Special export incentive scheme prevails over general policy commencement clause for duty credit entitlement

A special incentive under the Served From India Scheme was construed by reference to its own text and object, not by the general commencement clause in the Foreign Trade Policy, 2009-2014. The Court held that Clause 3.12.4 entitled service providers to duty credit scrips equal to 10% of free foreign exchange earned during the relevant financial year, and that the reference in Clause 1.2 to the earlier policy governed general exports and imports rather than this specific entitlement. The demand for refund of excess credit with interest was therefore unsustainable, and the impugned order was set aside.

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Issues: Whether the petitioner was entitled under the Served From India Scheme to duty credit scrips at 10% of foreign exchange earned during the relevant current financial year, notwithstanding that the Foreign Trade Policy, 2009-2014 came into force on 27.08.2009 and contained a clause governing exports and imports up to 26.08.2009 under the earlier policy.

Analysis: The scheme was framed to promote export of services and Clause 3.12.4 conferred entitlement on all service providers to duty credit scrips equivalent to 10% of free foreign exchange earned during the current financial year. The reference in Clause 1.2 of the Foreign Trade Policy, 2009-2014 to the earlier policy was held to govern general exports and imports, not the entitlement under the special Served From India Scheme. The Court read the policy both according to its text and its object, and treated the special scheme as standing on a separate footing from the general commencement clause.

Conclusion: The petitioner was entitled to 10% duty credit under the scheme, and the demand for refund of excess credit with interest was unsustainable.

Final Conclusion: The impugned order was set aside and the writ petition was allowed, with refund of the surrendered scrip value directed to be given effect to in the manner ordered by the Court.

Ratio Decidendi: A special incentive entitlement under a targeted export promotion scheme must be construed according to the specific scheme provision and its object, and not curtailed by a general commencement clause governing the broader policy unless the policy expressly so provides.

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