2021 (7) TMI 1034 - HC - Customs

Seeking registration of scrips - benefit under Merchandise Exports from India Scheme (MEIS) - invocation of procedure for cancellation of scrips as set out u/s 9(4) of Foreign Trade (Development and Regulation) Act, 1992 - HELD THAT - Upon a comparison of the details contained in the bills of export of goods under which the petitioner has claimed duty drawback, with the bills of the parties to the transaction, it is found that the numbers and date tally. It is thus clear that the export documents have been executed by the petitioner. The petitioner also confirms that the FTWZ has neither claimed nor been granted any benefit under MEIS Scheme in regard to the instant transactions. If at all such claims had been advanced, they would have been barred under the provisions of 3.06 (vii) of the policy note. The procedure set out for issuance of scrips is deemed to have been scrupulously adhered to by R3 and this is clear from a reading of clause (h) of the impugned order. The presumption in Clause (h) is that the scrips should be issued only after due scrutiny and, upon the slightest suspicion that the claim may be unacceptable, the Officer has to call for physical documents and decide the fate of the claim by way of a speaking order, if rejected. The issuance of the scrip thus pre-supposes due application of mind by R3 to all relevant stipulations. Clause 3.06 which sets out ineligible categories must thus be assumed, not just to have caught the attention of R3 but to have been thoroughly examined, prior to issuance of the scrip. A detailed procedure for cancellation of the scrips has been set out under Section 9(4) of the FTDR Act. In the absence of this procedure having been invoked, the categoric presumption is that R3 continues to hold the view that the scrips are valid - The explanation put forth for non-cancellation by Mr. Chandrasekaran is that the matter was subjudice. DHL logistics, the FTWZ, merely offers a facility to the petitioner to warehouse its consignments that are to be exported. The destination is decided by UTEXAM, which is the ultimate purchaser, which has paid the petitioner in USD for the consignment. The stipulation in Clause (vii) deals with exports made by a unit in the FTWZ. DHL, the FTWZ does not export the consignments but only facilitates such exports. The exports are thus, by the petitioner through DHL to a destination abroad - The role of DHL in this transaction is that of a warehouse and nothing more. The concept of 'ship to' and 'bill to', as used in this case, has been recognised under the GST regime, as commercial compulsions dictate, that transactions are to be structured in the most economical and least cumbersome manner in terms of time, procedure and expense involved. Petition allowed.

Summary

Issues Involved:
1. Registration of MEIS scrips.
2. Quashing of the communication rejecting the registration of MEIS scrips.
3. Entitlement to benefits under the MEIS Scheme.
4. Authority and procedure for cancellation of scrips.

Issue-wise Detailed Analysis:

1. Registration of MEIS Scrips:
The petitioner, an exporter of menthol and natural essential oils, sought the registration of three MEIS scrips issued by the Additional Director General of Foreign Trade, Mumbai. Despite submitting all required documents and attending a personal hearing, the scrips were returned without registration by the Deputy Commissioner of Customs, citing ineligibility under the Foreign Trade Policy.

2. Quashing of the Communication Rejecting the Registration of MEIS Scrips:
The petitioner challenged the communication dated 09.07.2019, which rejected the registration of the scrips. The court noted that the rejection was based on the interpretation that the exports were made by units in a Free Trade Warehousing Zone (FTWZ), which are ineligible for MEIS benefits. However, the court found that the petitioner had made the exports, and the FTWZ merely facilitated the warehousing of the consignments.

3. Entitlement to Benefits under the MEIS Scheme:
The court examined the eligibility criteria under the MEIS Scheme and concluded that the petitioner’s exports did not fall under the ineligible categories listed in paragraph 3.06 of the Foreign Trade Policy. The petitioner provided sufficient documentation, including purchase orders, commercial invoices, and bank realization certificates, to demonstrate that the exports were made to a foreign client and paid for in US dollars, thus qualifying for MEIS benefits.

4. Authority and Procedure for Cancellation of Scrips:
The court highlighted that the procedure for cancellation of scrips is outlined in Section 9(4) of the Foreign Trade (Development and Regulation) Act, 1992. Since this procedure was not invoked, the scrips remained valid. The court emphasized that the issuance of scrips by the Additional Director General of Foreign Trade presupposes due scrutiny and application of mind, and the Deputy Commissioner of Customs had no authority to reject the registration without following the prescribed cancellation procedure.

Conclusion:
The court accepted the petitioner’s interpretation, set aside the impugned order, and allowed the writ petitions. The court directed the re-validation of the scrips and the issuance of Telegraphic Release Advise (TRA) within four weeks. The judgment emphasized the importance of adhering to the statutory procedures for cancellation and the validity of the scrips issued after due scrutiny.