Export Incentive SCNs under FTDR Act: Validity Checks, Responses and Legal Remedies

Gaurav Arya | Last updated: 29 April 2025

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Show Cause Notices (SCNs) are being issued for the recovery of SEIS/MEIS duty credit scrips under the FTDR Act. It's crucial to first check the validity of these notices. Key checks include the issuing authority's competency and whether the notice was issued within the two-year limitation period from the scrip's grant. If valid objections exist, a formal reply should be submitted, and if necessary, a writ petition can be filed in the High Court.

Show Cause Notices (SCNs) are increasingly being issued seeking recovery of duty credit scrips granted under the Service Exports from India Scheme (SEIS) / Merchandise Exports from India Scheme (MEIS). These notices are issued under the Foreign Trade (Development and Regulation) Act, 1992 (the "FTDR

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FAQ :

Under Section 16 of the FTDR Act, only the DGFT or the Central Government is empowered to issue Show Cause Notices for reviewing or recalling orders related to the grant of scrips. Powers cannot be delegated to subordinate officers.

A Show Cause Notice prejudicial to the recipient must be issued within two years from the date of the decision or order granting the duty scrip, as per the proviso to Section 16 of the FTDR Act.

Your response should include formal objections regarding lack of jurisdiction and/or limitation, stating that the issuing officer is not competent or that the notice is time-barred. Annex supporting legal provisions and request the SCN be quashed or withdrawn.

If authorities proceed despite objections, a writ petition can be filed before the appropriate High Court under Article 226 of the Constitution of India on grounds of lack of jurisdiction, violation of statutory limitation, or violation of natural justice.

Key defences include lack of jurisdiction (notice issued by a non-competent officer), the notice being time-barred (issued beyond two years), the SCN being non-speaking or vague, and violation of the principles of natural justice.