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Government of India
Ministry of Commerce & Industry
Department
of Commerce
Directorate General of Foreign Trade
Udyog Bhawan, New Delhi
Trade Notice No. 07/2018
Date: 8th May 2017
To
1. All RAs of DGFT
2. Customs Authorities
Subject: Implementation of the Hon’ble Supreme Court’s Judgment dated
27th Oct 2015 in Civil Application No. 554 of 2006 with regard to recovery of
Duty Free Credit Entitlement (DFCE) Scheme Scrips for the exports made in the
year 2003- 04.
a. Duty Free Credit Entitlement (DFCE)Scheme: As per Exim Policy w.e.f
01.04.2003, under DFCE Scheme duty free import entitlement was available to
status holder exporters having incremental growth of more than 25% in FOB value
of exports in free foreign exchange subject to a minimum export turnover of ₹ 25
crore in free foreign exchange in the growth year. The duty free entitlement in
the form of Duty Credit Scrip was 10% of the incremental growth in exports.
b. Litigation: Certain amendments were made vide Notification No. 28 dated
January 28, 2004 in the DFCE Scheme. Vide Public Notice No. 40 dated 28.01.2004,
the Government announced exclusion of export performance in relation to certain
classes of goods from computation of the entitlement under the Scheme and, at
the same time, sought to disallow the import of agricultural products falling
under Chapters I to XXIV of ITC (HS) under the said scheme. This was followed by
Notification No. 38 dated April 21, 2004 and Notification No. 40 dated April 23,
2004 on the same lines on which Public Notice dated January 28, 2004 was issued.
c. Judgement: The above Notifications dated 28.01.2004, 21.04.2004 and
23.04.2004 and the Public Notice dated 28.01.2004 were challenged in various
High Courts and finally in the Supreme Court. The Hon’ble Supreme Court has held
that:
I. the Notification No.28 dated 28.01.2004 is clarificatory and validity of
the same has been upheld (Para 85 of the Judgement).
ll. the Public Notice No. 40 dated 28.01.2004 is ultra vires (Para 96 of the
Judgement)
III. decisions taken in the Notifications No 38 dated April 21st, 2004
and No. 40 dated 23rd April , 2004 did not take away any vested right of the
petitioner exporters and amendments were necessitated by over-whelming public
interest / considerations to prevent the misuse of the Scheme. Therefore, even
when the impugned Notifications issued under Section 5 could not be
retrospective in nature, “such retrospectivity has not deprived the writ
petitioners/exporters of their right inasmuch as no right had accrued in favour
of such persons under the Scheme. This Court or for that matter the High Court,
in exercise of its writ jurisdiction, cannot come to the aid of such
petitioners/exporters who, without making actual exports, play with the
provisions of the Scheme and try to take undue advantage thereof. To this
extent, direction of Bombay High Court granting these exporters benefit of the
scheme for the past period is set aside”(para 114 of the Judgement).
d. Implementation: Hence, as per the Judgement of the Hon’ble Supreme Court,
the recoveries, if any, of DFCE shall be processed as per the decision of the
Hon’ble Supreme Court as per procedure as under:
I. Zonal Committees: Zonal Committees shall be constituted comprising Zonal
Additional DGFT, Officials from the Regional Customs Authority, Excise
Authority, DRI, Income Tax Authority and any such other agencies as deemed
necessary by the Zonal Committees. All applications/cases of misuse shall be
compulsorily placed before the concerned Zonal Committees. Any
applications/cases of misuse pending in any other Regional offices shall be
placed before the respective Zonal Committees for appropriate decision and the
Head of such RA shall be a member for such cases in the respective Zonal
Committees.
ll. Irregular cases: No legal right shall accrue to the exporters who misused
Duty Free Credit Entitlement (DFCE) Scheme as established in the investigations
of Revenue Department (DRI/Customs). All cases of reported misuse of DFCE shall
be subject to rigorous scrutiny and appropriate recovery.
e. Reporting: RAs, shall submit fortnightly progress report of the status of
implementation of the decision of the Hon’ble Supreme Court including the name
of the exporters and the value of recoveries made. Any difficulties in the
implementation of the orders dated 27.10.2015 Hon’ble Supreme Court and the
above instructions shall be brought to the notice of this Directorate.
f. This issues with approval of Competent Authority
Lokesh HD
Joint Director General of Foreign Trade
[File No:
011/94/180/893/AM08/PC-3(part)]
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