2009 (6) TMI 369 - HC - Central Excise

Foreign trade policy - It is contended that under Target Plus Scheme the petitioner as well as other similar entities who have achieved a minimum export turnover in free foreign exchange of Rs. 10 crore in the previous licensing year were eligible for consideration for credit entitlement under the Target Plus Scheme. This limit of Rs. 10 crore was subsequently reduced to Rs. 5 crore vide Notification No. 20 (RE 2006/2004-2009 dated 13-7-2006). The entitlement under this scheme was contingent on the percentage of incremental growth in Free on Board (FOB) value of previous exports in the current licensing year over the previous licensing year - The petitioner having proceeded to act in terms of the policy which has been brought into force as narrated herein above the notification at Annexure K1 seeking to take away the benefit conferred by virtue of the credit duty being limited in terms of Annexure K1 and with retrospective effect would be opposed to law as is well settled by several decisions of the Supreme Court - Accordingly the petition is allowed. Annexure K1 insofar as it restricts the credit duty to which the petitioner was entitled in terms of Annexure C is quashed.

Summary

Issues:
Challenge to amendment in Foreign Trade Policy affecting duty credit entitlement under Target Plus Scheme.

Analysis:
1. Background: The petitioner, a company engaged in manufacturing and exporting aluminum extrusions, challenged the amendment in the Foreign Trade Policy affecting duty credit entitlement under the Target Plus Scheme.

2. Target Plus Scheme: The Government announced the Target Plus Scheme to reward Star Export Houses achieving quantum growth in exports. The scheme aimed to accelerate export growth by granting duty credits based on incremental exports, with specific percentage entitlements based on the growth achieved.

3. Amendment Controversy: An amendment was made to the policy, reducing the entitlement percentage for incremental growth in exports. This led to a dispute where the petitioner's entitlement was reduced, contrary to the original policy provisions.

4. Legal Argument: The petitioner contended that the amendment, which sought to take away the benefit accrued under the original policy, was impermissible. They argued that the vested rights could not be retrospectively altered by the amendment, citing the doctrine of promissory estoppel.

5. Judicial Precedent: The petitioner relied on the Supreme Court judgment in MRF Limited v. Assistant Commissioner, emphasizing that any statute impairing vested rights or creating new obligations should not have retrospective effect. The judgment highlighted the importance of upholding promises made under existing policies.

6. Constitutional Challenge: The petitioner further challenged the amendment as unconstitutional and ultra vires Article 191(l)(g) and the provisions of the Foreign Trade (Development and Regulation) Act, 1992.

7. Court Decision: Considering the arguments and legal principles, the Court allowed the petition, quashing the amendment restricting the duty credit entitlement. The respondent was directed to grant the additional entitlement denied to the petitioner within a specified timeframe.

This detailed analysis of the judgment highlights the issues, arguments, and the ultimate decision rendered by the Court in response to the challenge brought forth by the petitioner regarding the amendment affecting duty credit entitlement under the Target Plus Scheme.