Exporter’s 2014-15 IEIS Claim Fails As Karnataka HC Says FTP Extension Did Not Extend Scheme

In brief

The question

1. Whether the notification dated 19 February 2014, extending FTP 2009 until further orders, also extended the IEIS to financial year 2014–15.

The court held

The Court answered the issues against the appellant, holding that the extension of FTP 2009 did not extend IEIS to financial year 2014–15 and that the appellant was not entitled to the claimed benefits.

It also directed

The writ appeal was dismissed.

01Facts

The appellant challenged the rejection of its application for benefits under the Incremental Exports Incentivisation Scheme (IEIS) for financial year 2014–15.

pp. 2–5

The rejection letter stated that the scheme had not been extended for that period.

pp. 2–5

The appellant argued that a notification dated 19 February 2014, which continued the Foreign Trade Policy 2009–2014 (FTP 2009) “until further orders,” also continued the IEIS. A Single Judge dismissed the writ petition, and the appellant appealed.

pp. 2–5

02Issues

i.1. Whether the notification dated 19 February 2014, extending FTP 2009 until further orders, also extended the IEIS to financial year 2014–15.

pp. 5–6

ii.2. Whether the appellant was entitled to IEIS benefits for exports made in financial year 2014–15.

pp. 6–7

03Law Applied

Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 empowers the Central Government to formulate, announce and amend the Foreign Trade Policy by notification in the Official Gazette.

p. 6

Paragraph 3.14.5(c) of FTP 2009 made IEIS benefits admissible only where an IEC holder achieved incremental export growth in financial year 2013–14 compared with financial year 2012–13.

pp. 3–4, 6

Extending the duration of the policy did not, without an amendment to the scheme’s terms, extend IEIS to a later financial year.

p. 6

Provisions in the judgment · 2 · Linked ones open on LawLens

KARNATAKA HIGH COURT ACT, 1961 Section 4

Foreign Trade (Development and Regulation) Act, 1992 Section 5

04Reasoning

The Court held that the 19 February 2014 notification extended the period during which FTP 2009 remained in force but did not amend paragraph 3.14.5 or alter the financial-year limits stated in paragraph 3.14.5(c).

p. 6

Because the scheme expressly tied eligibility to growth achieved in 2013–14 against 2012–13, continuation of the policy alone did not create entitlement for exports made in 2014–15.

pp. 6–7

The Court also noted that FTP 2015–2020, effective from 1 April 2015, did not provide IEIS incentives, and that the DGFT stated no exporter had received IEIS benefits for 2014–15.

pp. 6–7