2025 (1) TMI 1386 - HC - Customs

Bombay HC allows MEIS scrip applications after revenue authorities wrongly rejected benefits for lacking valid RCMC during export period

Axiom Cordages Limited Versus The Union of India & Ors.

Bombay HC set aside rejection of petitioner's MEIS scrip applications. Revenue authorities wrongly rejected benefits claiming petitioner lacked valid RCMC ... Rejection of pending applications filed by the Petitioner for issuance of scrips under the “Merchandise Exports from India Scheme” (MEIS) - rejection of the MEIS benefits/scrips is done solely on the purported ground that the Petitioner did not have a valid RCMC during the period of export for which MEIS benefits were claimed by the Petitioner - HELD THAT:- Under the subsequent Foreign Trade Policy i.e. the Foreign Trade Policy 2023, all Export Oriented Units have to be registered with EPCES to avail of the benefit/scrips under the MEIS. Under the FTP 2015-20 there was no such requirement. It is for this very reason that on 12th October 2022, the Government of India, Ministry of Commerce and Industry, Seepz Special Economic Zone Authority, SEEPZ-SEZ, Andheri (E), Mumbai, issued Circular No.78 of 2022 informing all EOUs that EPCES membership is now compulsory for all the SEZ Units/SEZ Developers. In these circumstances, the benefits/scrips under the MEIS, rejected by Respondent No. 3 under the impugned order is incorrect and would have to be rectified. Conclusion - Under the FTP 2015-2020, exporters could be registered with either FIEO or EPCES to claim MEIS benefits. The requirement for exclusive registration with EPCES was introduced only in the subsequent FTP 2023. The impugned order rejecting the Petitioner's MEIS applications set aside. Petition disposed off. ISSUES PRESENTED and CONSIDEREDThe primary legal issue considered in this judgment was whether the rejection of the Petitioner's applications for Merchandise Exports from India Scheme (MEIS) benefits by Respondent No. 3 was valid, given the alleged lack of a valid Registration-Cum-Membership Certificate (RCMC) during the relevant period of export. The Court also considered whether the requirement for registration with a specific Export Promotion Council was correctly applied according to the Foreign Trade Policy (FTP) 2015-2020.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe Foreign Trade Policy 2015-2020 was central to the case, particularly its provisions regarding the issuance of RCMCs by recognized Export Promotion Councils. Chapter 3 of the FTP introduced the MEIS to reward exporters, and Chapter 2 outlined the general provisions regarding imports and exports, including the requirement for an RCMC.Under the FTP, Appendix 2T listed recognized Registering Authorities, including the Federation of Indian Export Organisations (FIEO) and the Export Promotion Council for EOUs and SEZs (EPCES). The Court examined these provisions to determine whether the Petitioner's registration with FIEO was sufficient for claiming MEIS benefits.Court's Interpretation and ReasoningThe Court found that the rejection of the Petitioner's MEIS benefits was based on a misinterpretation of the FTP provisions. Respondent No. 3 erroneously concluded that only EPCES was the competent authority to issue RCMCs for 100% EOUs during the relevant period. The Court noted that both FIEO and EPCES were recognized as Registering Authorities under the FTP 2015-2020, and there was no requirement for exclusive registration with EPCES.Key Evidence and FindingsThe Court reviewed the impugned order, the FTP 2015-2020, and the subsequent FTP 2023, as well as a circular issued by the Government of India in 2022. The circular clarified that EPCES membership became compulsory only under the FTP 2023, not the FTP 2015-2020. This evidence supported the Court's finding that Respondent No. 3's reliance on the FTP 2023 was misplaced for the period in question.Application of Law to FactsThe Court applied the provisions of the FTP 2015-2020 to the facts, determining that the Petitioner's registration with FIEO was valid for claiming MEIS benefits during the relevant period. The Court concluded that the rejection of the Petitioner's applications based solely on the lack of EPCES registration was incorrect.Treatment of Competing ArgumentsRespondent No. 3 argued that the Petitioner's lack of EPCES membership during the relevant period justified the rejection of MEIS benefits. The Court, however, found that this argument was based on an incorrect interpretation of the applicable FTP provisions. The Court emphasized that the FTP 2015-2020 did not mandate exclusive registration with EPCES for 100% EOUs.ConclusionsThe Court concluded that the impugned order was based on a misinterpretation of the FTP 2015-2020 and set it aside. The Court directed Respondent No. 3 to process the Petitioner's applications for MEIS benefits within eight weeks, subject to other compliance requirements.SIGNIFICANT HOLDINGSCore Principles EstablishedThe Court established that under the FTP 2015-2020, exporters could be registered with either FIEO or EPCES to claim MEIS benefits. The requirement for exclusive registration with EPCES was introduced only in the subsequent FTP 2023.Final Determinations on Each IssueThe Court set aside the impugned order rejecting the Petitioner's MEIS applications and directed Respondent No. 3 to grant the benefits if the applications were otherwise in order. The claim for interest was rejected as it lacked a legal basis.