Court dismisses petition challenging DEPB credit rate retroactive application

The court dismissed the petition challenging the order dated 27th February, 2001, regarding the retrospective credit under the DEPB scheme. It held that the 15% credit rate fixed on 31st March, 2000, could not be applied retrospectively from 1st April, 1997. The court emphasized that delegated legislation like the DEPB scheme cannot have retrospective effect unless expressly provided, and policy decisions should not be interfered with judicially. The petition was therefore dismissed, upholding the impugned order.

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Issues Involved:
1. Entitlement to retrospective credit under the DEPB scheme.
2. Validity of the impugned order dated 27th February, 2001.
3. Interpretation of paragraph 7.50 of the Handbook of Procedures.
4. Competence of the delegate to make legislation with retrospective effect.
5. Policy decision and judicial interference.

Detailed Analysis:

1. Entitlement to Retrospective Credit under the DEPB Scheme:
The petitioners sought retrospective application of the 15% credit rate under the Duty Exemption Pass Book (DEPB) scheme from 1st April, 1997, although it was fixed on 1st April, 2000. The objective of the DEPB scheme is to neutralize the incidence of customs duty on the import content of exported products to enhance competitiveness. Initially, no rate was provided for the petitioners' final product when the Export Import (Exim) Policy 1997-2002 was notified. The rate was later fixed at 7% on 5th July, 1997, revised to 8% on 31st March, 1999, and finally to 15% on 31st March, 2000. The petitioners argued that the rate should apply retrospectively from 1st April, 1997, citing instances where retrospective effect was granted for marine products.

2. Validity of the Impugned Order Dated 27th February, 2001:
The impugned order rejected the petitioners' request for retrospective application of the 15% credit rate. The respondents argued that the rate fixed on 31st March, 2000, was effective from that date and could not be applied retrospectively. The court upheld this view, noting that the policy did not provide for retrospective effect for the DEPB rates notified from 1st April, 2000, as per paragraph 7.50 (as substituted) of the Handbook.

3. Interpretation of Paragraph 7.50 of the Handbook of Procedures:
Paragraph 7.50 allowed exporters to export products for which credit rates were not notified, provided the products were covered under Standard Input Output Norms. If credit rates were later notified, exporters could apply for DEPB within 90 days of export or 60 days of notification. The court found that this provision applied only where no credit rate was initially notified. Since the petitioners' product had a notified rate from 5th July, 1997, paragraph 7.50 did not apply.

4. Competence of the Delegate to Make Legislation with Retrospective Effect:
The court emphasized that delegated legislation, such as the DEPB scheme, cannot be applied retrospectively unless expressly provided. The Delhi High Court's decision in Malik Tanning Industries Vs. Union of India was cited, stating that the power to frame policy with retrospective effect cannot be inferred without express provision. Section 5 of the Foreign Trade (Development, Regulation) Act, 1992, does not empower the Central Government to frame policy retrospectively, and such powers cannot be delegated to the Director General of Foreign Trade (DGFT).

5. Policy Decision and Judicial Interference:
The court recognized that the fixation of DEPB rates and their effective dates involve numerous factors and expertise, making it a policy decision. As per the Supreme Court's decision in Balco Employees Union Vs. Union of India, courts should not interfere in policy matters. Therefore, the impugned order dated 27th February, 2001, was upheld, and the petition was dismissed.

Conclusion:
The petition challenging the order dated 27th February, 2001, was dismissed. The court found no reason to grant retrospective effect to the 15% DEPB credit rate from 1st April, 1997, as the policy did not provide for it, and the competence to make retrospective legislation was beyond the delegate's authority. Judicial interference in policy decisions was deemed inappropriate.

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