Service Exports from India Scheme (SEIS) was introduced under the Foreign Trade Policy (FTP) 2015-20 with the objective to promote and encourage the export of services from India. Under this scheme, the exporters of notified services are rewarded at the rates specified under Appendix 3D. The incentive is provided in the form of a duty credit scrip which can be utilized for the payment of customs duties and is freely transferable. The exporters of eligible services are required to make a claim under this scheme with the Director General of Foreign Trade (DGFT) department in the prescribed format, based on the foreign exchange earned by them during the relevant year.

While assessing the applications filed by the service exporters, the department may come across various situations wherein the application is found to be deficient of documents/ information as is required for determining the eligibility under this scheme. The applicant is required to rectify the defect within the stipulated time period and in case the same is not rectified, the department issues a rejection letter denying the benefit of the scheme to the applicant. Similarly, in certain cases, if the department is of the opinion that the services provided by the applicant do not qualify to be rewarded under this scheme, the department may deny the benefit and reject the claim of the applicant.

It appears that department is utter confused while rejecting the claims of the exporter. The department is adopting different practice while rejecting the claims of the exporter. Different practices adopted by the DGFT in this regard are summarized below:

1) Review Application under Section 16 of the FTDR Act, 1992: In some situation, the DGFT while rejecting the claim of the exporters has mentioned that they can seek the review application against such rejection under Section 16 of the FTDR Act. Section 16 of the FTDR empowers the Central Government/DGFT to examine the correctness and legality of the order passed by the DGFT or any other officer subordinate to him, as the case may be, after giving an opportunity of the being heard to the parties concerned and pass an order as it may be deemed fit. There is no time limit prescribed for filing review application under Section 16 of the FTDR Act.

2) Filing Appeal under Section 15 of the FTDR Act, 1992: It is to be noted that in some cases, the DGFT while rejecting the claim of the exporters has mentioned that they can file an appeal against such rejection under Section 15 of the FTDR Act, 1992. The relevant extract of section 15 is reproduced hereunder:

“15 Appeal – (1) Any person aggrieved by any decision or order made by the Adjudicating Authority under this act may prefer an Appeal, –

(a) Where the decision or order has been made by the director general, to the central government;

(b) Where the decision or order has been made by an officer subordinate to the director general, to the director general or to any officer superior to the Adjudicating Authority authorised by the Director General to hear the appeal, Within a period of forty five days from the date on which the decision or order is served on such person”

Section 9(5) of the Act is reproduced below:

An appeal against an order refusing to grant, or renew or suspending or canceling, a [license, certificate, scrip or any instrument bestowing financial or fiscal benefits] shall lie in like manner as an appeal against an order would like under Section 15.

Reading Section 9 and 15 together, it appears that where DGFT has rejected the claim of the exporter, an appeal should be filed.

3) Issuance of Show Cause Notice: This is the third different practice adopted by DGFT while rejecting the SEIS claim. It has been noticed that in some cases the DGFT before rejecting any case is issuing formal SCN to the exporter.

4) Representation under para 2.05(a) of FTP: Interestingly, in certain cases the DGFT department is also instructing the exporters to file a review application under para 2.05(a) of the Handbook of Procedures 2015-20 before the Additional DGFT. The exporters have received some letters wherein it has been mentioned that exporters can file a representation under para 2.05(a) of FTP.

Therefore, four different practices are being followed by DGFT. The department is adopting different practices in different cases and suggesting incorrect legal provisions to the applicant. It seems that the DGFT department is itself confused with respect to the correct approach which  needs to be followed. The exporters are currently complying with the instructions as given by the DGFT department while rejecting the claim. In any case, a clarification from the DGFT department is highly needed so that confusion created by the regional offices can be cleared.

This article has been authored by Abhishek Jain and co-authored by Anushka Jain.

Abhishek Jain and Anushka Jain

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Qualification: LL.B / Advocate
Company: RSA LEGAL SOLUTIONS
Location: GURGAON, Haryana, IN
Member Since: 04 Dec 2019 | Total Posts: 3

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