SC allows transfer plea on duty entitlement on exports

The Supreme Court has allowed the plea of Hindalco Industries and Sterlite Industries seeking transfer of petitions challenging a commerce ministry notification on duty refund from various High Courts.

A Bench headed by Justice Ashok Bhan allowed transfer of petitions pending before the High Courts of Bombay, and Punjab and Haryana involving the same issue to the apex court.

According to the companies, the petitions involving a common issue should be transferred to the apex court for an authoritative decision and to avoid conflicting decisions with regard to a notification dated June 12, 2006 issued in relation to Target Plus Scheme (TPS).

Earlier, the Director General of Foreign Trade had also sought transfer of the petitions.

The impugned Notification issued by the Ministry of Commerce in relation to TPS in the Foreign Trade Policy 2004-2009 was notified under Section 5 of the Foreign Trade (Development and Regulation) Act 1992.

According to the notification, the rate of duty credit entitlement in respect of incremental exports under TPS was reduced to 5 per cent retrospectively, Hindalco stated, adding that before the notification the duty credit entitlement was ranging between 5 per cent to 15 per cent of the incremental growth of exports.

The petitions filed through Praveen Kumar stated that the ministry did not have statutory authority to retrospectively amend TPS, which was a part of the foreign trade policy.

"Even after completing the incremental exports, the parties were denied the duty credit entitlement on account of illegal and retrospective withdrawal/reduction of benefits which had resulted in huge financial implications for exporters all around the country," the companies stated.

"On account of the pendency of various petitions in different high courts, the controversy is getting resolved and the business of exporters throughout the country is getting adversely affected," they added.

To accelerate the growth of exports, the foreign trade policy 2004-09 had introduced the scheme which entitled only Star Export Houses for a duty credit based on the incremental growth in Free on Board value of exports made during 2004-05 over the exports in the previous year.

Besides Hindalco and Sterlite, Indian Exporters Grievance Forum, Abhishek Industries and others had moved different High Courts challenging the amendments made in the policy that reduced the rate of entitlement to 5 per cent.