M/S Shah Nanji Nagsi Exports Pvt. Ltd vs Union Of India

2025 INSC 1032 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. OF 2025 (@ Special Leave Petition (C) No. 14919 of 2021)

M/S SHAH NANJI NAGSI EXPORTS PVT. LTD. … APPELLANT(S)

Versus

UNION OF INDIA AND ORS. …RESPONDENT(S)

ORDER

1. Leave granted.

2. This appeal calls in question the judgment of the High Court of Judicature

at Bombay, Nagpur Bench, rendered on 02.08.2021 in Writ Petition No. 4095

of 2019, by which the writ petition instituted by the appellant was dismissed.

The High Court took the view 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.

3. The facts are largely undisputed. The appellant is a private company Signature Not Verified

engaged in the export of corn starch. During the period between 22.07.2017 to Digitally signed by BORRA LM VALLI Date: 2025.08.23 13:27:55 IST Reason:

05.10.2017, the appellant effected 54 (fifty-four) shipping bills under Serial

1 No. 467 of Appendix 3B to the Foreign Trade Policy (FTP) 2015–20 and was

eligible for incentive under the Merchandise Exports from India Scheme

(hereinafter referred to as “MEIS”) contained in Chapter 3 of the Policy.

4. For each of these consignments, shipping bills were filed electronically on

the ICEGATE platform through the appellant’s customs broker. It so happened

that in the column requiring a declaration of intent to claim reward, the default

entry “No” which was to be altered as “Yes” was not done by Customs broker.

This inadvertent omission, though clerical in nature, prevented the shipping

bills from being transmitted to the repository of the Directorate General of

Foreign Trade (DGFT). The consequence was that the appellant’s claim for

MEIS reward could not be processed electronically.

5. On discovering the error, the appellant addressed a representation dated

13.03.2018 to the Regional Authority of DGFT. At the same time, an

application was made before the Deputy Commissioner of Customs, Mundra,

invoking Section 149 of the Customs Act, 1962. By an order dated 08.06.2018,

the Deputy Commissioner allowed the amendment of all shipping bills, so that

the declaration “No” was substituted by “Yes”. The fact of this correction is

not in dispute.

6. Despite the correction, when the appellant pursued the matter with DGFT,

it was informed that the system permitted no manual intervention and that

unless the shipping bills were originally transmitted with the entry “Yes”, they

2 could not be processed. The appellant as a consequence, was compelled to

approach the Policy Relaxation Committee (hereinafter referred to as “PRC”)

on 05.12.2018. The PRC, however, by a cryptic email dated 15.03.2019,

rejected the claim, stating merely that no merit or hardship was made out. No

reasons were assigned, nor was the appellant afforded an opportunity of being

heard.

7. Aggrieved thereby, the appellant instituted Writ Petition No. 4095 of 2019

before the Nagpur Bench of the Bombay High Court. During its pendency, a

Division Bench of the Bombay High Court delivered its judgment in Portescap

India Private Limited v. Union of India & Others1 on 02.03.2021, dealing

with an identical issue. A pursis was filed by the appellant bringing the

judgment to the notice of the Court. Nonetheless, by its judgment dated

02.08.2021, the High Court dismissed the writ petition.

8. We have heard Learned Counsel, Mr. Gagan Sanghi, appearing for the

Appellant and Shri S. Dwarakanath, Additional Solicitor General, appearing

for the Respondents. Learned counsel for the appellant submitted that the

exports were genuine, covered under the notified products in Appendix 3B,

and that the intention to claim MEIS was evident from the invoices. It was

urged that once the Customs authority had corrected the shipping bills under

Section 149, the bills stood regularised in law and were required to be acted

1 (2021) SCC OnLine Bom 285 3 upon. Further it was contended that the rejection by the PRC was arbitrary and

violative of the principles of natural justice as no reasons were assigned nor

hearing granted. Further it was submitted that the High Court, erred in

relegating the appellant to pursue remedies against the broker, when the

entitlement arose under the statutory scheme. Reliance was placed

upon Portescap India Private Limited (supra), which had attained finality.

9. Per contra, learned Additional Solicitor General appearing for the

respondents submitted that the FTP and Handbook of Procedures required a

declaration of intent to be made on the shipping bill at the time of export.

