2016 (4) TMI 1284 - HC - Customs

Benefit of notification of December 28, 2012 - duty credit scrip - Held that - the petitioners will be entitled to the benefit under the notification of December 28, 2012 irrespective of the modification that was brought in by the notification of September 25, 2013. Accordingly, the petitioners claim should be considered by the DGFT in such light and on the basis of the earlier notification and without reference to the later. The order impugned dated October 5, 2015 is set aside to the extent that it disallowed the petitioners claim under the notification of December 28, 2012 - petition allowed by way of remand.

Summary

Issues:
Challenge to notification of September 25, 2013 and denial of incentive under notification of December 28, 2012; Interpretation of Incremental Exports Incentivisation Scheme; Validity of subsequent notification imposing cap on benefit; Authority to alter policy with retrospective effect; Effect of subsequent notification on vested rights of exporters.

Analysis:
The petitioners challenged a notification of September 25, 2013 and the denial of an incentive under a notification of December 28, 2012. The latter added an Incremental Exports Incentivisation Scheme, providing for a duty credit scrip on incremental growth achieved by exporters. The petitioners claimed entitlement based on substantial exports of raw cotton in the fourth quarter of 2012-13. The denial of their claim was allegedly due to a subsequent notification of September 25, 2013, imposing a cap on benefits, limiting growth to 25% or incremental growth of a specified value. The petitioners argued that once entitled to the incentive, it could not be discontinued or modified to their prejudice without a closure date specified in the scheme, citing lack of authority for retrospective policy changes under the Foreign Trade Act.

The Union cited a contradictory judgment of January 7, 2016 from the Delhi High Court, which also referenced the Kanak Exports judgment relied upon by the petitioners. The petitioners contended that the subsequent notification altering the scheme could not affect vested rights of exporters unless specifically empowered by statute for retrospective effect. The High Court referred to a previous judgment where it was held that rights vested prior to a subsequent notification could not be affected by it.

The Supreme Court's judgment in Kanak Exports emphasized that delegated legislation could not be made retrospective unless authorized by statute. It held that altering or closing a scheme after exporters had met the criteria for incentives amounted to impermissible retrospective action. The Court declared the petitioners entitled to benefits under the December 28, 2012 notification, disregarding the modifications in the September 25, 2013 notification. The impugned order disallowing the petitioners' claim was set aside, and the relevant authority was directed to reconsider the matter based on the earlier notification within four weeks.

In conclusion, the Court allowed the petition, emphasizing the protection of vested rights of exporters under the original notification and rejecting the application of subsequent modifications to their detriment. The judgment clarified the legal position on retrospective application of delegated legislation and upheld the petitioners' entitlement to benefits under the original scheme.