2015 (9) TMI 1596 - HC - Indian Laws

Incremental Exports Incentivisation Scheme Objective - powers under Section 5 of the Foreign Trade (Development and Regulation) (FTDR) Act, 1992 read with para 2.1 of Foreign Trade Policy (FTP), 2009-2014 making amendments to the FTP 2009-2014 with immediate effect - Held that - In the present case, while the earlier Notification dated 28th December, 2012 entitled an IEC holder to duty credit scrip @ 2% on the incremental growth (achieved by the IEC holder) during the period 1st January, 2013 to 31st March, 2013 compared to the period from 1st January, 2012 to 31st March, 2012 on the FOB value of exports, without any maximum limit of the duty credit scrip to which an IEC holder may thereby become entitled to, the Notification dated 25th September, 2013 restricted / limited duty credit scrip to which an IEC holder may become so entitled to 25% growth or incremental growth of ₹ 10 crores in value, whichever is less. Introduction of an outer limit to the benefit, to which a person may become entitled to, would definitely qualify as an amendment and not as a clarification. The earlier Notification dated 28th December, 2012 entitled an IEC holder to duty credit scrip @ 2% on the incremental growth and which 2% could be of any value, without any limitation whatsoever. However, vide subsequent Notification dated 25th September, 2013, the said duty credit scrip to which an IEC holder could become entitled to under the earlier Notification dated 28th December, 2012 was limited to a maximum of 25% growth or ₹ 10 crores whichever is less. Introduction of a maximum limit is by way of an amendment and can by no stretch of imagination be treated as a clarification. There was no ambiguity in the earlier Notification dated 28th December, 2012, as to the maximum amount to which an IEC holder may become entitled thereunder, to require any clarification. Moreover, the Notification dated 25th September, 2013 itself is titled as an amendment and describes the effect thereof also as amendment of the earlier Notification dated 28th December, 2012. The petitioners are held entitled to what they may have been entitled to under the Notification dated 28th December, 2012 and without any cap and / or maximum limit. The decision of the respondents denying such benefit to the petitioners are quashed / set aside and the respondents are directed to issue the duty credit scrip to the petitioners in terms of the Notification dated 28th December, 2012 on or before 31st January, 2016.

Issues Involved:
1. Opportunity to file counter affidavit.
2. Challenge to a Notification.
3. Retrospective effect of subsequent Notification.
4. Denial of duplicate scrips.
5. Jurisdiction of the Single Bench.
6. Interpretation of policy amendments and clarifications.
7. Abuse or misuse of the scheme.
8. Availability of alternative remedy.
9. Retrospective legislation by delegatee.
10. Entitlement under the earlier Notification.
11. Validity of clarifications issued by DGFT.
12. Vested vs. accrued rights.

Detailed Analysis:

1. Opportunity to file counter affidavit:
The court denied the respondents' request to file a counter affidavit, noting that sufficient time had already been provided and that counter affidavits had been filed in related petitions.

2. Challenge to a Notification:
The respondents argued that the challenge in the petitions was to a Notification, which should be considered by the Division Bench. However, the petitioners clarified that their challenge was not to the Notification itself but to its retrospective application.

3. Retrospective effect of subsequent Notification:
The court held that the subsequent Notification dated 25th September 2013, which limited the benefits under the earlier Notification dated 28th December 2012, could not have retrospective effect. The court emphasized that the Central Government, under Section 5 of the FTDR Act, cannot retrospectively amend policies.

4. Denial of duplicate scrips:
The petitioner in W.P.(C) No.1345/2015 was denied duplicate scrips due to the subsequent Notification. The court found this denial unjustified as the entitlement under the earlier Notification could not be affected by a subsequent Notification.

5. Jurisdiction of the Single Bench:
The court clarified that the Single Bench was competent to hear the challenge to the policy, as it was not a challenge to the vires of the Act, Rules, or Regulations, which would require consideration by the Division Bench.

6. Interpretation of policy amendments and clarifications:
The court distinguished between amendments and clarifications, stating that the subsequent Notification was an amendment, not a clarification. The amendment introduced a maximum limit, which was not present in the earlier Notification, and thus could not be applied retrospectively.

7. Abuse or misuse of the scheme:
The respondents argued that the scheme was being misused, which justified the subsequent Notification. The court acknowledged this concern but reiterated that the amendment could not have retrospective effect.

8. Availability of alternative remedy:
The respondents suggested that the petitioners could appeal under Section 9(5) read with Section 15 of the FTDR Act. The court noted that the appellate authority would still be bound by the clarifications issued, making the appeal ineffective.

9. Retrospective legislation by delegatee:
The court referenced previous judgments, including Malik Tanning Industries and Agri Trade India Services Pvt. Ltd., to assert that a delegatee cannot legislate retrospectively without express provision.

10. Entitlement under the earlier Notification:
The court held that the petitioners' entitlements under the earlier Notification dated 28th December 2012 remained unaffected by the subsequent Notification. The benefits accrued could not be taken away retrospectively.

11. Validity of clarifications issued by DGFT:
The court found that the DGFT's clarification dated 23rd September 2014, which limited benefits under the earlier Notification, was beyond its powers. The DGFT could interpret but not amend the policy.

12. Vested vs. accrued rights:
The court distinguished between vested rights and accrued rights, stating that the amendments could not take away accrued benefits. The amendments were found to be retroactive, not retrospective, and thus could not affect already accrued entitlements.

Conclusion:
The petitions were allowed, and the petitioners were held entitled to benefits under the earlier Notification dated 28th December 2012 without any cap or maximum limit. The respondents were directed to issue the duty credit scrips by 31st January 2016.

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