Unless “Yes” was so marked, the DGFT system could not accept the claim or

process the claim, and no manual over-writing was permissible. It was urged

that MEIS is a policy incentive, and strict compliance with procedure is

mandatory. The PRC, being the competent authority, considered the matter and

rejected it. The High Court was, therefore, correct in declining to grant relief.

10. The principal question for consideration is whether an inadvertent error in

the shipping bills, which was permitted to be corrected under Section 149 of

the Customs Act, can defeat an exporter’s claim under the MEIS?

11. This issue has received judicial consideration in a line of decisions of the

Bombay High Court. In Portescap India Private Limited (supra), the Bombay

High Court dealt with a similar situation where an exporter had inadvertently

marked “N” (for No) instead of “Y” (for Yes) while filing shipping bills. The

4 High Court held that such a mistake was purely procedural and, once corrected,

could not extinguish substantive entitlement. The Court directed the authorities

to process the claim, emphasising that the purpose of Chapter 3 of the FTP is

to incentivise exports and that this object would be frustrated if inadvertent

mistakes were treated as insurmountable. The ratio of Portescap (supra) is

squarely applicable to the present case.

12. The principle was reiterated in Technocraft Industries (India) Limited v.

Union of India and Others2, where the Bombay High Court again considered

denial of MEIS benefits despite the shipping bills having been corrected under

Section 149. The High Court noted the hardship faced by exporters and

directed the Customs and DGFT authorities to take appropriate steps to prevent

recurrence of such disputes, observing that systemic rigidity cannot be allowed

to defeat substantive rights. The facts of the present case furnish an illustration

of the very mischief which Technocraft (supra) sought to remedy.

13. In Larsen and Toubro Limited v. Union of India and Others3, the

Bombay High Court dealt with a similar rejection of MEIS claims despite

amendment under Section 149. The High Court deprecated the rejection,

holding that technical or systemic constraints cannot override statutory

entitlements. The High Court went to the extent of imposing costs upon the

2 (2023) SCC OnLine Bom 280 3 (2024) SCC OnLine Bom 3565 5 DGFT. While we do not consider it necessary to adopt that course, we find

ourselves in respectful agreement with the principle enunciated that beneficial

schemes must be construed liberally and that procedural lapses, once rectified,

cannot be allowed to defeat substantive rights.

14. These decisions, read together, demonstrate a consistent judicial approach

that distinguishes between procedural formalities and substantive entitlements.

The scheme under Chapter 3 of the FTP is a beneficial one, intended to reward

exporters. 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. Administrative technology must aid, not obstruct,

the implementation of the law.

15. In light of the above discussion, the appeal deserves to be allowed. The

judgment of the High Court dated 02.08.2021 is set aside. The rejection by the

Policy Relaxation Committee is quashed. The respondents are directed to

process the appellant’s claim for MEIS benefit on the basis of the amended

shipping bills and to pass appropriate orders in accordance with law within a

period of twelve weeks from the date of this judgment.

6

16. While we refrain from imposing costs, we cannot but observe that the

recurrence of such disputes, despite authoritative pronouncements

in Portescap, Technocraft Industries and Larsen and Toubro Limited,

underscores the need for systemic correction. 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.

17. The appeal is allowed in the above terms. There shall be no order as to

costs.

.……………………………., J.

[ARAVIND KUMAR]

.……………………………., J.

[N.V. ANJARIA] New Delhi;

August 19, 2025.

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ITEM NO.37 COURT NO.15 SECTION IX S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No.14919/2021

[Arising out of impugned final judgment and order dated 02-08-2021 in WP No.4095/2019 passed by the High Court of Judicature at Bombay at Nagpur]

M/S SHAH NANJI NAGSI EXPORTS PVT. LTD. Petitioner(s)

VERSUS

UNION OF INDIA & ORS. Respondent(s)

IA No. 119989/2021 - EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT Date : 19-08-2025 This matter was called on for hearing today.

CORAM : HON'BLE MR. JUSTICE ARAVIND KUMAR HON'BLE MR. JUSTICE N.V. ANJARIA

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.

UPON hearing the counsel the Court made the following O R D E R

Leave granted.

The appeal is allowed in terms of the signed reportable order

placed on the file.

(NEHA GUPTA) (AVGV RAMU) SENIOR PERSONAL ASSISTANT COURT MASTER (NSH)

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