The Bombay High Court allowed RoDTEP benefits to sugar exporters and flagged inconsistent litigation by the Centre, calling for a National Litigation Policy to ensure uniformity

In a ruling that could have wider implications for exporters of regulated commodities, the Bombay High Court has held that sugar shipments made with specific government permission and allocated quotas remain fully eligible for benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, even after the export policy was changed to "restricted". RoDTEP is a government scheme that refunds embedded duties and taxes on exported items to make Indian goods more competitive globally. More significantly, the court flagged "judicial chaos" caused by the Centre's inconsistent litigation strategy across High Courts and called for a clear "National Litigation Policy" to ensure uniformity on central trade and tax laws.

A division bench, in a common judgment delivered on April 20, allowed a batch of writ petitions filed by major sugar exporters including Rika Global Impex, Shree Renuka Sugars, K S Commodities and Uma Exports. The court ruled that the Revenue's denial of RoDTEP benefits was arbitrary. It observed that once the government itself permitted the exports through the quota mechanism notified by the Directorate of Sugar, Department of Food and Public Distribution (DFPD), after a notification issued in May 2022, the shipments could not be disqualified from the incentive scheme merely on the ground that sugar had been placed in the "restricted" category.

The dispute arose when the government shifted sugar (raw, refined and white sugar) from the "free" to "restricted" export category via the May 2022 notification to maintain domestic availability and price stability. The same notification, however, explicitly allowed exports under specific permission from the DFPD. The petitioners had exported white refined sugar within the approved quotas, fulfilled all conditions including realisation of export proceeds, and claimed RoDTEP duty credit. Customs authorities denied the benefit, citing that sugar was a "restricted" item for export and was therefore ineligible under the RoDTEP scheme guidelines.

The Bombay High Court followed earlier decisions of the Gujarat High Court in Shree Renuka Sugars Ltd and Satyendra Packaging Ltd. Both those orders became final after the Supreme Court dismissed the Revenue's Special Leave Petition.

The court directed the authorities to grant RoDTEP benefits to the petitioners who exported sugar with specific DFPD permissions and have not yet received them, to refund any amounts already recovered from the exporters along with 6 per cent interest per annum within four weeks, and to refrain from taking any coercive recovery action.

Also Read

Bombay High Court refers GST consolidated SCN issue to larger bench

Consumer protection: Flat buyers' rights must not be scuttled by financierspremium

No plans to impose curbs on sugar exports: Food Secretary Sanjeev Chopra

Marital discord alone not basis for abetment of suicide charge: Bombay HC

Bombay HC seeks Maharashtra govt's response on Muslim quota plea

Advocate Abhishek A Rastogi, founder of Rastogi Chambers, who appeared for the petitioners, stated, "This judgment is a decisive reaffirmation of the principle that executive actions must be applied consistently and cannot operate to the detriment of taxpayers where the Government itself has permitted and facilitated the underlying transactions... This ruling brings much-needed certainty and restores commercial confidence for exporters operating under tightly regulated regimes."

According to Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small and Medium Enterprises (FISME), the Bombay High Court ruling in the sugar export matter has implications far beyond sugar, as similar issues can arise in commodities such as rice, wheat, onion, pulses, edible oils, cotton, steel products and certain minerals, where exports are often shifted from "free" to "restricted" category but continue to be allowed under quotas, licences or specific government approvals.

"...For small and medium businesses, the larger concern is policy uncertainty leading to avoidable litigation and blocked export incentives. FISME believes the government should issue a uniform clarification that exports allowed under notified quotas or official permissions will remain eligible for remission benefits unless specifically excluded," Bhardwaj added.

Suresh Agarwal, promoter, Rika Exports, said, "Our exports were undertaken strictly in accordance with government-approved quotas and permissions, and the subsequent denial of RoDTEP scheme benefits had created significant financial and operational strain. The High Court's decision rightly recognises that exporters cannot be penalised for policy transitions when they have acted in full compliance with the framework prescribed by the government."

Bombay HC grants RoDTEP relief to sugar firms, flags litigation chaos