Amendment Certificate issued u/s 149 Customs Act: Delhi HC directs consideration of MEIS claim application [Read Order]

The Delhi High Court ( HC ) directed the respondent to consider the Merchandise Exports from India Scheme (MEIS) claim application of Petitioner as the amendment certificate was issued under section 149 of the Customs Act, 1962. The Petitioner, Zydus Takeda Healthcare Private Limited, is a 100% Export Oriented Unit (EOI) engaged in the business of pharmaceuticals. In order to avail the benefit under Merchandise Export from India Scheme (MEIS), the Petitioner submitted an online application on website of the Directorate General of Foreign Trade (DGFT). In terms of Paragraph No. 3.14 of Handbook of Procedure exporters are required to declare their intent to claim benefit under MEIS at the time of generating shipping bills for both, Export Data Interchange (EDI) generated Shipping Bill and Non-EDI Shipping Bill. Essential Training for Tax Professionals: Know Your Sections! For EDI Shipping Bills, the exporter is mandated to mark/ tick either “Y” (for “Yes”) or “N” (for “No”) under the “Reward” column against each item of export. By marking “Y”, the exporter declares their intent to claim reward under MEIS, whereas marking “N” indicates that the exporter does not intend to claim the benefit of reward. However, for Non-EDI Shipping Bills, in order to be eligible for claiming rewards under MEIS, the exporter is required to mention a declaration on the shipping bills, which reads as follows “We intend to claim rewards under Merchandise Exports From India Scheme (MEIS)”. During the period from 20th April, 2015 to 27th July, 2015, the Petitioner exported pharmaceutical products under 17 shipping bills, out of which 10 shipping bills were filed in the months of April and May, while the remaining 7 bills were filed in the months of June and July. Essential Training for Tax Professionals: Know Your Sections! At the time of filing of these bills, the Petitioner inadvertently selected “N” (for No) instead of “Y” (for Yes) in “Reward” column of the shipping bills. After goods were exported and payments were realized, the Petitioner filed applications for issuance of scrips under MEIS scheme in respect of 27 shipping bills, of which 17 shipping bills are in dispute1. At that stage, Assistant Development Commissioner, SEEPZ, SEZ (Respondent No. 4), issued certain deficiency notices pointing out the error in selection of “N” instead of “Y” in the rewards column pertaining to the 7 shipping bills which were filed in June and July 2015. Realising the mistake, the petitioner applied for amendment of the shipping bills u/s 149 of Customs Act, 1962 to rectify the error, on the basis of the documents available at the time of the export. The Assistant Commissioner of Customs, Export (ACC(E)) (Respondent No. 3) rectified the inadvertent error. However, since the amendment could not be carried out in the automated EDI system after completion of export, ACC (E) issued amendment certificates in respect of the 7 shipping bills which were identified to be deficient. Essential Training for Tax Professionals: Know Your Sections! Even though there were only 7 shipping bills that were defective, respondent No.4 proceeded rejecting all 17 shipping bills, stating the petitioner has not submitted compliance to the deficiency notices within the permissible timelines. The Petitioner submitted the aforenoted amendment certificates issued by Respondent No. 3 and requested for grant of MEIS benefits, however, Respondent No. 4 requested the Petitioner to re apply for MEIS benefits through the DGFT portal. However, these shipping bills were not reflected on the DGFT portal owing to a system error, and therefore, the Petitioner could not re-apply for MEIS benefits. In such a condition, the petitioner approached Policy Relaxation Committee ( Respondent No.2 ) requesting for re-validation of the 17 shipping bills which were not reflected in the DGFT portal, so as to enable the Petitioner to re-apply for MEIS incentives. This request of the Petitioner was considered and rejected through the impugned order dated 21st May, 2019. Essential Training for Tax Professionals: Know Your Sections! The particular order was challenged by the petitioner through a review application, but was refused by the PRC through impugned order dated 6th January 2020. In such circumstances, the Petitioner has filed the instant petition assailing the aforenoted impugned orders. They urge that once the amendment certificates were issued under Section 149 of the Customs Act, the Respondents ought to have allowed the Petitioner’s request for the MEIS incentives. The rejection of their claim is arbitrary and unreasonable, and therefore, the impugned orders are liable to be quashed by this Court. In response, Mr. Satya Ranjan Swain, Senior Panel Counsel for Respondents No. 1, 2 & 4, argues that it is not in dispute that the Petitioner did not fill the declaration of intent column. Sufficient opportunity was given to the Petitioner after issuance of deficiencies notices to rectify their mistakes, however, since the Petitioner failed to comply within time, they cannot be afforded the benefit of MEIS. Essential Training for Tax Professionals: Know Your Sections! He pointed out that, on 11th May, 2018, the DGFT issued instructions to all regional authorities to close the cases of processing MEIS/ SEIZ applications where the applicants had not responded to deficiency letters within 30 days of the issuance of such letters. The Petitioner has failed to comply within the time period prescribed and hence no relief can be granted to them. The court after carefully examining the documents on record and deliberated on the submissions advanced by the counsel for parties. The court is of the opinion that since the Petitioner has satisfied all the requirements to claim benefits under MEIS which were due to them, the same ought not to be denied on hyper-technical grounds, purely on account of an inadvertent and bona fide error of not declaring the intent to claim MEIS benefits on shipping bills. According to the court, this was a procedural lapse which has been rectified u/s 149 of the Customs Act, with Respondent No. 3 having issued amendments certificates in respect of the deficient shipping bills. Essential Training for Tax Professionals: Know Your Sections! Further, the Court also noted that the Petitioner’s request was rejected on account of a system error which was beyond the Petitioner’s control. The Petitioner could not reapply for MEIS benefit as the online request on the DGFT portal for re-validation of shipping bills has not been resolved. Although the system has generated a report indicating that the issue has been resolved, as depicted in the screenshots placed on record by the Petitioner, however, in reality, that is not the case as a result the shipping bills in question are still not reflected on the EDI system. Justice Sanjeev Narula observed that the PRC ought to have considered all the facts, and particularly that this was a case of pure inadvertent error on the part of the Petitioner which was subsequently rectified. Therefore, since the Petitioner has already cured the deficiencies and secured amendment certificates, their request should not be rejected on account of amended shipping bills not being reflected on the automates system. Thus, since the Petitioner has fulfilled the prerequisites to claim the MEIS benefits, in the opinion of the Court, the present petition deserves to be allowed. Essential Training for Tax Professionals: Know Your Sections! Following directions are given Impugned order dated 21st May, 2019 aswell as impugned review order dated 6th January, 2020 are set aside. Respondents are directed to consider the Petitioner’s MEIS claims electronically/manually and process the application in accordance with public notices No. 40/ 2015-2020 dated 9th October, 2015 and 47/ 2015-20 dated 8th December, 2015, in respect of all 17 shipping bills. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Amendment Certificate issued u/s 149 Customs Act: Delhi HC directs consideration of MEIS claim application [Read Order]

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