Foreign trade policy circulars cannot override SEIS eligibility criteria or deny service export benefits to a shipping agent.

Administrative policy circulars cannot add substantive conditions or redefine eligibility under the Foreign Trade Policy framed by the Central Government under section 5 of the Foreign Trade (Development and Regulation) Act, 1992, so circulars that recast a shipping agent as a mere aggregator were ultra vires. SEIS entitlement must be assessed under the policy's own criteria for notified service providers in India and the foreign exchange earned for the service activity; where the petitioner performed the contractual services and received foreign exchange for them, benefit could not be denied by shifting credit to downstream providers. The refusal order, show-cause notices, and consequential recovery action were unsustainable.

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Issues: (i) Whether the impugned policy circulars could lawfully add to or alter the Foreign Trade Policy and thereby curtail SEIS eligibility. (ii) Whether the petitioner, as a shipping agent, was entitled to SEIS benefit on the foreign exchange received for the services arranged and performed in the course of its business.

Issue (i): Whether the impugned policy circulars could lawfully add to or alter the Foreign Trade Policy and thereby curtail SEIS eligibility.

Analysis: The power to formulate and amend the Foreign Trade Policy lies with the Central Government under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. Policy circulars issued by administrative authorities can regulate procedure, but cannot introduce new conditions, restrictions, or definitions that modify the eligibility framework created by the policy. The circulars in question attempted to characterise the petitioner as an aggregator and to alter the treatment of earnings routed through it, which amounted to adding substantive conditions to the policy.

Conclusion: The circulars were ultra vires the Foreign Trade Policy and could not stand.

Issue (ii): Whether the petitioner, as a shipping agent, was entitled to SEIS benefit on the foreign exchange received for the services arranged and performed in the course of its business.

Analysis: The scheme under Chapter 3 of the Foreign Trade Policy rewards service providers of notified services located in India, provided the services are rendered in the manner contemplated by the policy and the minimum foreign exchange threshold is satisfied. The definition of service provider in Paragraph 9.51 covers cross-border supply of services from India, and the policy does not authorise recasting the entitlement by treating the petitioner only as a conduit for payments to third parties. On the facts, the petitioner performed the contractual service obligations and earned foreign exchange in respect of its service activity, so the benefit could not be denied by shifting the reward to downstream service providers through the impugned circulars.

Conclusion: The petitioner was entitled to SEIS benefit and the refusal order and show-cause notices were unsustainable.

Final Conclusion: The writ petition succeeded, the impugned circulars were struck down to the extent they curtailed the policy, and the consequential refusal and recovery proceedings were quashed.

Ratio Decidendi: Administrative circulars cannot amend or override a statutory foreign trade policy framed under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, and entitlement under SEIS must be determined according to the policy's own criteria for service providers and foreign exchange earnings.

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