Export incentive ambiguity resolved in exporter's favour where overlapping input-output norms allowed the more beneficial credit claim.

Under the Duty Credit Passbook Scheme, an exporter could claim credit on the more favourable of overlapping alternative input-output norms where the exported goods were capable of falling under more than one norm and the manufacturing route did not clearly determine the applicable one. The scheme was treated as a deemed credit mechanism that did not require proof of actual import content, and any ambiguity had to be resolved in favour of export promotion. In the absence of an express restriction in the policy or notification, the exporter was entitled to choose the applicable norm. The denial of credit based on the Penicillin G route was therefore set aside.

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Issues: Whether, under the Duty Credit Passbook Scheme, the exporter was entitled to claim credit under the more favourable of the alternative input-output norms where the exported goods could fall under more than one norm and the manufacturing route adopted by the exporter was not ative of the applicable norm.

Analysis: The scheme granted deemed credit linked to export of specified goods and did not require proof of actual import content in the exported product. The two sets of norms for the same exported goods were not capable of a clear and practical distinction on the basis of the particular manufacturing route adopted by an exporter, and applying the route followed by each manufacturer would produce anomalous and unequal results. In the absence of an express restriction in the policy or the notification, and having regard to the export-promotion object of the scheme, the ambiguity had to be resolved in favour of the exporter. The circular relied upon was understood as applying only where multiple alternative inputs were shown against the same export item, and not as compelling the department to choose the less beneficial norm in all cases.

Conclusion: The exporter was entitled to select the applicable norm and claim the credit accordingly, and the impugned denial based on the Penicillin G route could not stand.

Final Conclusion: The appeal was allowed and the order denying the claimed credit was set aside.

Ratio Decidendi: Where an export incentive scheme contains ambiguous or overlapping alternative norms and does not expressly restrict the exporter's choice, the benefit of doubt must be extended to the exporter and the more beneficial norm may be claimed.

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