Scheme Benefits

The Bombay High Court has held that the Joint Directorate General of Foreign Trade (DGFT) was unjustified in denying Cash Compensatory Support Scheme benefits for castor oil exports based on a new technical test. The bench of Justice M.S. Sonak and Justice Jitendra Jain has observed that exports made under contracts prior to June 1989 should not be impacted by subsequent scheme modifications. The respondents/department were found unjustified in denying Cash Compensatory Support Scheme benefits for castor oil exports based on a new technical test. The court directed the department to pay cash assistance of Rs. 4,33,75,866 within 8 weeks, with 6% interest if payment is delayed. The petitioner/assessee has challenged the order dated 29 October 1993 passed by the Joint DGFT by which the Petitioner's application, for the period 3 July 1989 to 7 May 1991, for refund of Cash Compensatory Scheme (CCS) has been rejected primarily on the ground that 'Castor Oil First Special Grade' cannot be equated as 'Castor Oil Medicinal' for grant of benefit of CCS. The petitioner contended that on an identical issue the Coordinate Bench of this Court in the Petitioner's own case while dealing with the refund of duty drawback has held that 'Castor Oil First Special' qualifies as 'Castor Oil Medicinal' for the purpose of duty drawback. He submitted that the said decision squarely covers the controversy raised in the present Petition and therefore the Respondents be directed to refund the cash compensatory amount as prayed for. The department contended that the decision of the Co-ordinate Bench in Writ Petition No. 871 of 1994 dealt with duty drawback scheme whereas the present Petition deals with Cash Compensatory Support Scheme. He submitted that post the introduction of new Circular laying down new tests, the Petitioner is not entitled to the said benefit for the period under consideration. The issue raised was whether the goods 'Castor Oil Medicinal' is different than the 'Castor Oil First Special' post of the introduction of the new test i.e. TLC. The court held that The Circular dated 31 March 1989 by which rate of 5% of FOB as CCS was granted applied for the period 1 April 1989 to March 1992 and as per the said Circular, the benefit of CCS was granted to the Petitioner on export of goods on the premise that the same constitutes of ‘Castor Oil Medicinal’. The court held that since the Circular applied for the period 1989 to 1992, the Respondents were not justified in denying the benefit of CCS for the period 22 June 1989 to 8 May 1991 merely on the basis of change of test to be conducted. Case Details Case Title: Sanjay Kumar Agarwal Versus Union of India Case No.: WRIT PETITION NO.872 OF 1994 Date: 12 June 2025 Counsel For Petitioner: Gouresh Mogre a/w Ms Tripty Kapadia i/by Joy Legal Consultants Counsel For Respondent: Dr G R Sharma a/w Mr D P Singh and Mr Vikas Salgia Click Here To Read Order Read More: Free Trade Agreement Doesn’t Deprive Customs Dept. Of Their Powers To Issue SCN: Bombay High Court

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