2025 (5) TMI 422 - HC - Customs

Policy Review Committee's rejection of MEIS benefits claim for delayed export payments upheld as discretionary decision

S.S. Automotive Pvt. Ltd. Versus Union Of India & Anr.

Delhi HC dismissed petitioner's challenge to Policy Review Committee's rejection of MEIS benefits claim for shipping bills exported to Egypt, Algeria, ... Entitlement to benefit of MEIS in respect of shipping bills which were issued against the goods exported by the petitioner to Egypt, Algeria, Libya and Romania between July 2015 to August 2016 - delay on part of the foreign importers to release foreign exchange remittances in respect of the shipping bills - HELD THAT:- In the very nature of things, policy relaxation cannot be claimed by the petitioner as a matter of substantive right. The same lies within the realm of the discretion of the concerned authorities to be exercised in exceptional circumstances. It is for the PRC to consider whether the cited circumstances are such as to warrant grant of relaxation. In the present case, the PRC has noticed that in respect of 6 out of the 8 shipping bills, the payment was realized by the petitioner within 3 years from the export date and it was possible for the petitioner to avail the benefits under the MEIS Scheme with applicable “late cut”, however, the petitioner, for reasons best known to it, did not take the requisite steps - Consequently, in due course, the said shipping bills became ineligible for benefits under the MEIS in terms of the Policy provisions. In the present case, the Committee found that the payment was received much beyond the period stipulated under the Policy. As such, the PRC, after due consideration of the matter, rejected the application of the petitioner, thereby, denying the benefits under the MEIS to the petitioner - The view taken by the PRC neither suffers from any apparent jurisdictional error nor is afflicted on account of perversity / non-consideration of relevant aspects. This Court finds no justification in seeking to exercise jurisdiction under Article 226 of the Constitution of India to displace / upset a considered view taken by the PRC. Conclusion - Payments for most shipping bills were realized within the permissible three-year period, and the petitioner failed to claim MEIS benefits within that period despite the availability of late cut fees. Payments for the remaining shipping bills were realized beyond the stipulated period, falling outside the scope of usual relaxation.The PRC's decision rejecting the petitioner's claim was neither arbitrary nor unreasonable and did not warrant judicial interference. This Court finds no merit in the present petition; the same is, accordingly, dismissed. The core legal questions considered by the Court in this matter include: (i) whether the petitioner is entitled to relaxation under paragraph 2.58 of the Foreign Trade Policy (FTP) for claiming Merchandise Exports from India Scheme (MEIS) benefits beyond the prescribed time limits; (ii) the scope and exercise of discretion vested in the Policy Relaxation Committee (PRC) under paragraph 2.58 of the FTP; (iii) the applicability of the prescribed timelines and late cut fees under the FTP and Handbook of Procedures (HBP) for claiming MEIS benefits; (iv) whether delay in realization of export proceeds, beyond the stipulated period, constitutes a sufficient ground for granting relaxation; and (v) the extent of judicial review permissible over the discretionary decisions of the PRC.Regarding the entitlement to relaxation under paragraph 2.58 of the FTP, the legal framework provides that the Director General of Foreign Trade (DGFT) may grant exemptions, relaxations, or relief from any provisions of the FTP or related procedures on grounds of genuine hardship or adverse impact on trade, subject to consultation with relevant committees, including the PRC for all other issues. The petitioner sought such relief due to delayed realization of export proceeds, which led to their shipping bills becoming time barred for claiming MEIS benefits.The Court noted that the MEIS scheme, as per paragraphs 3.01 and 3.02 of the FTP 2015-20, incentivizes exporters by granting scrips usable against customs duties, with the normal period for claiming benefits being one year from export shipment under paragraph 3.15 of the HBP. A late cut fee allows claims up to three years from export. However, the petitioner's claims exceeded this three-year window, rendering them ineligible as per the strict provisions of the policy.The petitioner's case was premised on paragraph 2.58 of the FTP, which empowers DGFT to grant relief in public interest or on grounds of genuine hardship. The petitioner argued that the delayed payments were beyond its control, caused by foreign buyers' inability to remit funds timely due to conflicts in their countries, and that it had suffered financial losses servicing loans during this delay. The petitioner contended that denying