DGFT Must Act First: Customs Can’t Invalidate MEIS Licenses Alone
If you’ve claimed export incentives under MEIS Licenses, here’s a crucial legal update: Customs authorities cannot cancel or reject your scrips without prior proceedings initiated by DGFT. This position was reinforced in multiple High Court rulings, protecting exporters from arbitrary denial of benefits.
Let’s break it down.
What Is MEIS and Why It Matters
The Merchandise Exports from India Scheme (MEIS) was introduced under Foreign Trade Policy 2015–2020 to promote exports by offering duty credit scrips to exporters. These scrips are transferable and can be used to pay Customs duties.
Even though MEIS was phased out and replaced by RoDTEP, pending claims and scrips are still under scrutiny by Customs—often leading to disputes.
Can Customs Cancel MEIS Licenses Directly? No.
Under the Foreign Trade (Development and Regulation) Act, 1992, only the Director General of Foreign Trade (DGFT) has the statutory power to assess and revoke export incentives.
As clarified in the Delhi High Court judgment in Shivam Exim vs. UOI (2023) and others, Customs cannot suo motu deny MEIS benefits unless:
- DGFT first issues a show cause notice
- Exporter gets a chance to be heard
- Final order of rejection or cancellation is passed by DGFT
Key Legal Provisions:
- Section 9(4) of FTDR Act: DGFT is the authority to suspend or cancel authorization.
- FTP Para 3.24 & 3.26: Governs grant of MEIS and its usage.
- CBIC Instruction No. 20/2023-Customs dated 20.06.2023: Reiterates that Customs must refer questionable scrips to DGFT, not act independently.
Practical Impact for Exporters
If your MEIS scrip is being blocked at the port or denied usage, verify whether DGFT has issued a rejection order. If not, you can legally challenge Customs’ action.
Exporters must watch for:
- No show cause issued by DGFT
- Customs blocking scrip based on internal audit
- Absence of adjudication by licensing authority
Such actions are legally unsustainable. Multiple High Courts (Delhi, Madras, Gujarat) have consistently ruled in favour of exporters.
Expert View: Know Your Appeal Route
“Any action taken by Customs without DGFT proceedings can be challenged via writ petition under Article 226. Courts have quashed such denials for violating principles of natural justice.”
— Tax Litigator, Delhi HC
What To Do If Your MEIS Scrip Is Blocked
Follow these steps:
- File RTI/Query with DGFT to check if any cancellation order exists.
- Submit Representation to Customs quoting CBIC Instruction No. 20/2023.
- Approach High Court via a writ petition if wrongful denial continues.
- Keep all MEIS claim documents and exports data ready for verification.
Table: DGFT vs Customs – Who Can Do What?
| Action | DGFT | Customs |
|---|---|---|
| Issue MEIS scrip | ✅ Yes | ❌ No |
| Cancel MEIS scrip | ✅ Yes (after hearing) | ❌ No |
| Block usage temporarily | ❌ No | ❌ No (without DGFT) |
| Refer case for investigation | ✅ Yes | ✅ Yes |
| Final adjudication | ✅ Yes | ❌ No |
Why This Matters Even Post-MEIS
Even though MEIS ended in 2021, many exporters are still dealing with past claims. Some are under audit or investigation. If Customs tries to reverse past scrip usage or seeks recovery, remember:
Only DGFT can initiate such action.
Customs must refer, not act.
FAQs on MEIS Licenses & Customs Disputes
Q1: Can Customs reject my MEIS claim during clearance?
A: No. They can raise concerns, but final rejection needs DGFT action.
Q2: What if DGFT has not initiated any case?
A: You can contest Customs action in court or via representation.
Q3: What’s the recourse for old MEIS claims now under audit?
A: Ensure no retrospective cancellation occurs without due process by DGFT.
Summary
MEIS Licenses cannot be cancelled or questioned by Customs unless DGFT has first issued a notice and passed an order. Recent High Court rulings and CBIC instructions reinforce that Customs must refer, not adjudicate. Exporters can legally challenge such denials.
Conclusion: Don’t Let Customs Overreach Undermine Your MEIS Claims
MEIS scrips are a DGFT domain. If you’re facing unjust denial by Customs, you have legal standing to contest it. Efiletax helps you navigate DGFT queries, Customs responses, and legal documentation—get in touch today to protect your export incentives.