas Buyer, Statements of Bank Realization, and Shipping Bills, to prove the transaction was with the Overseas Buyer.4. Interpretation of Paragraph 3.06 of FTP 2015-20:The court examined Paragraph 3.06, which lists categories ineligible for MEIS benefits. Clauses (vi) and (xix) specifically exclude SEZ/FTWZ products exported through DTA units and exports made by FTWZ units. The court noted that the Petitioner’s case did not fall outside these ineligible categories due to insufficient evidence.5. Legal precedents and their applicability:The Petitioner relied on the Jindal Drugs Private Limited case, where MEIS benefits were granted based on sufficient documentary evidence. The court found that the Petitioner in the present case failed to provide similar evidence, making the reliance on this precedent inapplicable.Conclusion:The court upheld the impugned order dated 03.06.2020, rejecting the Petitioner’s applications for MEIS benefits due to lack of sufficient documentary evidence. However, the Petitioner was given a final opportunity to file a fresh application with complete documentation within two weeks. The Competent Authority was directed to consider the application in accordance with law, providing the Petitioner an opportunity for a personal hearing and issuing a speaking order.Disposition:The Writ Petition was disposed of with directions for the Petitioner to reapply with necessary documentation.