MEIS benefits under these circumstances was inequitable.The Court emphasized that policy relaxation under paragraph 2.58 is discretionary and not a substantive right. It lies within the PRC's domain to assess whether exceptional circumstances warrant such relief. The Court relied on precedents, notably a Division Bench decision which held that the PRC's powers are wide and discretionary, and exemptions are granted balancing hardship and trade impact. The Court reiterated that judicial interference is limited to cases where the PRC's decision is perverse, arbitrary, or illegal.In the present case, the PRC's detailed examination revealed that for six of the eight shipping bills, payments were realized within three years, and the petitioner could have claimed MEIS benefits with applicable late cut fees but failed to do so. For the remaining two shipping bills, payments were received beyond the three-year limit. The PRC noted that relaxation is typically granted only when payments are received within three years but the electronic Bank Realization Certificate (e-BRC) is uploaded late. Since the petitioner's payments were beyond this period, the PRC found no merit in granting relaxation and rejected the claim.The Court found no jurisdictional error or perversity in the PRC's decision. It held that the petitioner's failure to apply within the prescribed time, despite payments being received within the permissible period for most shipping bills, was a matter within the petitioner's control. The Court also observed that the discretion to grant relaxation is a delicate balance and that the PRC's decision was neither arbitrary nor unreasonable.The Court further cited coordinate Bench rulings which reinforced the limited scope of judicial review over PRC decisions. It was noted that relaxation cannot be claimed as a matter of right and that the petitioner's lack of vigilance or delay in compliance does not shift the onus to authorities to retrospectively grant benefits. The Court distinguished genuine hardship from mere delay or laxity in compliance.In conclusion, the Court upheld the PRC's rejection of the petitioner's claim for MEIS benefits on the ground of time-barred shipping bills and delayed realization of export proceeds beyond the stipulated period. The Court dismissed the petition, affirming the discretionary nature of relief under paragraph 2.58 of the FTP and the limited judicial role in reviewing such administrative decisions.Significant holdings include the following verbatim legal reasoning:'No person is entitled to an exemption as a matter of right. Exemptions are granted by Authorities, which are purely discretionary orders. While exercising discretion, as per Para 2.5 of the Foreign Trade Policy 2009-14, if the PRC has imposed the conditions which it deemed fit, in public interest, unless it can be shown that the said conditions were completely perverse, arbitrary or illegal, the same cannot be interfered with.''The powers of the PRC, while making its recommendations are wide and are purely discretionary. The PRC, in its order dated 24 April, 2015 has considered the relevant facts... No interference with such decision would be permissible unless the petitioner is able to establish that the decision of the PRC was perverse, arbitrary, capricious or unreasonable or otherwise contrary to the statutory framework.''Exemption from following policy/procedure can be granted only in cases of genuine hardship or adverse impact on trade or in public interest. It is not applicable for cases where the exporters, even bona fide, are not vigilant or are lax in compliance with the mandatory conditions.'Core principles established include:The discretionary power of the PRC under paragraph 2.58 of the FTP to grant relaxation on grounds of genuine hardship and public interest, subject to conditions.The strict application of prescribed timelines for claiming MEIS benefits, with late cut fees extending the claim period up to three years from export date.The limited scope of judicial review over PRC decisions, which will not be interfered with unless shown to be perverse, arbitrary, or illegal.The distinction between genuine hardship and mere delay or negligence in compliance, with the latter not warranting relaxation.The principle that entitlement to policy relaxation is not a substantive right but a discretionary relief.Final determinations on the issues are that the petitioner was not entitled to relaxation under paragraph 2.58 of the FTP because:Payments for most shipping bills were realized within the permissible three-year period, and the petitioner failed to claim MEIS benefits within that period despite the availability of late cut fees.Payments for the remaining shipping bills were realized beyond the stipulated period, falling outside the scope of usual relaxation.The PRC's decision rejecting the petitioner's claim was neither arbitrary nor unreasonable and did not warrant judicial interference.