2018 (7) TMI 928 - HC - Customs

Court upholds Govt of India Notification restricting pea imports to protect farmers

The court upheld the validity of the Government of India Notification No. 4/2015-2020 dated 25th April 2018, and the Trade Notice dated 18th May 2018. It ... Restriction on import of peas (yellow peas) - advance payments were made against import - Validity of Trade's Notification No.4 /215-220 dated 25th April, 2018 - Whether the Government of India, Ministry of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade's N/N. 4/215-220 dated 25th April, 2018, and particularly the Policy condition No.4 therein has been creating, according to some Regional authorities of the Directorate General of Foreign Trade, a situation where clarification was required to be obtained from the Government of India and particularly the Ministry as aforesaid? Held that:- It is no doubt that the principle, which is settled as far as administrative law is concerned, in unequivocal terms says that the statutory notifications, if required to be altered or amended in future, then, the same route has to be adopted and no administrative orders/executive instructions and circulars can then be issued so as to interfere with, much less amend the statutory prescriptions. A Notification in this case, according to the learned senior counsel appearing for the parties, has been issued in exercise of the statutory powers conferred by section 3 of the FTDR Act. Therefore, an amendment to the Notification has to be in like manner. Section 3 of the FTDR Act falls in Chapter II. Sub-section (1) says that the Central Government may, by order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. By subsection (2) of section 3, there is a power conferred in the Central Government to publish an order making prohibition or prohibiting or otherwise regulating the import or export of goods or services or technology. This can be subject to exceptions - Section 4 continues the existing orders made under the Imports and Exports (Control) Act, 1947, which is an Act repealed by section 20 of the FTDR Act. Section 5 provides for formulating and pronouncing FTP. If it is formulated and announced by a Notification in the Official Gazette, it can also be amended by the Central Government. It is the FTP vide its paras, which is stipulating certain measures and when there is any restriction placed on the imports, which are otherwise stated to be free. “Unless otherwise stipulated” are the words and expressions appearing in clause (b) of para 1.05, which would enable us to understand that it is not because there is a blanket provision made in para 1.05 that the restriction or regulation notwithstanding the export or import will ordinarily be permitted. If there is a stipulation otherwise, then, these wide or general words will not be of any assistance. As far as the subject Notification is concerned, it is apparent from a bare reading thereof that it is issued in exercise of the powers conferred by section 3. There is a clear stipulation therein and in that regard, the language of the same is important. The FTP, as amended from time to time, contains stipulations with regard to import. Now the import policy of certain items of Chapter 7 of the ITC (HS) 2017 stands amended. The revised import policy is restricted, which was free. The transitional arrangement, which has been clarified by this trade notice does not contravene the substantive provisions of the notification or section 3 of the FTDR Act in the Central Government. Petition fails and is therefore dismissed. Issues Involved:1. Legality of the Government of India Notification No. 4/2015-2020 dated 25th April 2018.2. Interpretation of Policy Condition No. 4 within the Notification.3. Validity of the Trade Notice dated 18th May 2018.4. Impact on importers who made partial advance payments before 25th April 2018.5. Balance between domestic agricultural interests and importers' rights.Detailed Analysis:1. Legality of the Government of India Notification No. 4/2015-2020 dated 25th April 2018:The court examined the Notification issued under the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act) and found it to be legally valid. The Notification sought to amend the import policy of peas under Chapter 7 of the ITC (HS) 2017, Schedule-I (Import Policy), changing the categorization from free to restricted for a specified period. The Notification was issued under the powers conferred by Section 3 of the FTDR Act, read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy (FTP) 2015-2020.2. Interpretation of Policy Condition No. 4 within the Notification:Policy Condition No. 4 specified that during the period from 1st April 2018 to 30th June 2018, a total quantity of one lakh metric ton of yellow peas minus the quantity already imported from 1st April 2018 till the date of issuance of the Notification would be allowed against a license. The term 'already imported' included shipments that had arrived from 1st April 2018 till 25th April 2018 and those backed by irrevocable commercial letters of credit (ICLC) or advance payments made through banking channels before 25th April 2018. The court clarified that 'advance payment' referred to the full payment of the contracted price and not partial or token payments.3. Validity of the Trade Notice dated 18th May 2018:The Trade Notice dated 18th May 2018, which clarified that only shipments backed by 100% advance payments before 25th April 2018 would qualify for registration, was challenged. The court held that this Trade Notice did not amend the Notification but merely clarified the existing policy condition to remove any confusion among the Regional Authorities. The Trade Notice was found to be consistent with the Notification and did not overreach or override it.4. Impact on importers who made partial advance payments before 25th April 2018:The court addressed the grievances of importers who had made partial advance payments before 25th April 2018 and found that their interpretation of 'advance payment' as including partial payments was incorrect. The Notification and subsequent clarifications clearly required full advance payment for the shipments to qualify for registration. Importers who made only partial payments were not eligible for the benefit of the relaxation provided by the Notification.5. Balance between domestic agricultural interests and importers' rights:The court recognized the government's responsibility to balance the interests of domestic producers and importers. The policy decision to restrict the import of peas was made to protect domestic farmers from the adverse impact of large-scale imports on local market prices. The government's stand was that allowing imports based on partial advance payments would defeat the purpose of the quota restrictions and further destabilize the domestic market. The court upheld the policy decision, emphasizing that it was within the government's discretion to impose such restrictions to safeguard the interests of domestic stakeholders.Conclusion:The court dismissed the writ petitions, upholding the validity of the Government of India Notification No. 4/2015-2020 dated 25th April 2018, and the subsequent Trade Notice dated 18th May 2018. The court found that the clarifications provided in the Trade Notice were consistent with the Notification and necessary to remove any confusion among the Regional Authorities. The court emphasized the importance of full advance payment for the registration of shipments and upheld the government's policy decision to balance the interests of domestic farmers and importers.