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2025 (4) TMI 1075 - HC - CustomsGrant of scrips under the MEIS during the period June 2017 to August 2020 at the rate of 5% FOB value - HELD THAT - Although the issue of classification of the Petitioners goods (involved in the present proceedings) has been contested on different levels the dispute in the present Petition was restricted to the non-process of pending applications and non-granting of the reward/scrips under the MEIS as set out in the order dated 21st January 2025. In the event the classification dispute of the goods of the Petitioner is held against the Petitioner and as a result thereof they are entitled to a lesser percentage of benefit under the MEIS the excess amounts utilized under the scrips (granted pursuant to this order) will have to be refunded to the Authorities. 38 applications in respect of which the duty credit scrip was sanctioned @ 2% are not reflecting on the DGFT portal and hence cannot be processed and 1 application dated 13.06.2020 is also not visible/reflecting to Respondent No. 3 on the DGFT portal and hence cannot be processed. List the above matter for compliance on 29th April 2025.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Legality of Non-Processing and Non-Granting of MEIS Scrips for 111 Applications Relevant Legal Framework and Precedents: The Merchandise Exports from India Scheme (MEIS) is a government incentive scheme designed to promote exports by granting duty credit scrips calculated as a percentage of FOB value. The processing and issuance of MEIS scrips are governed by the Foreign Trade Policy and related administrative orders. The Court's prior order dated 21st January 2025 set aside the impugned order refusing the grant of scrips and directed the Respondent to process the 111 applications. Court's Interpretation and Reasoning: The Court recognized that the Petitioner's 111 applications fall into three categories: (1) 72 applications from October 2018 onwards not processed at all; (2) 38 applications from June 2017 to December 2018 partially processed at 2% rate; and (3) 1 application pending processing. The Court observed that the Respondents had failed to process the majority of the applications despite the earlier order. Key Evidence and Findings: Compliance reports indicated that 69 out of 72 applications in Category 1 were processed following the Court's order. However, 3 applications remained unprocessed due to requests for clarifications and pending issues related to one shipping bill under Apex Court proceedings. Application of Law to Facts: The Court emphasized that the non-processing of applications was contrary to the earlier order and the Petitioner's entitlement under the MEIS. The Court directed immediate compliance and processing of the pending applications. Treatment of Competing Arguments: The Respondents argued that processing was withheld due to pending classification disputes and technical issues on the DGFT portal. The Court rejected withholding processing on these grounds as unjustified, particularly the ground related to the shipping bill pending before the Apex Court. Conclusions: The Court held that the Respondents must process all pending MEIS applications without delay and directed clarifications and resolution of technical issues to facilitate this. Issue 2: Effect of Classification Dispute on MEIS Benefits and Refund Obligations Relevant Legal Framework and Precedents: Classification of goods under tariff headings affects the applicable MEIS benefit rates. The Court's earlier order (21st January 2025) acknowledged ongoing classification disputes but limited the present proceedings to non-processing of applications. It also held that if classification disputes are decided against the Petitioner, resulting in reduced MEIS benefits, the Petitioner must refund excess amounts utilized. Court's Interpretation and Reasoning: The Court reaffirmed that the classification dispute does not justify withholding the processing of MEIS applications. It clarified that any adjustment due to classification outcomes must be addressed subsequently through refund mechanisms. Key Evidence and Findings: The Court noted the Petitioner's goods classification was contested at multiple levels but emphasized the limited scope of the present petition. Application of Law to Facts: The Court applied the principle that procedural compliance with MEIS processing must proceed notwithstanding substantive classification disputes, preserving the Petitioner's right to benefit subject to future reconciliation. Treatment of Competing Arguments: Respondents' argument that pending classification proceedings justified withholding was rejected. The Court balanced procedural fairness with substantive rights. Conclusions: The Court concluded that classification disputes do not bar MEIS application processing and that refund obligations arise only if classification outcomes reduce entitlements. Issue 3: Resolution of Technical Issues on DGFT Portal Affecting MEIS Application Processing Relevant Legal Framework and Precedents: The DGFT portal is the official platform for filing and processing MEIS applications. Technical issues that impede visibility and processing of applications violate procedural fairness and the Petitioner's rights. Court's Interpretation and Reasoning: The Court acknowledged the Respondents' submission that 38 applications sanctioned at 2% and 1 other application were not visible on the DGFT portal due to IT-related technical problems. Key Evidence and Findings: The Court was informed that the technical glitches prevented the processing of these applications despite sanction. Application of Law to Facts: The Court directed the Respondents to immediately resolve the technical issues and ensure all pending MEIS scrips are issued within two weeks. Treatment of Competing Arguments: No substantive opposition to resolving the technical issues was recorded; the Court treated the issue as a procedural compliance matter. Conclusions: The Court mandated prompt technical rectification and processing of all affected applications. Issue 4: Compliance with Court Orders and Timelines for Processing MEIS Applications Relevant Legal Framework and Precedents: The Court's supervisory jurisdiction includes enforcing compliance with its orders and setting timelines for execution. Court's Interpretation and Reasoning: The Court noted prior extensions granted to Respondents for compliance and emphasized the need for prompt action. Key Evidence and Findings: Partial compliance was achieved, but some applications remained pending due to clarifications and technical issues. Application of Law to Facts: The Court issued clear directions for Respondent No. 2 to provide clarifications within 7 days and Respondent No. 3 to process applications within 7 days or 2 weeks depending on the category. Treatment of Competing Arguments: Respondents' requests for extensions were accommodated but final deadlines were fixed to ensure compliance. Conclusions: The Court fixed strict timelines for compliance and scheduled a compliance hearing on 29th April 2025. 3. SIGNIFICANT HOLDINGS "Withholding the processing of the application on the ground that one of the shipping bills was covered under the proceedings before the Hon'ble Apex Court is not justified." "In the event the classification dispute of the goods of the Petitioner is held against the Petitioner, and as a result thereof they are entitled to a lesser percentage of benefit under the MEIS, the excess amounts utilized under the scrips (granted pursuant to this order), will have to be refunded to the Authorities." "We hereby direct the Respondents to forthwith
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