M/S Shah Nanji Nagsi Exports Pvt. Ltd. v. Union of India (2025 INSC 1032)
Introduction
In a landmark ruling delivered on 19 August 2025, the Supreme Court of India in M/S Shah Nanji Nagsi Exports Pvt. Ltd. v. Union of India clarified the law on exporters’ entitlement under the Merchandise Exports from India Scheme (MEIS). The Court held that genuine exporters cannot be denied MEIS benefits due to inadvertent procedural mistakes, if such errors are later corrected in accordance with the Customs Act, 1962.
This judgment has wide implications for exporters, customs brokers, and businesses operating under the Foreign Trade Policy (FTP), especially where claims are rejected because of technical lapses in shipping bills filed through ICEGATE.
Factual Background
The petitioner, M/S Shah Nanji Nagsi Exports Pvt. Ltd., engaged in the export of corn starch, filed 54 shipping bills in 2017. To claim MEIS incentives, exporters are required to make a declaration of intent by ticking the appropriate box (“Yes”) on the electronic shipping bill filed through ICEGATE.
Due to a clerical error on the part of the customs broker, the declaration box remained unchecked. This technical lapse prevented the bills from being electronically transmitted to the DGFT system for further processing.
On realising the error, the petitioner promptly approached the Customs authorities. Invoking Section 149 of the Customs Act, 1962, the Deputy Commissioner permitted the amendment of the shipping bills, thereby correcting the declaration to “Yes”. However, when the exporter subsequently applied for MEIS scrips, the DGFT rejected the claim without assigning reasons or granting an opportunity of hearing.
The Bombay High Court dismissed the petitioner’s writ petition, observing that the grievance was against the customs broker and suggesting that the exporter pursue remedies in that direction.
Issues Before the Supreme Court
The Supreme Court was essentially called upon to decide:
- Whether an inadvertent error in ticking the declaration box, once corrected under Section 149 of the Customs Act, could still disentitle the exporter from claiming MEIS benefits.
- Whether the rejection of claims by the Policy Relaxation Committee (PRC) without reasons or hearing satisfied the requirements of natural justice.
- Whether directing the exporter to litigate against the customs broker was a just and lawful resolution of the dispute
Supreme Court’s Ruling
Substantive Rights Cannot Be Defeated by Procedure
The Court stressed that the purpose of MEIS is to reward genuine exporters. Once shipping bills are corrected, the benefit cannot be denied merely because of a clerical error at the time of filing.
Section 149 of Customs Act Has Full Effect
Amendments permitted under Section 149 are retrospective in nature. Corrected shipping bills relate back to the original filing date, safeguarding the exporter’s claim.
Natural Justice and Reasoned Orders
The PRC’s blanket rejection of the claim, without a speaking order or opportunity of hearing, was found contrary to the principles of natural justice. The Court observed that administrative authorities disbursing benefits under statutory schemes must act fairly, transparently, and with due regard to reasons.
Rejection of Broker Liability Argument
The Court criticised the High Court’s approach of relegating the exporter to pursue remedies against its broker. The liability of the broker, if any, was a separate contractual issue and had no bearing on the statutory entitlement of the exporter under the FTP and Customs law.
Directions to Government Authorities
The Court directed the Union of India, including DGFT and CBIC, to ensure that procedural defects, once rectified under statutory provisions, do not compel exporters into unnecessary litigation. Administrative systems, particularly electronic platforms, should be designed to facilitate correction of errors in a seamless manner.
Legal Significance
- Interpretation of Section 149: The judgment clarifies that amendments to shipping bills permitted under Section 149 are not merely cosmetic. Once allowed, such amendments relate back to the original filing, and exporters cannot be deprived of consequential benefits.
- Doctrine of Natural Justice: Reiterates that rejection of claims must be supported by reasons and preceded by an opportunity to be heard. Silent or mechanical rejections are legally unsustainable.
- Beneficial Schemes: Reinforces the principle that incentive schemes framed under the FTP must be interpreted liberally in favour of their intended beneficiaries, namely exporters, unless there is clear evidence of fraud or misuse.
Broader Implications for Exporters
This judgment provides crucial reassurance to exporters that if the intent to claim benefits under any scheme of the Foreign Trade Policy is inadvertently left unticked in the shipping bill, the entitlement will not be lost. Once the error is duly rectified through an amendment, the exporter remains fully eligible to avail the benefit.
Conclusion
The Supreme Court’s judgment in M/S Shah Nanji Nagsi Exports Pvt. Ltd. v. Union of India marks a turning point in India’s export incentive jurisprudence. By holding that procedural lapses cannot extinguish substantive statutory entitlements, the Court has aligned judicial reasoning with the broader goal of Ease of Doing Business.
For Indian exporters, this is not just a victory in one case; it is a precedent that strengthens confidence in India’s Foreign Trade Policy framework and ensures that incentives flow to those who genuinely deserve them.
