Port restriction on treaty imports quashed for lacking nexus with trade agreement objectives

Restriction of polished marble slab imports from Sri Lanka to the Port of Calcutta alone was found invalid because it lacked a sufficient nexus with the stated treaty-related objectives. The Delhi High Court noted that concerns about misuse of Indo-Sri Lanka Free Trade Agreement benefits or non-Sri Lankan-origin goods could be addressed at any port, and that confining imports to one port would neutralise the duty concession rather than regulate it. The condition in Schedule-1, Section XIII of the Import Policy ITC (HS) 2012 was quashed, the port restriction was set aside, and duty collected on imports through other ports was directed to be refunded.

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Issues: Whether Condition No. 2 in Schedule-1 Section XIII of Import Policy ITC (HS) 2012, restricting import of polished marble slabs from Sri Lanka only through the Port of Calcutta, was valid.

Analysis: The restriction was examined against the scheme of the Indo-Sri Lanka Free Trade Agreement and the earlier judicial view striking down an identical restriction. The stated grounds, namely prevention of misuse of treaty benefits and protection of the domestic marble industry, did not furnish a sufficient nexus for confining imports to one port. If the concern was that non-Sri Lankan-origin goods were being imported, that could be checked at any port. If the object was to neutralize the duty concession granted under the treaty, that would defeat the very benefit of the concession rather than regulate its lawful use. The appropriate course for the Government, if aggrieved, was to seek exclusion of the goods from the treaty arrangement, not to render the concession ineffective by port restriction.

Conclusion: The condition was held invalid and was quashed. The import restriction to the Port of Calcutta only was set aside, and duty collected from imports through other ports was directed to be refunded.

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