Retrospective policy change cannot defeat DFIA entitlement once a valid transferable licence is issued.

A policy circular issued after a valid DFIA licence with transferability endorsement cannot retrospectively curtail the duty-free import entitlement created by that licence. The applicable policy is the one in force up to the date of issue of the licence, so a later clarification does not displace rights already accrued under the existing DFIA framework. On the admitted facts, the licence predated the circular, and the imported goods remained governed by the licence and the corresponding notification. The later circular therefore could not be used to deny duty-free import of lactose under the prior entitlement.

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Issues: Whether the policy circular issued after grant of a valid DFIA licence could be applied to deny duty-free import of lactose against the licence.

Analysis: The circular relied upon by Revenue was issued after the DFIA licence had been granted with transferability endorsed. The governing question was whether such later policy clarification could curtail the entitlement already flowing from the licence. The Court relied on the settled position that the applicable policy is the one in force up to the date of issue of the licence, and that a subsequent change in policy does not operate retrospectively to impair rights under an already issued licence. On the admitted facts, the licence preceded the impugned circular, and the imported goods were therefore governed by the existing DFIA entitlement under the notification.

Conclusion: The later circular did not apply to the prior valid DFIA licence, and the respondents were entitled to the benefit of duty-free import under the notification.

Ratio Decidendi: A policy circular issued after a valid DFIA licence has been granted cannot retrospectively alter the entitlement created by that licence or deny the benefit of duty-free import under the applicable notification.

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