TMI Blog2016 (1) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... nable about any of this. Indeed, the Petitioners do not object to this. But this a far cry from an insistence that irrespective of the value of the incremental exports, those incentives must be restricted to a paltry ₹ 20 lakhs. - There is no such restriction to be found in the 2012 Notification or in the 2013 Notification. We certainly cannot read it into 2013 Notification. None can claim any benefit or incentive as an absolute right. However, a definite policy is enunciated in the present case. That policy extends an incentive for a demonstrated increase in exports. Its purpose is also clear, viz., to encourage more exports. The policy’s terms must, therefore, receive an interpretation as would advance its stated purpose, viz., to promote and encourage exports. That this is also one of the avowed objects of the Foreign Trade (Development and Regulation) Act, 1992 is also not doubted. Where the policy did not itself place any such cap - and plainly it did not, for we find no words of limitation in it, other than those in the eligibility criteria, and these are accepted - any interpretation of the 2013 Notification, therefore, that restricts the incentives in their entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners accept, including a limitation as to the eligibility period or time, allowed a duty credit of 2% on the incremental growth in export achieved by those who held an Import Export Code ( IEC ) for the quarter in question. If the prescribed criteria were met, the IEC holder was entitled to a duty credit scrip at this rate. It is the case of the Petitioners that the 2012 Notification did not in and of itself prescribe any cap or ceiling limit on the quantum of the duty credit scrip. It only prescribed a percentage of the incremental growth and contained various other qualifying restrictions. 5. Subsequently, by Notification No. 44(RE-2013)/2009-2014 dated 25th September 2013, Exhibit F , p. 61 to WP No. 2122 of 2015 ( the 2013 Notification ), according to the Petitioners, two paragraphs were added to the 2012 Notification. The first of these said that the benefit of the IEIS would be 25% growth or incremental growth of ₹ 10 crores, whichever was less. The second paragraph of the 2013 Notification, however, said in terms that claims in excess of this value would be subject to greater scrutiny by the Regional Authority ( RA ). According to the Petitioners, therefore, cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al growth (achieved by the IEC holder) during the period 01.01.2013 to 31.3.2013 compared to the period from 01.01.2012 to 31.3.2012 on the FOB value of exports. Incremental growth shall be in respect of each exporter (IEC holder) without any scope for combining the exports for Group Company. (c) Incentive will be admissible only if the IEC holder has achieved growth in the financial year 2012-2013 vis a vis financial year 2011-2012. Quantum of benefit will be calculated on the incremental growth achieved subject to eligibility criteria given in para 3.14.4(d) of FTP 2009-14. Eligibility Criteria (d) For the purpose of the scheme, export performance shall not be allowed to be transferred from any other IEC holder. Benefit under this scheme will not be allowed to an exporter who had made no export between 01/01/12 to 31/03/12. The following exporters shall not be taken into account for calculation of export performance or for computation of entitlement under the Scheme. (i) Export of imported goods or exports made through transshipment. (ii) Export from SEZ/EOU/EHTP/STPI/BTP/F TWZ (iii) Deemed Exports. (iv) Service Exports (v) Third Party ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Petitioners emphasize is clauses (a) and (b). According to them, clause (b) clearly states that an IEC holder is entitled to a duty credit scrip of 2% on the incremental growth achieved by it for the quarter in question, i.e., 1st January 2013 to 31st March 2013 when compared to the immediate preceding corresponding quarter of 1st January 2012 to 31st March 2012, on the FOB export value. No combining of exports for a Group Company was permitted. Further, clause (c) provide that the incentive was admissible only if the IEC holder achieved growth in the FY 2012-2013 vis- -vis FY 2011-2012. As Mr. Nankani points out, this was evidently mean to eliminate anybody trying to take undue advantage of a sudden, one-off or seasonal growth in exports. The intention was to provide a boost or an incentive to those who were steadily increasing their export business. 10. It is important to note that clause (b) contains no cap and clause (c) says that the quantum of benefit was to be calculated on the increased growth achieved subject to the eligibility criteria mentioned in sub-clause (d). 11. Corresponding changes were then reflected in the Handbook of Procedures. This was amended on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are added below paragraph 3.14.4.(c) as under: (i) Benefit of Incremental Export Incentivisation Scheme for the last quarter of 2012-13 will be limited to 25% growth or Incremental growth of ₹ 10 crores in value, whichever is less. (ii) Claims in excess of this value will be subjected to greater scrutiny by Regional Authority. 