Retrospective effect of policy clarifications rejected where a later DGFT circular could not govern an earlier export transaction.

A DGFT policy circular clarifying that garments made from netted fabrics fall within knitted garments for DEPB benefit was held to operate prospectively only. The exporter's goods were found to be garments made of netted fabric by thermal bonding, and the later clarification could not be applied to a shipping bill filed before its issuance because neither the EXIM Policy nor any statute showed express or implied retrospective effect. The presumption against retrospectivity in fiscal matters therefore applied, and the earlier rejection of the claim, together with confiscation and penalty, was upheld.

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Issues: Whether the DGFT policy circular clarifying that garments made from netted fabrics fall within the category of knitted garments for DEPB benefit could be applied retrospectively to a shipping bill filed before the circular was issued.

Analysis: The export goods were declared as knitted garments but were found on examination to be garments made of netted fabrics produced by thermal bonding. The circular relied upon by the exporter was treated as a clarification of the relevant EXIM Policy entry, but no provision in the policy or in any statute was shown to support retrospective operation. Para 4.13 of the EXIM Policy made the DGFT's interpretation final and binding on doubts arising under the policy, but that did not by itself establish that a later clarification would govern an earlier export transaction. In the absence of express language or necessary implication giving the circular retrospective effect, the normal presumption against retrospectivity applied.

Conclusion: The circular was held to operate prospectively only and could not assist the exporter for the earlier shipping bill. The rejection of the appeal and the confiscation and penalty order were upheld.

Ratio Decidendi: A subsequent administrative or policy clarification will not apply retrospectively unless the governing instrument expressly so provides or such intent necessarily follows by implication; in fiscal matters, the presumption is prospective operation.

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