Court protects exporters' vested rights; Government cannot alter scheme retrospectively

The court held that the Central Government lacked authority to retrospectively alter the Incremental Exports Incentivisation Scheme under the Foreign Trade Act. It emphasized protecting the vested rights of exporters and ensuring benefits under the original scheme are honored without arbitrary changes. The court referenced judicial precedent supporting the position that subsequent notifications should not impact vested rights. The petitioner's entitlement to incentives was upheld, and the authorities were directed to promptly pay the rightful dues, allowing for interest on any delays.

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Issues: Ex post facto alteration of incentive scheme affecting exporter's claim, authority to alter policy with retrospective effect under Foreign Trade Act, consideration of vested rights of exporter, judicial precedent on subsequent notifications affecting vested rights.

Analysis:
1. Ex post facto alteration of incentive scheme: The petitioner complained about the ex post facto alteration of the Incremental Exports Incentivisation Scheme. The scheme initially provided a duty credit scrip at the rate of 2% on the incremental growth achieved in exports in a specific period. However, subsequent alterations limited the benefit to a certain growth percentage or value, affecting the petitioner's claim for a duty credit scrip valued over Rs. 1 crore. The petitioner argued that it was unreasonable and arbitrary for the Central Government to introduce changes retrospectively, especially after the petitioner had organized its export business based on the original scheme declared by the Government.

2. Authority under Foreign Trade Act: The petitioner contended that the Central Government lacked the authority under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, to alter a disclosed policy with retrospective effect. The petitioner emphasized that the application for the incentive was made before the subsequent notification, and the rights vested in the exporter should not be affected by such changes. Reference was made to a Delhi High Court judgment supporting the view that subsequent notifications cannot impact vested rights of exporters.

3. Consideration of vested rights: The Court considered the vested rights of the petitioner under the original notification of December 28, 2012. Despite a previous order allowing the authority to decide the petitioner's application without retrospective effect, the subsequent order declined the incentive based on the altered scheme. The Court held that benefits already vested cannot be withdrawn from the beneficiary, emphasizing the importance of honoring the exporter's rightful dues under the original notification.

4. Judicial precedent on subsequent notifications: The Court referred to an unreported judgment of the Delhi High Court where a similar view was taken regarding the impact of subsequent notifications on vested rights of exporters. The Court emphasized the need to uphold the exporter's entitlement to incentives as per the original scheme, excluding clauses introduced in subsequent notifications that reduce the quantum of benefits available to exporters. The Court directed the concerned authority to reconsider the matter and ensure the rightful dues of the petitioner are paid promptly, allowing the petitioner to seek appropriate interest for any delays.

In conclusion, the judgment highlighted the importance of protecting vested rights of exporters under incentive schemes and emphasized the need for authorities to adhere to original notifications without retrospectively altering policies to the detriment of beneficiaries.

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