Court allows duty-free import of vanaspati oil from Sri Lanka for petitioner who made advance payment. No retrospective application.

The court allowed the writ petition, holding that the petitioner, who had made advance payment before the public notice date, was entitled to import duty-free vanaspati oil from Sri Lanka. The court emphasized that the amended policy could not be applied retrospectively to completed transactions and there should be no discrimination between different modes of payment.

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Issues Involved:
1. Retrospective application of amended policy.
2. Validity of transactions completed before policy amendment.
3. Authority of Director General of Foreign Trade (DGFT) under the Foreign Trade Policy.
4. Impact of policy amendment on existing trade agreements and consignments in pipeline.
5. Discrimination between different modes of payment (advance payment vs. Letter of Credit).

Detailed Analysis:

1. Retrospective Application of Amended Policy:
The petitioner challenged the retrospective application of the amended policy, arguing that the amended terms should not affect transactions completed before the amendment. The court noted that the petitioner had entered into an agreement with a foreign supplier on May 16, 2006, and made an advance payment on May 26, 2006. The goods were shipped on June 9, 2006, before the public notice dated June 2, 2006, which restricted imports to National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED). The court held that the amended policy could not be applied retrospectively to transactions already completed.

2. Validity of Transactions Completed Before Policy Amendment:
The court observed that the petitioner had completed the transaction by making an advance payment before the issuance of the public notice. The court held that the petitioner should be entitled to import duty-free vanaspati oil from Sri Lanka, similar to those who had opened irrevocable Letters of Credit before the public notice. The court emphasized that the petitioner's transaction was valid and should not be subjected to the amended policy.

3. Authority of Director General of Foreign Trade (DGFT) under the Foreign Trade Policy:
The court examined the powers conferred on the DGFT under the Foreign Trade Policy, 2004-2009, specifically under paragraph 2.4. The DGFT issued the public notice restricting imports to NAFED, citing public interest. However, the court found that the DGFT's authority did not extend to applying the amended policy retrospectively to transactions already completed.

4. Impact of Policy Amendment on Existing Trade Agreements and Consignments in Pipeline:
The court noted that the public notice caused issues for consignments already in the pipeline. The respondents conceded that a clarification was issued allowing firms that had opened irrevocable Letters of Credit before the public notice to import vanaspati oil. The court held that the same benefit should be extended to the petitioner, who had made an advance payment before the public notice.

5. Discrimination Between Different Modes of Payment (Advance Payment vs. Letter of Credit):
The court addressed the issue of discrimination between different modes of payment. The respondents allowed imports for those who had opened irrevocable Letters of Credit before the public notice but did not extend the same benefit to those who made advance payments. The court found no justification for this discrimination and held that the petitioner, who made an advance payment, should also be allowed to import duty-free vanaspati oil.

Conclusion:
The writ petition was allowed, and the court held that the petitioner, who had sent the entire payment in advance before the date of the public notice, was entitled to import duty-free vanaspati oil from Sri Lanka. The court emphasized that the amended policy could not be applied retrospectively to transactions already completed, and there should be no discrimination between different modes of payment.

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