DGFT cannot override EXIM Policy by circulars when policy expressly permits duty free import under advance licence.

The DGFT cannot use circulars, a public notice, or procedural instructions to override the EXIM Policy or curtail an entitlement expressly granted by it. Where the Foreign Trade (Development and Regulation) Act vests policy-making and amendment power in the Central Government, the DGFT may only implement the policy consistently with that framework. Because the EXIM Policy permitted duty free import of natural rubber under an advance licence, the contrary circulars and public notice were beyond power and invalid. The related show cause notice for cancellation of the advance licence, being founded on those invalid instruments, was also unsustainable and was quashed.

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Issues: (i) Whether the DGFT could, by circulars and a public notice, prohibit duty free import of natural rubber under an advance licence when the EXIM Policy permitted such import; (ii) whether the consequent show cause notice for cancellation of the advance licence was sustainable.

Issue (i): Whether the DGFT could, by circulars and a public notice, prohibit duty free import of natural rubber under an advance licence when the EXIM Policy permitted such import.

Analysis: The Foreign Trade (Development and Regulation) Act, 1995 vested the power to frame and amend the export-import policy in the Central Government. The DGFT was empowered to carry out and implement the policy, and to prescribe procedures, but not to amend or override the policy itself. The EXIM Policy expressly allowed duty free import of natural rubber under an advance licence, and the impugned circulars and public notice sought to prohibit what the policy permitted. Procedural instructions could regulate implementation only to the extent they remained consistent with the policy, and could not be used to alter substantive policy.

Conclusion: The circulars and the public notice were ultra vires, without jurisdiction, and invalid.

Issue (ii): Whether the consequent show cause notice for cancellation of the advance licence was sustainable.

Analysis: The show cause notice was founded on the invalid circulars and the invalid amendment to the Handbook of Procedures. Once the prohibition issued by the DGFT was held to be beyond power, the foundation for cancellation of the advance licence disappeared.

Conclusion: The show cause notice was not sustainable and was quashed.

Final Conclusion: The petition succeeded because the policy permitted duty free import under advance licence and the DGFT could not, by subordinate procedural action, negate that entitlement.

Ratio Decidendi: Where a statute reserves the power to amend policy exclusively to the Central Government, the implementing authority cannot, through circulars or procedural instructions, override or amend the policy or curtail rights expressly conferred by it.

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