- with readers working within the Law Firm industries
- within Privacy, Insurance and Transport topic(s)
The Bombay High Court has held that exporters of white refined sugar are entitled to benefits under the Remission of Duties and Taxes on Export Products (RoDTEP) Scheme, even after sugar was classified as a “restricted” export item.
As we discuss below, stakeholders believe that while this decision was in relation to the export of white refined sugar, it will perhaps have ramifications well beyond the sugar sector and similar disputes could possibly emerge across a broad range of commodities, perhaps heralding a need for uniformity in governmental measure, particularly where the State itself sanctions and facilitates the underlying transactions.
Background
Rika Global Impex Ltd, Shree Renuka Sugars Ltd, K.S. Commodities Pvt Ltd and Uma Exports Ltd are engaged in exporting white refined sugar. These exporters contended that having obtained specific permissions from the Directorate of Sugar, Department of Food and Public Distribution (DFPD) as required under Notification No. 10/2015-20, by which the export policy for white sugar was revised from ‘free’ to ‘restricted’, the exporters ought to be allowed to claim duty credit on their exports. It was the exporters’ case that this was in line with the RoDTEP Scheme notified by the Government of India on 17 August 2021 and Notification No. 75/2021-Customs (N.T.) dated 23 September 2021.
The RoDTEP Scheme was introduced to provide a rebate of Central, State and Local taxes and duties which are not refunded under any other duty remission schemes. The exporter is permitted to make a claim under this scheme in the shipping bill by making a declaration which subsequently entitles the exporter for a rebate based on the rates prescribed by the Central Government for specific products covered by the Scheme.
Decision
The High Court held that exporters of sugar who obtained specific permission from the Directorate of Sugar (as required under the restriction policy) are entitled to RoDTEP benefits, and the mere classification of sugar as "restricted" does not automatically disqualify it from the scheme. It would be arbitrary to deprive the exporters of the benefits promised by the RoDTEP Scheme.
Concluding Remarks
The decision concluded that if the Directorate of Sugar has granted specific permission for sugar export, such exports cannot be treated as "restricted or prohibited" to deny RoDTEP benefits. Remission benefits may not be withheld particularly where the underlying exports are duly authorised under government-approved quota allocations.
In a statement made to Business Standard1, the Secretary General of the Federation of Indian Micro and Small and Medium Enterprises (FISME), observed that this decision of the Bombay High Court will have ramifications well beyond the sugar sector. Similar disputes could possibly emerge across a broad range of commodities — including rice, wheat, onion, pulses, edible oils, cotton, steel products and certain minerals — where export classifications are frequently revised from "free" to "restricted", yet shipments continue to be permitted under quota allocations, licences or other forms of specific government authorisation.
The press has reported widespread relief among exporters, as they see the decision as recognising that exporters cannot be penalised for policy transitions where they have acted in compliance with the framework prescribed by the government.
Footnotes
* Civil Writ Petition No 2310 of 2024.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
