Cabinet Approves Implementation Of SC Order On Target Plus Scheme

The Union Cabinet on Wednesday approved the implementation of the Supreme Court's judgement on eligibility under the Target Plus scheme for exporters that will lead to settling of claims as per original provisions of the foreign trade policy (FTP).

As per an official release, the revenue implication of settlement of exporters’ claims is ₹2700 crore. The benefit is being extended to all the applicant exporters eligible as per provisions of the initially notified TPS Scheme under FTP for the year 2005-06, and as per provisions of Foreign Trade Policy 2004-09 throughout the country.

“The corrective measure will bring an end to multiple litigations with the Government and the claims under the TPS will be issued as per original provisions under Foreign Trade Policy in compliance with the decision of the Hon’ble Supreme Court,” the release states.

The Scheme was floated to accelerate quantum growth in exports. The scope of benefits under the TPS was, however, narrowed after the scheme was implemented. Subsequently, in a judgment delivered in October, 2015 in the case of Director General of Foreign Trade and Anr. v. M/s Konark Exports and Anr., the Apex Court had ruled that the two notifications relating to Target Plus Scheme cannot be applied retrospectively, and can be made effective only from the date of their issue. Notification No. 48/2005 dated February 20, 2006 had made certain products ineligible, and Notification No. 8/2006 dated June 12, 2006 had reduced the rates to 5% from the earlier 5, 10 and 15%.

The Court observed that once the star export houses achieved the quantum growth in exports, they acquired a vested right to avail the duty credit entitlement and achieve higher rate, i.e. 10% or 15%. The retrospective application, however, reduced the same to 5%, taking away their right to the duty credit entitlement.

The claims will now be considered as per original notifications till the date of the two new notifications. “The guidelines and modalities for processing the claims will be worked out by the DGFT in consultation with the Department of Revenue and is proposed to be completed in one year from the date of approval of the Cabinet,” the release further stated.