Breaking the Bureaucratic Barrier: Court Orders MEIS Scrips Release Amid System Glitches.
13 November 2024
Custom Duty >> Tax Laws
In a recent ruling of Larsen & Toubro Limited, Mumbai v/s The Union of India, (a) through the Secretary, Department of Commerce, Ministry of Commerce & Industry, New Delhi & Others, a court addressed the systemic challenges faced by exporters in obtaining the Merchandise Exports from India Scheme (MEIS) benefits due to discrepancies in the electronic system for processing amended shipping bills. The case involved a petitioner who had encountered significant delays and technical hurdles despite complying with all necessary procedures. This article explores the key elements of the case and the court's intervention aimed at resolving systemic issues that hinder the timely processing of legitimate claims under the MEIS scheme.
Background:
The petitioner, an exporter, sought a writ of mandamus to compel the second and third respondents—officials from the Directorate General of Foreign Trade (DGFT) and the Customs Department—to accept amendments made to three shipping bills and issue MEIS Scrips worth Rs. 1,61,34,190. The petitioner initially made an inadvertent error by indicating the wrong flag for claiming the MEIS benefits in the relevant shipping bills. Upon identifying the mistake, the petitioner sought to correct the error both manually and digitally.
The MEIS scheme, introduced via a notification on April 1, 2015, aims to incentivize the export of certain goods manufactured in India. The petitioner’s eligibility for the benefits under this scheme was not disputed, but the system's inability to accommodate the amendments made to the shipping bills was causing significant delays in processing the claim.
Key Events and Court Intervention:
Upon realizing the error, the petitioner requested a manual correction of the shipping bills, which was granted by the Customs Department on October 17, 2019. However, despite receiving approval for the amendments, the petitioner faced challenges with the DGFT's portal, which was not equipped to accept the amended shipping bills. Over time, the petitioner made repeated efforts to resolve the issue, including filing applications to the concerned authorities, but was met with bureaucratic inaction.
By March 2021, the third respondent rejected the request, citing technical limitations and advising the petitioner to submit online applications, a process that was not compatible with the situation. After further communication and repeated follow-ups, the petitioner eventually sought the intervention of the court to resolve the issue.
The court observed that the core issue was not the petitioner’s eligibility for the MEIS benefit, but the failure of the electronic system to process the amended shipping bills. The court emphasized that the petitioner should not be penalized due to systemic inefficiencies.
Legal Precedents and Court's Direction:
The court referred to a similar case, Technocraft Industries (India) Ltd. v. Union of India, where it had been noted that the disconnect between the Customs Department and DGFT was leading to unnecessary delays and hardship for exporters. In that case, the court had directed both departments to collaborate and find a solution to the issue of amended shipping bills under Section 149 of the Customs Act. The court had also emphasized the need for technological upgrades to ensure smoother processing of such claims.
In the present case, the court found that the petitioner had made every effort to comply with the requirements, and the only obstacle was the failure of the DGFT's systems to accept the amended bills. It was noted that the petitioner had already been granted the right to amend the shipping bills by the Customs Department. The court held that it was unjustifiable for the petitioner to be denied the MEIS benefits simply because of technical glitches in the DGFT’s portal.
The court also pointed out that the DGFT had not implemented the necessary changes to its systems, even after the issuance of an advisory by the Directorate General of Systems and Data Management (CBIC) in April 2023, which was intended to address such issues. In response, the court directed the second and third respondents to process the petitioner’s application and release the MEIS Scrips within 15 days. The court also ordered that the DGFT must update its electronic systems within 60 days to prevent similar issues in the future.
Conclusion:
This case highlights the importance of ensuring that government systems and portals are aligned with the needs of the public, particularly when it comes to the implementation of schemes designed to promote exports. The court’s intervention was crucial in ensuring that exporters like the petitioner do not face undue hardships due to systemic failures. Moreover, the ruling underscores the need for the authorities to work together and leverage technology effectively to make the process smoother and more efficient. The court’s direction to update the DGFT’s systems reflects the ongoing challenges in integrating technology with government processes and the need for continuous improvement to ensure the ease of doing business in India.