2024 (12) TMI 369 - HC - Customs

Gujarat HC allows manual shipping bill amendments for MEIS benefits despite electronic system limitations under Section 149

M/s. Ball Aerosol Packaging India Pvt. Ltd. Versus Union Of India & Ors.

The Gujarat HC directed authorities to allow manual amendment of shipping bills to enable petitioners to correct technical errors and claim MEIS scheme ... Grant of benefit under MEIS scheme - amendment of Shipping Bills manually - direction to allow modification in the online system to enable the Petitioners to correct the technical error - non-declaration of the intention to avail the benefit under Chapter 3 on the shipping bills covering the export consignment - HELD THAT:- On perusal of the section 149, it appears that when amendment to shipping bill after export of goods is sought, the same is governed by the proviso to section 149 and if the requirements of the proviso of section 149 are satisfied, the amendment has to be allowed. This Court in the case of Gokul Overseas [2020 (3) TMI 167 - GUJARAT HIGH COURT] in the facts before the court, where the petitioner omitted to file declaration of intent within three months from the date of the late export order as stipulated in the CBEC circular no. 36/10 dated 29.03.2010 for availing the benefits under the Merchandise Exports From India Scheme (MEIS) was permitted as all other relevant material available as the petitioner before the Court was eligible for the benefit of MEIS. It was observed by the Court that 'The respondents are, therefore, not justified in turning down the request to convert the shipping bills of the petitioner from free to MEIS and thereby depriving the petitioner of the benefits under the MEIS in respect of exports made under such shipping bills.' This Court in case of Bombardier Transportation India Pvt. Ltd. vs. Directorate General of Foreign Trade [2021 (3) TMI 9 - GUJARAT HIGH COURT], has held that in similar facts that the EDI system, which is an electronic system developed and managed by the respondent authority 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 and in view of settled law that the benefit which otherwise a person is entitled to once the substantive conditions are satisfied cannot be denied due to technical error or lacunae in the electronic system. This Court in the case of M/s. Deendayal Port Trust vs. Union of India [2020 (3) TMI 155 - GUJARAT HIGH COURT] in the facts of the said case, it was held that the department was directed to consider the CENVAT credit claim made by the petitioner by allowing the petitioner to re-revise the service tax, return manually and thereafter, to revise GST Tran-1 online so as to grant the benefit of carried forward of the CENVAT credit manually. This Court in case of M/s. Siddharth Enterprises [2019 (9) TMI 319 - GUJARAT HIGH COURT] has held that by not allowing the right to carry forward the CENVAT credit for not being able to file the form GST TRAN-1 within the due date may severely dent the working capital of the petitioner and may diminish an ability to continue the business, which would the mandate of Article 19(1)(g) of the Constitution of India. It was further held that Article 300A which provides that no person shall be deprived of property save by authority of law while right to the property is no longer a fundamental right, but it is still a constitutional right and CENVAT credit earned under the erstwhile Central Excise Law is the property of the writ-applicants and it cannot be appropriated for merely failing to file a declaration in the absence of Law in this respect. Accordingly, respondent authorities were directed to permit the petitioner to allow the filing of declaration in form GST TRAN-1 so as to enable them to claim transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140 (3) of the CGST Act. The petitioner shall be entitled to MEIS scheme benefit in respect of the exports of the goods by the respondent authorities in view of the amendment of the shipping bills under Section 149 of the Customs Act, 1962 - The respondent authorities are directed to process the claim of the petitioner for MEIS scheme. Petition disposed off. Issues Involved:1. Entitlement to benefits under the Merchandise Exports from India Scheme (MEIS).2. Procedural lapse in declaration of intent on shipping bills.3. Amendment of shipping bills under Section 149 of the Customs Act.4. Technical limitations of the electronic system (EDI) in processing amendments.5. Legal precedents and applicability of judicial decisions.Detailed Analysis:1. Entitlement to MEIS Benefits:The core issue revolves around the petitioner's eligibility for export incentives under the Merchandise Exports from India Scheme (MEIS) as outlined in the Foreign Trade Policy, 2015-2020. The petitioner, engaged in the export of aluminum cans, claimed that they met all substantive conditions for the MEIS benefits, including exporting goods listed in Appendix 3B of the Foreign Trade Policy. Despite this, benefits were denied due to procedural lapses in the declaration of intent on shipping bills.2. Procedural Lapse in Declaration of Intent:The petitioner failed to select 'Y' (for Yes) in the reward column of EDI shipping bills, which is a procedural requirement for claiming MEIS benefits. This oversight was attributed to the petitioner's Customs House Agent (CHA). The petitioner argued that this was merely a procedural lapse and should not bar them from receiving benefits, as they had otherwise complied with all substantive requirements of the MEIS scheme.3. Amendment of Shipping Bills under Section 149 of the Customs Act:Section 149 of the Customs Act allows for the amendment of shipping documents post-export based on existing documentary evidence. The petitioner sought to amend the shipping bills to correct the oversight. The court noted that the amendment should be permitted if the conditions under Section 149 are satisfied, emphasizing that procedural lapses should not impede the substantive rights of exporters.4. Technical Limitations of the Electronic System (EDI):The court recognized the limitations of the Indian Customs EDI System (ICES), which did not permit amendments to shipping bills post-export. It was noted that the system's inability to process amendments electronically should not deprive the petitioner of benefits they are substantively entitled to. The court highlighted previous judgments where technical errors in electronic systems were deemed insufficient grounds to deny benefits.5. Legal Precedents and Applicability of Judicial Decisions:The court referenced several judgments, including Gokul Overseas v. Union of India and Oriental Carbon And Chemicals Limited vs. Union Of India, which supported the petitioner's case. These judgments established that procedural lapses, such as failing to declare intent on shipping bills, should not be fatal if all other substantive conditions are met. The court also cited decisions where amendments were allowed despite procedural errors, reinforcing the principle that substantive rights should not be undermined by technicalities.Conclusion:The court directed the respondent authorities to process the petitioner's claim for MEIS benefits, acknowledging the amendment of shipping bills under Section 149 of the Customs Act. It emphasized that procedural lapses should not deny substantive benefits, aligning with the principles established in prior judgments. The petition was disposed of with directions to grant MEIS benefits, subject to compliance with legal requirements.