DGFT to implement Supreme Court's Target Plus Scheme decision

The Dollar Business Bureau

The country’s apex court had delivered its judgement in the decade old litigation of Target Plus Scheme (TPS) for Export Promotion in the Civil Appeal No. 554/2006 titled DGFT v/s Kanak Exports & Ors., on 27th October 2015.

Accordingly, the Government has approved implementation of TPS for 2005-06 as per the Judgment of the Supreme Court. The recent notification No.06/2015-2020 dated May 8, 2017 has been issued in this regard. The DGFT has instructed all its Regional Authorities to re-examine all the eligible claims/applications pending for TPS 2005-06 for issue of the balance claim/recovery of wrong claims as applicable after ensuring due diligence and ensuring genuineness of the exports.

It has to be recollected that the Supreme Court in its Oct 2015 directive had held, “that Customs Notification No.48/2005 dated February 20, 2006 and Customs Notification No.8/2006 dated June 12, 2006 cannot be applied retrospectively and they would be effective only from the dates they were issued.” In other words the scope of benefits under the TPS was narrowed by the DGFT in the above given years after the scheme was implemented but the exporters were not satisfied and filed an appeal arguing that the new provisions could not be applied retrospectively which the apex court upheld.

As per a government press release the settlement of exporter’s claims under the TPS will have a revenue implication of about  Rs. 2700 crore to the government.

The Target Plus Scheme as a part of Foreign Trade Policy was announced on 31.08.2004 w.e.f. 01.04.2004. The objective was to accelerate growth in exports by rewarding Star Export Houses with minimum threshold export turnover of Rs.10 crore in the previous year. The scheme provided for three slabs of entitlement of duty credit scrips 5%, 10%, 15% based on the following 3 conditions:

1. Where the percentage incremental growth of exports was above 20% but below 25% the duty credit entitlement  was 5% of the incremental growth.
2. Where the percentage incremental growth was above 25% but below 100% the duty credit entitlement was 10% of the incremental growth.
3. Lastly where the percentage incremental growth was above 100% the duty credit entitlement was 15%.

The Scheme was in operation for the years 2004-05 and 2005-06.