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Issues: (i) Whether MEIS scrips, though already availed and whose validity period had expired, could be cancelled retrospectively under Section 9(4) of the Foreign Trade (Development and Regulation) Act, 1992 read with Rule 10 of the Foreign Trade (Regulation) Rules, 1993. (ii) Whether the authorities satisfied the requirements of the governing provisions before cancelling the scrips. (iii) Whether the appellate authority applied its mind and recorded proper reasons while affirming the cancellation.
Issue (i): Whether MEIS scrips, though already availed and whose validity period had expired, could be cancelled retrospectively under Section 9(4) of the Foreign Trade (Development and Regulation) Act, 1992 read with Rule 10 of the Foreign Trade (Regulation) Rules, 1993.
Analysis: Section 9(4) empowers cancellation of a scrip only for good and sufficient reasons and subject to the prescribed conditions. Those conditions are found in Rule 10 of the Foreign Trade (Regulation) Rules, 1993. The validity of the scrips had expired, but the power under Section 9(4) was treated as wide enough to permit cancellation where the underlying decision required reconsideration. The Court declined to accept the contrary view that an expired scrip could never be cancelled.
Conclusion: Yes. The scrips could be cancelled retrospectively even after expiry of their validity period.
Issue (ii): Whether the authorities satisfied the requirements of the governing provisions before cancelling the scrips.
Analysis: The order in original and the appellate order did not identify which specific condition under Rule 10 had been satisfied. Rule 10(a) was inapplicable because fraud, suppression of facts, or misrepresentation was not established. Rule 10(b) and Rule 10(c) were also inapplicable. Rule 10(d) could not be invoked because the alleged default was treated as a foreign trade policy issue rather than a contravention of customs law, foreign exchange law, or the rules and regulations relating thereto. The cancellation was therefore unsupported by the required statutory basis.
Conclusion: No. The cancellation was not shown to satisfy the statutory requirements.
Issue (iii): Whether the appellate authority applied its mind and recorded proper reasons while affirming the cancellation.
Analysis: The appellate order merely reproduced a conclusion that cancellation was permissible after hearing, but it did not examine the relevant rule or explain how the facts fitted any condition under Rule 10. The absence of a reasoned connection between the facts and the enabling provision showed non-application of mind.
Conclusion: No. The appellate authority failed to give proper reasons or demonstrate due application of mind.
Final Conclusion: The appellate order could not be sustained and the matter had to be reconsidered by the appellate authority on its own merits in the light of the Court's observations. The writ petitions succeeded and the dispute was sent back for fresh decision.
Ratio Decidendi: Cancellation of a fiscal scrip under Section 9(4) of the Foreign Trade (Development and Regulation) Act, 1992 must be grounded in a specific prescribed condition under Rule 10 of the Foreign Trade (Regulation) Rules, 1993 and supported by a reasoned order identifying that condition.
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