Trade incentive scheme eligibility and retrospective recovery of earlier benefits under differing policy regimes

Eligibility under the Served From India Scheme was construed in light of the Foreign Trade Policy's object of promoting Indian service providers and Indian brand use. On that basis, a foreign brand was treated as disqualifying for the scheme benefit, and the challenge to the show cause notice and Policy Interpretation Committee minutes failed. The later policy framework could not be used to recover benefits already granted for periods governed by earlier policies; recovery was confined to the relevant policy period, and benefits granted up to 2007-08 were protected from retrospective disturbance.

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Issues: (i) Whether the impugned show cause notice and Policy Interpretation Committee minutes, which treated an overseas brand as disqualifying for benefits under the Served From India Scheme, were sustainable; (ii) whether SFIS benefits already granted for periods governed by an earlier policy could be recovered under the later policy framework.

Issue (i): Whether the impugned show cause notice and Policy Interpretation Committee minutes, which treated an overseas brand as disqualifying for benefits under the Served From India Scheme, were sustainable.

Analysis: The eligibility under the Served From India Scheme was examined with reference to the object of the Foreign Trade Policy and the scheme provisions dealing with service providers, entitlement, and ineligible remittances and services. The decisive factor was that the scheme was intended to promote an Indian brand and Indian service providers, and the challenged interpretation was held to be consistent with that object. The Court followed the earlier binding decision on the same scheme and held that a foreign brand used by the petitioner did not qualify for the benefit.

Conclusion: The challenge to the show cause notice and the Policy Interpretation Committee minutes failed.

Issue (ii): Whether SFIS benefits already granted for periods governed by an earlier policy could be recovered under the later policy framework.

Analysis: The Court distinguished benefits granted for periods governed by policies preceding FTP 2009-14 from claims arising under the later policy. It held that recoveries, if any, had to be confined to the period governed by the relevant policy and could not be made by an adjudication order in 2015 so as to disturb benefits already granted under the earlier framework.

Conclusion: Recovery of SFIS benefits granted till 2007-08 was held impermissible.

Final Conclusion: The petition succeeded only to the limited extent of protecting benefits already granted under the earlier policy period, while the challenge to the impugned notice and policy interpretation otherwise failed.

Ratio Decidendi: Benefits under a trade incentive scheme must be construed in light of its object and eligibility framework, and recoveries cannot retrospectively disturb benefits already accrued under an earlier policy regime.

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