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2023 (11) TMI 383 - HC - CustomsValidity of Notification dated 29th January, 2020 - revocation of benefit under the Merchandise Exports from India Scheme [MEIS] in respect of Flexible Intermediate Bulk Container [FIBC] bags, with effect from 07th March, 2019, retrospectively. The Petitioner seeks directions against the Respondents to ensure that the impugned notification is applied prospectively. HELD THAT:- While the MEIS was in operation from 1st April 2015 to 31st December 2020, its retrospective discontinuation for the FIBC sector has become a point of contention and distress for the Petitioner and it’s member units. Upon learning about the prospective withdrawal of the MEIS benefit, the Petitioner promptly voiced concerns to the relevant authorities. Despite this, the DGFT portal ceased accepting MEIS benefit applications as of 01st August 2019. Despite subsequent representations, the contested notification was issued on 29th January 2020, retracting the MEIS benefits for the FIBC sector from 07th March 2019. Although the initial grievances highlighted in the petition spanned a broader spectrum, during the hearing, the Petitioner narrowed their challenge to two specific reliefs: (i) The controversial notification should have a prospective, not retrospective, effect and (ii) immediate approval of the claims made by the Petitioner’s member units under the MEIS scheme for the disputed period. Given these revisions, our analysis is confined to addressing these specific contentions and reliefs. Retrospective Effect of Impugned Notification - HELD THAT:- The Kanak Exports ruling [2015 (11) TMI 80 - SUPREME COURT] , though anchored in the context of an earlier iteration of Section 5 of the FTDR Act, 1992, still holds relevance. A close examination reveals that the 2010 Amendment has not altered the statute's stance on retrospective provisions. Furthermore, the Respondents have not indicated any provision that would counter this interpretation - Further, disentangling the Respondents’ case law references, the decisions in S.B. International [[1996 (1) TMI 125 - SUPREME COURT], P.T.R Exports [1996 (5) TMI 413 - SUPREME COURT] , and the Karnataka High Court’s verdict in Rajesh Exports [ [2005 (9) TMI 695 - KARNATAKA HIGH COURT] , alluded to by the DGFT, to highlight the Government's policy discretion in the public interest, do not align with the present case. This is primarily because in those case there was no retrospective amendment to policy or such a finding by the Court although urged, as opposed to the clear retrospective withdrawal of a benefit herein. Guided by the precedents previously discussed, we conclude that the retrospective withdrawal of the MEIS benefits through the impugned notification does not stand. DGFT’s decision to repeal the scheme with a retrospective effect, combined with their refusal to honor claims for the valid period, is arbitrary and indefensible, both in principle and law. Respondents’ Assertions of Prior Publicity and RoSCTL Scheme - HELD THAT:- The MEIS, falling under Chapter-3 Exports from India Schemes of the FTP 2015-20, serves as an incentive, while the RoSCTL merely rebates state and central embedded taxes and levies. They operate under separate governance: DGFT for MEIS and the Ministry of Textile for RoSCTL, emphasizing their distinct purposes and mechanisms. Therefore, equating the two schemes is erroneous. RoSCTL, in its very nature, cannot compensate for claims associated with exports executed or committed before the release of the impugned notification, for which the Petitioner was rightfully eligible. The claims under each scheme are distinct, separate, and cannot be juxtaposed or adjusted against one another. Notably, given that the entire MEIS scheme faced scrutiny at the WTO - singling out FIBCs from export incentives retrospectively, while retaining benefits for other products, especially those under Chapters 61 to 63, exhibits arbitrariness and discrimination. In our considered opinion, no valid justification has been brought forth, for such selective retrospective withdrawal of benefits. Such an action arguably violates Article 14 of the Constitution of India. Therefore, selectively withdrawing the scheme with retrospective effect for specific categories not only appears arbitrary but also compounds the deprivation felt by the FIBC sector, which was already excluded from the RoSCTL benefit. Blocking of DGFT’s Portal for Submission of Claims - HELD THAT:- For exports having already been carried out for the period from 07th March, 2019 till the date of the impugned notification was notified – exporters would have already factored in and priced exports in line with MEIS benefits. Now, given that it is held that impugned notification could not have been given effect retrospectively, it follows that the benefit should be disbursed to all bona fide applicants, who have applied in terms of the orders of this Court – subject to fulfilment of other applicable conditions. The Petitioner has restricted the reliefs to seeking the prospective application of the impugned notification and the processing of claims submitted for MEIS benefits. Considering the same, the following directions are issued: (i) The impugned notification dated 29th January, 2020, insofar as it withdraws the MEIS benefit on FIBC bags classified under HS-ITC 6305 3200, shall apply prospectively. (ii) Respondents shall forthwith process the applications for the MEIS benefit on FIBC bags classified under HS-ITC 63053200, submitted in terms of the interim order of this Court dated 22nd February, 2022 – in respect of the exports made during the period from 07th March, 2019 till the date of the issuance of the impugned notification.
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