14. Mr. Nankani s submission is that he has no quarrel with this Notification as it stands, because on the face of it it does not, read as a whole, place any cap on the value of the scrip. Sub-clause (i) does say that the benefit is limited to 25% growth or incremental growth of ₹ 10 crores in value, i.e., that the credit scrip will be only 2% of the 25% of the growth or 2% of the incremental growth of ₹ 10 crores whichever is less, i.e., a maximum of ₹ 20 lakhs. At the same time, however, clause (ii) clearly contemplates claims larger than ₹ 20 lakhs but only says that these will be subject to greater scrutiny by the Regional Authority. This, according to Mr. Nankani, is completely sound, because where a large incremental export is claimed and a very large credit is claimed on that basis, it is of course neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S scrip that could be claimed was restricted to ₹ 20 lakhs. 17. Mr. Nankani submits that the basis of this communication is actually to be found in the 2014 Clarification dated 23rd September 2014. Exhibit S , pp. 91-92 Paragraphs 2, 3 and 4 of this Clarification read. 2. DGFT had issued two notifications in this regard. (a) Vide Notification No. 44 dated 25.09/2013 the following sub-paragraphs (i) and (ii) were added below paragraph 3.14.4 of FTP as under: (i) Benefit of Incremental Export Incentivisation Scheme for the last quarter of 2012-13 will be limited to 25% growth or Incremental growth of ₹ 10 crores in value, whichever is less. (ii) Claims in excess of this value will be subjected to greater scrutiny by Regional Authority (b) Vide Notification No. 43 dated 25.09.2013 the following sub-paragraphs were added below paragraph 3.14.5(c) of FTP as under: (i) Benefit of Incremental Export Incentivisation Scheme for the year 2013-14 will be limited to a scrip of a value not exceeding ₹ 1 Crore per IEC. (ii) Claims in excess of this value will be subjected to greater scrutiny by Regional Authority. 3. It is info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l scrutiny may indeed be required. But neither the 2012 Notification nor the 2013 Notification in any way restrict or cap the total entitlement of ₹ 20 lakhs. Mr. Nankani s submission is that if such a cap was intended, then, clause (ii) of the 2013 Notification was unnecessary: (ii) Claims in excess of this value will be subjected to greater scrutiny by Regional Authority. The very wording of this clause, he submits, contemplates an application being made for IEIS scrip in excess of ₹ 20 lakhs. The only harmonious construction of clauses (i) and (ii) is, he submits, to hold that claims for IEIS scrips over ₹ 20 lakhs require a more minute scrutiny with greater evidence and documentation. The purpose of this, he submits, is to prevent, as the Government itself says, unintended benefits being taken by certain exporters. This can only mean, Mr. Nankani submits, that a temporary, seasonal or oneoff increase in exports, something that is merely an aberration and does not display or evidence a consistent growth in export business and turnover, should not be held eligible for such an incentive. For genuine exporters who do qualify and show an incremental grow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s date, or from the date of the 2012 Notification, but only with immediate effect , i.e., from the date of the 2013 Notification. It would, therefore, operate as against all applications for IEIS scrips made after that. 25. This is, of course, well-settled. But Mr. Nankani s submission is slightly different: all that he says is that this kind of clarification or amendment is not one that can reasonably be said to apply only in praesenti or in futuro, irrespective of the wording of the 2013 Notification. Of necessity, it relates back to the 2012 Notification and seeks to impose a limit on it where none existed. Matters might have been different, he says, and we agree, if there was material to show that previous applications were allowed without limit, and the 2013 Notification only operates against those that are made after its date. But even this, he says, is surely immaterial. He reiterates that, on a plain reading, the 2013 Notification places no cap at all. He stresses the second clause (ii) of the 2013 Notification. This was entirely unnecessary, whether retrospective or prospective, had any cap been imposed, and the 2013 Notification would have stopped at clause (i). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs. There would then be no question of greater scrutiny by the Regional Authority. That clause would be entirely meaningless. Evidently, therefore, what clause (ii) says is that while claims up to the value of ₹ 20 lakhs will require one degree of scrutiny, those in cases of more than that amount will require much greater study, examination and scrutiny. 29. We are mindful of the principles of interpretation that Mr. Rana presses into service. None can claim any benefit or incentive as an absolute right. However, a definite policy is enunciated in the present case. That policy extends an incentive for a demonstrated increase in exports. Its purpose is also clear, viz., to encourage more exports. The policy s terms must, therefore, receive an interpretation as would advance its stated purpose, viz., to promote and encourage exports. That this is also one of the avowed objects of the Foreign Trade (Development and Regulation) Act, 1992 is also not doubted. Where the policy did not itself place any such cap - and plainly it did not, for we find no words of limitation in it, other than those in the eligibility criteria, and these are accepted - any interpretation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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