Supreme Court Directs DGFT & CBIC To Update Tech Systems To Ensure Genuine Exporters Don't Lose Benefits Over Clerical Errors

The Supreme Court observed that an exporter cannot be denied legitimate entitlements under the government's incentive schemes merely because of an inadvertent clerical error that was later corrected through statutory processes.

Holding thus, a bench of Justices Aravind Kumar and NV Anjaria ruled in favour of an exporter who was denied a claim for benefits under the Merchandise Exports from India Scheme (MEIS) just because the column declaring “intent to claim MEIS” in the shipping bills was incorrectly marked “No” instead of “Yes due to oversight of the customs broker.

Though Customs authorities subsequently amended the shipping bills under Section 149 of the Customs Act, 1962, the Directorate General of Foreign Trade (DGFT) refused to process the claim, citing “system limitations.” The Policy Relaxation Committee rejected the application through a cryptic email, without granting a hearing.

The Bombay High Court had upheld the denial, holding the exporter was bound by the broker's mistake. Following this, an appeal was filed before the Supreme Court.

Setting aside the impugned findings, the Court said that “the beneficial schemes must be construed liberally and that procedural lapses, once rectified, cannot be allowed to defeat substantive rights”.

Since the bills that were not deliberately mistaken and rectified later, therefore cannot form the ground for denial of the benefit of the scheme to the Appellant-exporter, the court said.

“Once exports are genuine and fall within the notified category, inadvertent mistakes of procedure cannot be treated as fatal, especially where they are corrected under statutory authority. The rejection by the PRC, bereft of reasons and passed without hearing, falls foul of the principles of natural justice. 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.”, the court observed.

Further, in reply to the Respondent's stand that the system permitted no manual intervention to correct the bills, the Court asked the DGFT and CBDTC to make necessary technological advancements so that genuine exporters are not driven to needless litigation on account of inadvertent procedural lapses which have been rectified in accordance with law.

“Administrative technology must aid, not obstruct, the implementation of the law”, the Court observed.

“The Union of India, acting through the Directorate General of Foreign Trade and the Central Board of Indirect Taxes and Customs, must take appropriate measures, whether by issuing comprehensive instructions or by suitable technological adjustments, to ensure that genuine exporters are not driven to needless litigation on account of inadvertent procedural lapses which have been rectified in accordance with law.”, the court ordered.

Accordingly, the appeal was allowed. Further, the Court directed DGFT to process the appellant's MEIS claim based on the amended shipping bills within 12 weeks.

Cause Title: M/S SHAH NANJI NAGSI EXPORTS PVT. LTD. Versus UNION OF INDIA AND ORS.

Citation : 2025 LiveLaw (SC) 842

Click here to read/download the order

Appearance:

For Petitioner(s) : Mr. Gagan Sanghi, Adv. Mrs. Farah Hashmi, Adv. Mr. Rameshwar Prasad Goyal, AOR

For Respondent(s) : Mr. Raj Bahadur Yadav, AOR Mr. S Dwarakanath, A.S.G. Mr. Gurmeet Singh Makker, AOR Mr. Rohit Khare, Adv. Mr. Digvijay Dam, Adv. Mr. Navanjay Mahapatra, Adv. Mr. Ishaan Sharma, Adv. Mr. Raghav Sharma, Adv. Rajat Vaishnaw, Adv. Abhyudey Kabra, Adv.