Retrospective withdrawal of export incentive invalid where accrued DEPB benefits are taken away without clear authorisation.

DGFT may issue a public notice to withdraw DEPB benefits for cotton exports prospectively, but not with retrospective effect unless the enabling instrument clearly authorises it. The note explains that the impugned notice substantively removed the incentive rather than merely clarifying policy, so exporters could not be deprived of benefits that had already accrued for earlier shipments. Accordingly, recoveries made for shipments between 21 April 2010 and 31 March 2011 were invalid, while prospective withdrawal of the benefit was sustained.

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Issues: Whether the Director General of Foreign Trade could withdraw DEPB benefits on export of cotton by public notice with retrospective effect from 21 April 2010, and whether recoveries made for shipments prior to 31 March 2011 were valid.

Analysis: The Foreign Trade (Development and Regulation) Act, 1992 empowers the Central Government to formulate and amend the export-import policy, while the Director General of Foreign Trade is entrusted with implementation and with resolving questions of interpretation under paragraph 2.3 of the Foreign Trade Policy, 2009-2014. The power under paragraph 2.4 and paragraph 4.3 to issue public notices and specify DEPB benefits is available for implementation of the policy, but the impugned notice did not merely interpret or clarify an existing position. It substantively withdrew the benefit on cotton exports. While the authority could withdraw the benefit prospectively, there was no power to impose that withdrawal retrospectively so as to deprive exporters of benefits that had already accrued for the earlier period. The later restoration of benefit from an anterior date did not justify the earlier retrospective disallowance.

Conclusion: The retrospective operation of the public notice dated 31 March 2011 was invalid to the extent it applied to shipments made between 21 April 2010 and 31 March 2011, and the recoveries for that period were quashed. The withdrawal was upheld only prospectively.

Final Conclusion: The challenge succeeded in part, with the impugned notice and consequential recoveries set aside only for the prior period, while the power to withdraw DEPB benefit prospectively was sustained.

Ratio Decidendi: A delegated authority may withdraw an export incentive prospectively under the policy, but cannot give such withdrawal retrospective effect so as to take away accrued benefits unless the enabling instrument expressly authorises it.

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