Foreign Trade Policy benefits cannot be issued or withdrawn retrospectively – Exporters can claim benefit only when valid scheme is in operation

The Delhi High Court has partly allowed a writ petition filed by an Association of Chillies Exporters, challenging the foreclosure of the Transport and Marketing Assistance Scheme for Specified Agricultural Products notified by Notification No. 9 September 2021, by Notification dated 25 March 2022. The Court held that while the Central Government lacks statutory power under the Foreign Trade law to issue or withdraw export incentive schemes retrospectively, exporters cannot claim incentives for a period when no valid scheme was in operation.
 

During the period from 1 April 2021 till 8 September 2021, the TMA Scheme was not in operation. However, vide notification dated 9 September 2021 the Scheme was made applicable with retrospective date, i.e. 1 April 2021 and was to operate till 31 March 2022. Notification dated 9 September 2021 was however withdrawn by notification dated 25 March 2022 with the objective to foreclose the Scheme to revamp, redesign and refocus it better for better outcomes. 
 

The Delhi High Court in Chillies Exporters Association India v. Directorate General of Foreign Trade & Anr. thus concluded that no right can be said to have accrued to the chilli exporters during the period from 1 April 2021 to 8 September 2021. It was however held that if any exporter had exported the goods on and after 9 September 2021 till 24 March 2022, such an exporter shall be eligible to claim incentive under the TMA Scheme for this period alone.
 

The objection to foreclosure of the Scheme by notification dated 25 March 2022 was thus partly dismissed. Supreme Court decision in the case of Kanak Exports wherein it was held that Section 5 of the Foreign Trade (Development and Regulation) Act does not empower the Central Government to issue any notification with retrospective effect, was relied here.