2016 (1) TMI 418 - HC - Customs

Grant of Duty Credit Scrips - DGFT issued the Duty Credit Scrips for ₹ 50 lakhs and ₹ 1crore only as against the petitioner s claims of ₹ 90,42,165 and ₹ 4,59,94,671. - Constitutional validity of Notifications Nos. 43 and 44 dated 25.09.2013 - As per the said scheme an IEC holder would be entitled for a Duty Credit Scrip at the rate of 2% on the incremental growth achieved by it during the period 01.01.2013 to 31.03.2013 compared to the period from 01.01.2012 to 31.03.2012 on the FOB value of exports. - another scheme called Incremental Exports Incentivisation Scheme (IEIS) on annual basis has been introduced. Under this scheme, an IEC holder would be entitled for a Duty Credit Scrip at the rate of 2% on an incremental growth achieved by it during a current year compared to the previous year on the FOB value of the exports. Held that - On a careful consideration of the FTP 2009-14 as well as the Schemes in question vide paragraphs 3.14.4 and 3.14.5 read with the amendment vide Notifications dated 25.09.2013, we do not find any substance in the contention of the petitioner that the impugned amendments are sought to be enforced by the respondents with retrospective operation. We agree with the submission of the learned ASG that the amendments vide Notifications No.43 and 44 dated 25.09.2013 are only clarificatory and in no way affect the rights accrued to the petitioner to claim the benefit of Duty Credit. Therefore, we do not find any substance in the contention that the amendment to paragraph 3.14.4 and 3.14.5 of FTP 2009-14 vide Notifications No.43 and 44 dated 25.09.2013 are unconstitutional. However, the petitioner s claims ought not to have been rejected without assigning any reasons - Respondent No.2 (regional authority) directed to ensure that a speaking order is passed in terms of Clause (ii) of paragraph 3.14.4(c) and 3.14.5(c) of FTP 2009-14 regarding the claims made by the petitioner. - Decided partly in favor of appellant.

Summary

Issues:
1. Rejection of Duty Credit Scrips under Foreign Trade Policy (FTP) 2009-14.
2. Validity of Notifications Nos. 43 and 44 dated 25.09.2013.
3. Constitutional validity under Articles 14 and 19(1)(g) of the Constitution of India.
4. Retrospective enforcement of amendments to the Schemes.
5. Requirement of reasoned order for rejecting claims exceeding specified values.

Analysis:
1. The petitioner, a company trading in textiles, challenged the rejection of its requests for Duty Credit Scrips under the FTP 2009-14 by the Director General of Foreign Trade. The petitioner claimed entitlement to Duty Credit Scrips for specific amounts based on incremental growth achieved as per the schemes introduced under the FTP.

2. The amendments introduced through Notifications Nos. 43 and 44 dated 25.09.2013 imposed limitations on the entitlement of Duty Credit Scrips under the Incremental Exports Incentivisation Scheme. The petitioner contended that these amendments were unconstitutional and violated their vested rights under the Schemes.

3. The petitioner argued that the amendments infringed upon their rights under Articles 14 and 19(1)(g) of the Constitution of India by restricting their ability to claim Duty Credit entitlement based on incremental growth. The petitioner claimed that the restrictions imposed frustrated the purpose of the FTP 2009-14.

4. The High Court analyzed the retrospective enforcement of the amendments and held that the impugned Notifications dated 25.09.2013 were clarificatory in nature and did not affect the petitioner's accrued rights. Citing precedent, the Court affirmed the government's authority to withdraw incentives for justifiable reasons and in public interest.

5. While upholding the constitutionality of the amendments, the Court noted that claims exceeding specified values should not be rejected without providing reasons. The Court directed the Regional Authority to issue reasoned orders within 8 weeks for claims falling under the clause requiring greater scrutiny, emphasizing the necessity for a thorough review process.

Conclusion:
The High Court dismissed the petitions challenging the constitutionality of Notifications Nos. 43 and 44 dated 25.09.2013 but directed the Regional Authority to provide reasoned orders for claims exceeding specified values. The judgment clarified the government's authority to amend schemes and highlighted the importance of a transparent review process for claim rejections.