Court invalidates Trade Notice No. 11 of 2015, rules against retrospective application and bars recovery of benefits.

The court invalidated Trade Notice No. 11 of 2015 issued by the DGFT, ruling that it effectively amended an entry beyond clarification, which was impermissible. It held that the notice could not be applied retrospectively and barred the recovery of benefits granted under the Focus Product Scheme based on the notice. Additionally, it deemed withholding benefits under the MEIS unjustified and directed processing of the petitioners' applications under the scheme. The court quashed the trade notice, disallowed recoveries, and instructed processing of MEIS applications, ultimately ruling in favor of the petitioners in all aspects.

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Issues Involved:
1. Validity of Trade Notice No. 11 of 2015 dated 14.12.2015 issued by DGFT.
2. Retrospective application of the trade notice.
3. Recovery of benefits already granted under the Focus Product Scheme (FPS).
4. Withholding of benefits under the Merchandise Exports from India Scheme (MEIS).

Detailed Analysis:

1. Validity of Trade Notice No. 11 of 2015 dated 14.12.2015 issued by DGFT:
The petitioners challenged Trade Notice No. 11 of 2015 issued by the Director General of Foreign Trade (DGFT), which clarified that the intention behind Entry No. 269 in Appendix 37-D was to grant incentives only to bicycle parts. The court observed that the trade notice did not merely clarify but effectively amended the entry itself. The entry included items such as taps, cocks, and valves, which are not typically used in bicycles. The clarification sought to exclude these items, rendering the entry meaningless. The court held that a clarification cannot amend the entry and that the power to amend lies with the Government of India. Therefore, the trade notice was not valid.

2. Retrospective application of the trade notice:
The petitioners argued that the trade notice could not be applied retrospectively to cases that were closed long ago. The court agreed, stating that the DGFT does not have the power to issue circulars with retrospective effect. The Foreign Trade Policy (FTP) 2009-14 recognized the DGFT's authority to issue clarifications, but such clarifications must not contradict the plain interpretation of the policy. The court cited previous judgments to support the view that retrospective amendments are not permissible unless specifically conferred by statute.

3. Recovery of benefits already granted under the Focus Product Scheme (FPS):
The respondents initiated actions to recover benefits already granted under the FPS, based on the impugned trade notice. The court observed that the petitioners had made correct declarations in their applications, and the benefits were granted accordingly. The scheme ended on 31.03.2015, and the trade notice was issued much later. The court held that the respondents could not seek recoveries based on a clarification that effectively amended the entry. The DGFT's intention to grant incentives only to bicycle parts was not evident from the entry's language, which included items not used in bicycles.

4. Withholding of benefits under the Merchandise Exports from India Scheme (MEIS):
The respondents withheld benefits under the MEIS, citing the petitioners' failure to refund benefits under the FPS. The court found this action impermissible. The MEIS was a new scheme with its own provisions, and the respondents could not stall the petitioners' applications for benefits under it. The court directed the respondents to process the petitioners' applications for export benefits under the MEIS in accordance with its provisions.

Conclusion:
The court quashed the impugned trade notice dated 14.12.2015 and directed the respondents not to seek recoveries of the export incentives granted under the FPS. The respondents were also instructed to process the petitioners' applications for export benefits under the MEIS. All petitions were allowed and disposed of accordingly.

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