2015 (11) TMI 1229 - HC - Customs

Denial of import duty benefit equivalent to 2% of FOB value of exports - Focus Products Scheme FPS - Held that - The exporter, on reliance of the earlier interpretation and enforcement of the policy made exportation of the said goods with the expectation of earning duty benefits, which were earned on previous occasions. On that basis he exported goods on this occasion too. He thereby altered his position. All of a sudden, enforcement of this notification with retrospective effect deprived him of this duty legitimately earned. This is plainly unjust. - an administrative action should have finality. When goods are legitimately exported under the existing policy duty is earned. The Government takes a decision in clearing particular exports, which results in earning of this duty benefit. This decision at that point of time is to be taken as final in normal circumstances and cannot be reversed at a later point of time by change of interpretation of the description of the goods by a policy circular, with retrospective effect. - respondent authorities are restrained by an order of injunction from denying any duty benefit to the writ petitioners earned by virtue of export of goods understood by the parties as Technical Textiles, before 21st October, 2011 - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of the term "Technical Textiles" under the Foreign Trade Policy 2009-2014.
2. Validity of a policy circular issued by the Central Government with retrospective effect.
3. Application of promissory estoppel in the context of duty benefits earned through legitimate exports.
4. Finality of administrative actions in granting duty benefits and the impact of changing interpretations on exporters.
5. Jurisdiction of respondent authorities in issuing notifications and demands for duty reversal.

Analysis:

1. The primary issue in this case revolves around the interpretation of the term "Technical Textiles" under the Foreign Trade Policy 2009-2014. The petitioners, who were exporters of Woven fabrics of Synthetic Filament Yarn, claimed entitlement to duty credit scrips for their exports under the Focus Products Scheme. The Central Government, through a policy circular issued in 2011, attempted to redefine "Technical Textiles" retrospectively, excluding the goods exported by the petitioners.

2. The validity of the policy circular issued by the Central Government with retrospective effect is called into question. The circular, published in October 2011 with effect from April 2011, aimed to redefine Technical Textiles for specific applications such as automobile and medical purposes. This retrospective redefinition impacted the duty benefits earned by exporters prior to the issuance of the circular.

3. The principle of promissory estoppel comes into play as the exporters relied on the previous interpretation of the policy to conduct their exports and earn duty benefits. The sudden enforcement of the new definition with retrospective effect resulted in the deprivation of legitimately earned duty benefits, leading to an argument of injustice against the exporters.

4. The judgment also delves into the finality of administrative actions concerning duty benefits granted to exporters. It emphasizes that once goods are legitimately exported under existing policies and duty benefits are earned, the government's decision should be considered final. Any subsequent change in interpretation through a policy circular, especially with retrospective effect, should not reverse the benefits earned by exporters.

5. Lastly, the jurisdiction of the respondent authorities in issuing notifications and demands for duty reversal is scrutinized. The court finds that the authorities exceeded their jurisdiction by issuing notifications and demands contrary to established legal principles and court precedents. The court restrains the authorities from denying duty benefits earned by exporters before the issuance of the contentious policy circular in 2011, while allowing them to proceed as per the new definition for exports post that date.