Retrospective curtailment of export incentives is impermissible, and polyester fabrics were treated as eligible under the handbook entry.

A policy circular cannot retrospectively narrow eligibility under an export incentive scheme or authorise recovery of duty credit benefits already granted, because accrued entitlement cannot be withdrawn through delegated clarification. The text also states that polyester printed and dyed fabrics fall within Entry 33 of Table 4 of Appendix 37D, as the entry covers technical textiles and is read broadly in line with the relevant ITC (HS) classification. On that basis, the exports remained eligible for the stated incentive, and the recovered duty credit scrips and interest were required to be returned or reissued by way of refund or equivalent scrip issuance.

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Issues: (i) Whether the Directorate General of Foreign Trade could, by a policy circular, restrict the scope of eligible items under the export incentive scheme with retrospective effect and recover benefits already granted; (ii) Whether polyester fabrics fell within Entry 33 of Table 4 of Appendix 37D of the Handbook of Procedures Volume 1.

Issue (i): Whether the Directorate General of Foreign Trade could, by a policy circular, restrict the scope of eligible items under the export incentive scheme with retrospective effect and recover benefits already granted.

Analysis: The governing policy entitled exports of notified products to duty credit scrips. The earlier decision relied upon held that neither the Central Government nor the Directorate General of Foreign Trade had the power to amend the Foreign Trade Policy or withdraw export benefits with retrospective effect. A policy circular could not be used to curtail eligibility already accrued under the scheme or to sustain recovery of benefits already issued.

Conclusion: The retrospective restriction and consequent recovery were invalid.

Issue (ii): Whether polyester fabrics fell within Entry 33 of Table 4 of Appendix 37D of the Handbook of Procedures Volume 1.

Analysis: Entry 33 described technical textiles as woven fabrics of synthetic filament yarn under ITC (HS) Code 5407. The earlier binding interpretation accepted that polyester printed and dyed fabrics were covered by that entry, both because the language of the entry was broad enough and because the goods corresponded to the relevant ITC (HS) classification. On that interpretation, the petitioners' exports qualified for the stated export benefit.

Conclusion: The exported products were covered by the relevant entry and were eligible for the benefit.

Final Conclusion: The petitions succeeded and the recovered duty credit scrips and interest were directed to be returned through refund or equivalent issuance of duty credit scrips.

Ratio Decidendi: A delegated authority cannot retrospectively curtail accrued export incentive benefits by circular, and the eligibility of goods under an incentive entry must be determined according to the ordinary and contextually accepted scope of the entry.

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