Inadvertent Mistake in Shipping Bills cannot Deny MEIS Claim: Supreme Court says High Court fails to Address Statutory Entitlement [Read Order]

The Supreme Court has ruled that an inadvertent mistake in shipping bills cannot deprive a genuine exporter of benefits under the Merchandise Exports from India Scheme (MEIS). The court directed the government to make policy or technological adjustments.

The apex court observed that “The High Court’s view that the appellant may proceed against the customs broker fails to address the statutory entitlement which accrues to the exporter under the scheme. Administrative technology must aid, not obstruct, the implementation of the law.”

The appellant, Shah Nanji Nagsi Exports Pvt Ltd, an exporter of corn starch, filed 54 shipping bills during July- October 2017, but due to a clerical error by its customs broker, the mandatory declaration of intent to claim MEIS was incorrectly marked as “No” instead of “Yes.”

Though the Deputy Commissioner of Customs subsequently allowed amendment of the shipping bills under Section 149 of the Customs Act, 1962, the system at the Directorate General of Foreign Trade (DGFT) did not accept the claim since the original transmission carried the wrong entry.

The Policy Relaxation Committee (PRC) also rejected the request without assigning reasons, and the Bombay High Court dismissed the writ petition, observing that the exporter’s remedy lay against the broker.

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The appellant submitted that the High Court dismissed the petition stating that the error which had crept in while filing of shipping bills was attributable to the customs broker, and that the appellant, if so advised, could pursue his remedies against the broker but no relief could be granted in exercise of writ jurisdiction.

Before the Supreme Court, counsel for the appellant argued that exports were genuine, covered under the notified categories, and once the customs authority corrected the shipping bills, the entitlement under MEIS could not be denied on a mere procedural lapse.

It was submitted that the rejection by PRC was arbitrary and violated natural justice since no reasons were provided.

The Union government countered that strict adherence to procedure was mandatory under the Foreign Trade Policy, and unless the declaration of intent was made at the time of export, the DGFT’s system could not process the claim.

The Bench of Justice Aravind Kumar and Justice N.V. Anjaria held that the mistake was purely clerical and once rectified under statutory authority, could not extinguish a substantive entitlement under the scheme.

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The Court drew support from earlier Bombay High Court decisions in Portescap India Pvt. Ltd., Technocraft Industries (India) Ltd., and Larsen & Toubro Ltd., all of which had held that procedural lapses cannot defeat genuine claims under export incentive schemes. Emphasizing that Chapter 3 of the Foreign Trade Policy was beneficial in nature and observed that administrative technology must aid, not obstruct, the implementation of the law.

Accordingly, the Supreme Court set aside the High Court’s judgment, quashed the PRC’s rejection, and directed the authorities to process the exporter’s MEIS claim based on the amended shipping bills within twelve weeks.

While refraining from imposing costs, the Court strongly directed the government to introduce systemic reforms either through policy instructions or technological adjustments so that genuine exporters are not forced into avoidable litigation merely because of inadvertent clerical errors.

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