Export restriction and customs control: pre-existing irrevocable letter of credit protected sugar shipments from later policy ban.

A later Foreign Trade Policy prohibition on sugar exports did not apply to consignments covered by an irrevocable letter of credit opened before the restriction, because the transitional clause preserved shipments that were earlier freely permitted within the letter of credit's validity period. Customs also had no lawful basis to stop export merely for absence of clearance from the Directorate of Sugar, as the governing control order and standing order did not authorise such refusal. The writ application therefore succeeded and export of the covered quantity of sugar within the credit period was permitted.

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Issues: (i) Whether the amendment to the Foreign Trade Policy prohibiting export of sugar applied to consignments covered by an irrevocable letter of credit opened before the restriction came into force; (ii) Whether the Customs authorities could stop export of sugar on the ground of want of clearance from the Directorate of Sugar.

Issue (i): Whether the amendment to the Foreign Trade Policy prohibiting export of sugar applied to consignments covered by an irrevocable letter of credit opened before the restriction came into force.

Analysis: The policy in force originally permitted free export of sugar other than preferential quota sugar. The later notification amended the policy to place sugar in the prohibited category, but the transitional arrangement in paragraph 1.5 preserved exports that were earlier freely permitted if shipment was made within the validity of an irrevocable letter of credit established before the date of restriction. The letter of credit in this case was opened before the amendment and therefore fell within the protected transitional window.

Conclusion: The restriction did not apply to the petitioner's consignments covered by the earlier irrevocable letter of credit, and export could not be denied on that basis.

Issue (ii): Whether the Customs authorities could stop export of sugar on the ground of want of clearance from the Directorate of Sugar.

Analysis: The Sugar Control Order and the customs standing order did not disclose any authority permitting Customs to block export of a commodity that was otherwise freely exportable merely because clearance from the Directorate of Sugar had not been produced. In the absence of such enabling authority, the refusal to permit shipment could not be sustained.

Conclusion: The Customs authorities had no lawful basis to prevent export on the stated ground, and the interference with shipment was unjustified.

Final Conclusion: The writ application succeeded and the petitioner was entitled to export the covered quantity of sugar within the validity period of the letter of credit.

Ratio Decidendi: A later export restriction cannot be applied to shipments covered by an irrevocable letter of credit protected by the policy's transitional clause, and Customs cannot withhold export absent legal authority under the governing control order or policy.

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