Statutory export benefits cannot be denied by circulars that enlarge policy exclusions or override the governing scheme.

A circular issued under administrative powers cannot curtail a benefit conferred by the statutory Export Import Policy or the governing drawback provisions. Applying that principle, the Madras HC noted that entitlement to drawback and DEPB flowed from the policy framed under the Foreign Trade Act and the customs drawback regime, and the exclusion in the policy could not be enlarged by Policy Circular Nos. 6 and 35. A denial based solely on those circulars was therefore unsustainable, and the consequential adverse orders were set aside. The writ petitions were allowed in part, with the circular-based refusal held invalid.

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Issues: (i) Whether Policy Circular Nos. 6 and 35 could validly be applied to deny drawback benefits under the Export Import Policy to exports made through a 100% EOU. (ii) Whether the denial of DEPB benefit on that basis was valid and sustainable.

Issue (i): Whether Policy Circular Nos. 6 and 35 could validly be applied to deny drawback benefits under the Export Import Policy to exports made through a 100% EOU.

Analysis: The entitlement flowed from the statutory Export Import Policy framed under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, and the relevant drawback regime under Section 75 of the Customs Act, 1962. The controlling principle was that a circular may regulate administration, but it cannot curtail a right conferred by the policy/statute. The policy provision dealing with drawback recognised the scheme of drawback and limited the exclusion to the extent stated therein; the impugned circulars could not enlarge that exclusion so as to defeat the substantive benefit.

Conclusion: The policy circulars could not override the statutory policy and could not be relied upon to deny the drawback entitlement.

Issue (ii): Whether the denial of DEPB benefit on that basis was valid and sustainable.

Analysis: The petitioner's exports were found to fall within the benefit structure of the applicable Export Import Policy. Once the exports were otherwise entitled to the benefit under the policy, the rejection made solely on the strength of the impugned circulars was unsustainable. The consequential orders also could not survive once the foundation for denial failed.

Conclusion: The denial of DEPB benefit was held to be invalid and unsustainable.

Final Conclusion: The petitioner succeeded on the substantive challenge, and the consequential adverse orders were set aside. The writ petitions were allowed in part, with the challenge to the circular-based denial failing and the relief consequent upon the invalid denial granted.

Ratio Decidendi: A circular issued under administrative powers cannot take away a benefit conferred by a statutory policy or by the governing drawback provisions, and any denial founded solely on such a circular is legally unsustainable.

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