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M/S Shah Nanji Nagsi Exports Pvt. Ltd. v. Union of India

Civil Appeal · 2025 INSC 1032Decided 19 Aug 2025
C.A. No.-010897-010897 - 2025 (arising out of SLP (C) No. 14919 of 2021)
Justice Aravind Kumar · Justice N.V. Anjaria

Background

Shah Nanji Nagsi Exports, a corn-starch exporter, filed 54 shipping bills between July and October 2017 that were eligible for reward under the Merchandise Exports from India Scheme (MEIS). Due to a clerical slip by its customs broker, the "intent to claim reward" field on the shipping bills was left as the default "No" instead of being marked "Yes," which meant the bills never reached the Directorate General of Foreign Trade (DGFT) system for processing the incentive. The Customs Deputy Commissioner allowed the company to formally correct all the shipping bills under Section 149 of the Customs Act, but DGFT still refused to process the claim, saying its system permitted no manual override. The company's plea to the Policy Relaxation Committee was rejected by a bare, unreasoned email, and the Bombay High Court (Nagpur Bench) dismissed its writ petition, telling it to instead sue its customs broker.

Decision Breakdown

The Supreme Court held that once a shipping bill error is corrected under the statutory mechanism of Section 149 of the Customs Act, that correction must be given effect: a purely clerical/procedural lapse cannot be allowed to defeat a genuine, substantive entitlement under a beneficial export-incentive scheme. It relied on a consistent line of Bombay High Court decisions on materially identical facts (Portescap India, Technocraft Industries, and Larsen and Toubro) holding that MEIS, being a beneficial scheme meant to promote exports, must be construed liberally, and that "administrative technology must aid, not obstruct" the law's implementation. The Policy Relaxation Committee's rejection, given without reasons and without a hearing, was held to violate natural justice. The Court set aside the High Court's judgment, quashed the PRC's rejection, and directed the authorities to process the MEIS claim on the basis of the amended shipping bills within twelve weeks, while urging DGFT and the Central Board of Indirect Taxes and Customs to fix the underlying systemic/technological rigidity so genuine exporters are not repeatedly forced into litigation over the same kind of clerical mistake.

Lesson Learnt

A genuine, later-corrected clerical error in export paperwork should not be used by a government agency's rigid IT system to deny a business its lawful incentive entitlement: beneficial welfare/incentive schemes must be interpreted liberally in favour of genuine claimants, and any rejection by a government committee must be a reasoned decision made after hearing the affected party.

Official source (sci.gov.in)View Judgment (PDF)

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