2021 (12) TMI 1121 - HC - Customs

Seeking direction to remove the name of the petitioner from the Denied Entity List - benefit of Merchandise Export from India Scheme - HELD THAT - As is well known, to encourage exports in order to earn foreign exchange and to make the export goods originating from the country cost competitive in international market, the Government of India comes up with the export incentives from time to time which are framed in different mechanisms - The petitioner in the present case is interested in receiving the export benefits under MEIS. The only reason why the petitioner is blocked from making application for such purpose is that on account of alleged past misdeeds, the petitioner has been placed in the denied entity list which would be sufficient to disqualify the petitioner to claim any other benefit of MEIS. Nothing has been brought to the notice from the MEIS scheme suggesting that for any past unrelated events of dispute between the department and the petitioner, export incentive in the presentie would be denied to the exporter - The trade notice pertains to the facility for applying the benefit under MEIS under the system driven approval mechanism. This part is totally procedural and this trade notice cannot decide the rights of the petitioner under the scheme. It may be that for those who are placed in denied list or suspended list, the fast tracked procedure of system driven approval mechanism may not be made available. This is not the same thing as to suggest that such entities for unrelated events could be denied the benefit of export incentives under the scheme if all conditions are satisfied. The contention that unless and until the petitioner pays up the entire duty and penalty imposed under the orders passed by the DGFT and custom authorities the petitioner cannot claim any export incentive under the new scheme is completely unacceptable. Both the orders are under challenge before the first appellate authorities. Respective statutes require pre-deposit of certain amounts upon which rest of the recoveries would be suspended. If the petitioner has no such protection under law, the department can recover the amounts through coercive means and perhaps even from the petitioner's entitlement of intensives under the export promotion scheme in quest. But once this mechanism is statutorily put in place and followed by the assessee, the Government of India cannot seek coercive recovery of the remaining amounts in indirect manner by blocking the export incentives under unrelated schemes and future consignments. It is directed that the respondents shall permit the petitioner to make an application within the time envisaged in the scheme for the incentive under MEIS scheme and consider the same on merits in terms of the provisions made under the scheme - Petition disposed off.

Summary

Issues:
Petitioner's request to remove name from Denied Entity List (DEL) and accept online application for Merchandise Export from India Scheme (MEIS) benefits.

Analysis:
The petitioner, a registered company, faces allegations of failing export obligations due to clandestine diversion of raw materials and manufacturing goods with locally produced materials. Orders passed by Directorate of Revenue Intelligence (DRI) and Customs Department led to financial penalties and placement in DEL. The petitioner challenged these orders, pending appeal. The Assistant Director General of Foreign Trade discontinued granting licenses to the petitioner and placed them in DEL. The petitioner sought relief to apply for MEIS benefits before the scheme's deadline.

The court noted that export incentives are discretionary, not a vested right. The petitioner's past actions led to denial of MEIS benefits based on being in DEL. The court highlighted that while past actions impact future export opportunities, denying unrelated benefits without scheme provisions is impermissible. The court emphasized that past disputes should not automatically disqualify an exporter from present incentives unless specified in the scheme.

The court reviewed guidelines for maintaining DEL, noting it aims to restrict advance authorization licenses for entities defaulting in export obligations. The court rejected the argument that the petitioner must pay all penalties to claim MEIS benefits, as the orders are under appeal. Coercive recovery methods cannot block future incentives unrelated to the disputed amounts. The court directed authorities to allow the petitioner to apply for MEIS benefits within the scheme's timeline and evaluate the application based on scheme provisions.

In conclusion, the court disposed of the petition, directing authorities to consider the petitioner's MEIS application on merit. The court refrained from addressing the request to remove the petitioner's name from DEL, leaving it for the petitioner to pursue through appeal.