In their plea, the exporters have claimed that through the October 2017 notification, the DRI arbitrarily removed the services that were deemed as exports
under annexure 5 (D) of the Foreign Trade Policy. They said these exports
were also counted towards discharge of export obligation under the Export Promotion Capital Goods (EPCG) Scheme. The new license norms said that export of only physical goods would be allowed and it was applicable retrospectively.
“If the benefits were promised in public interest then curtailment of such benefits midway will have to be justified,” said Rastogi. The exporters had applied for the licenses with an understanding that the services would be allowed to be a part of export obligations, he said.
In the pre-GST era, exporters could use the EPCG Scheme to import capital goods without payment of any Customs duty such as Basic Customs Duty (BCD), Special Additional Duty (SAD), and Countervailing Duty (CVD). These exemptions were valid if they exported services that were at least six times of the duty saved. In 2017, however, the government curtailed upfront duty exemption available on import of capital goods against the EPCG Scheme to allow only BCD, SAD and CVD. “The imposed restriction appears to be an afterthought,” the exporters said in their plea.