Court Rules Parts of Foreign Trade Policy Unconstitutional: Emphasizes Limits on Executive Power and Stresses Legal Adherence.

The court allowed the writ application, declaring Para 2.3 of the Foreign Trade Policy (FTP), Para 8.3.6 of the Handbook of Procedures (HOP), and Para 7 of the ANF-8 form ultra vires the Foreign Trade (Development and Regulation) Act and the Constitution of India. The court underscored the necessity for adherence to the statutory framework and the separation of powers, ensuring that executive authorities do not exceed their legislative limits. The petition was granted without any order as to costs, and a request for a stay of the judgment was denied.

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Issues Involved:
1. Constitutionality of Para 2.3 of the Foreign Trade Policy (FTP).
2. Validity of Para 8.3.6 of the Handbook of Procedures (HOP).
3. Authority of Para 7 of the declaration attached with ANF-8 form to re-verify or re-determine duty drawback benefits.

Issue-wise Detailed Analysis:

1. Constitutionality of Para 2.3 of the FTP:
The petitioner challenged Para 2.3 of the FTP, which grants the Director General of Foreign Trade (DGFT) the power to interpret the FTP, HOP, and other related classifications, making such interpretations final and binding. The petitioner argued that this provision violates Articles 14 and 19(1)(g) read with Articles 246 and 265 of the Constitution of India and the FTDR Act. The court held that while the DGFT's interpretations are binding on the authorities under the FTDR Act, they are not binding on the High Courts or the Supreme Court. The court emphasized that judicial authorities' interpretations should prevail over those made by the DGFT to ensure uniformity and adherence to the Constitution.

2. Validity of Para 8.3.6 of the HOP:
Para 8.3.6 of the HOP incorporates the Customs and Central Excise Duty Drawback Rules, 1995, mutatis mutandis to deemed exports. The petitioner contended that the DGFT does not have the authority to legislate or incorporate substantive laws by reference, as this power is reserved for the Central Government under Section 19 of the FTDR Act. The court agreed, stating that the DGFT's attempt to incorporate the Duty Drawback Rules through administrative guidelines is ultra vires the FTDR Act and violates the basic structure of the Constitution, particularly the separation of powers. The court declared Para 8.3.6 of the HOP ultra vires the FTDR Act.

3. Authority of Para 7 of the declaration attached with ANF-8 form:
Para 7 of the ANF-8 form requires claimants to refund any excess duty drawback determined upon re-verification. The petitioner argued that this provision unlawfully grants quasi-judicial powers to the DGFT and its subordinates, which are not provided for under the FTDR Act. The court held that the power to re-determine or re-verify duty drawbacks must be explicitly conferred by statute and cannot be assumed through administrative guidelines. The court found that the DGFT and its subordinates do not have the authority to re-determine or re-verify duty drawbacks once granted, except through the review process outlined in Section 16 of the FTDR Act. Consequently, Para 7 of the ANF-8 form was declared ultra vires the FTDR Act.

Conclusion:
The court allowed the writ application to the extent of declaring Para 2.3 of the FTP, Para 8.3.6 of the HOP, and Para 7 of the ANF-8 form ultra vires the FTDR Act and the Constitution of India. The court emphasized the need for adherence to the statutory framework and the separation of powers, ensuring that executive authorities do not overstep their legislative bounds. The petition was allowed without any order as to costs, and a request for a stay of the judgment was refused.

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