2018 (10) TMI 337 - HC - Customs

Court quashes DGFT notification, cites lack of jurisdiction and procedural non-compliance. Significant impact on petitioner's newspaper business.

The court quashed the impugned notification dated June 3, 2016, issued by the DGFT, citing lack of jurisdiction and non-compliance with procedural ... Jurisdiction - Power of DGFT to amend the Foreign Trade policy - import of Newsprint - Validity of N/N. 09/2015-20 dated June 3, 2016 issued by Director General of Foreign Trade - The impugned notification requires small business persons to comply with such requisitions which are onerous. Held that:- Section 5 of the Act of 1992 allows the Central Government to formulate the foreign trade policy and to amend it. Section 3 of the Act of 1992 allows the Central Government to make provisions for prohibiting, restricting or otherwise regulating import or export of goods or services or technology. In the present case, by the impugned notification, a foreign trade policy has been sought to be amended - The Central Government could have done so in exercise of powers under Section 5 of the Act of 1992. It has however chosen to involve the provisions of Section 3 of the Act of 1992, as appearing in the impugned notification. In the present case, by the impugned notification, the Director General of Foreign Trade has sought to amend the existing policy. On the strength of Atul Commodities Private Limited [2009 (2) TMI 18 - SUPREME COURT], it can be said that, Director General of Foreign Trade has no jurisdiction to amend the Export and Import Policy. The impugned notification herein, has not been suggested to be clarificatory in nature. The impugned notification no. 09/2015-20 dated June 3, 2016 issued by the Director General of Foreign Trade is quashed. Issues Involved:1. Jurisdiction of the Director General of Foreign Trade (DGFT) to issue the impugned notification.2. Compliance with procedural requirements under the Foreign Trade (Development and Regulation) Act, 1992.3. Economic feasibility and operational impact on the petitioner.4. Validity and scope of the impugned notification under relevant statutory provisions.Issue-wise Detailed Analysis:1. Jurisdiction of the Director General of Foreign Trade (DGFT) to issue the impugned notification:The petitioner challenged the notification issued by the DGFT on the grounds that the DGFT has no jurisdiction to issue such a notification. The petitioner argued that altering a foreign trade policy is within the purview of the Central Government, not the DGFT. The relevant statutory provisions, particularly Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992, were cited, which restricts the DGFT from exercising powers under Sections 3 or 5 of the Act. The court agreed with the petitioner, noting that the DGFT cannot be considered as the Central Government and therefore lacks the jurisdiction to amend the foreign trade policy.2. Compliance with procedural requirements under the Foreign Trade (Development and Regulation) Act, 1992:The petitioner contended that the impugned notification was not laid before the Parliament as required under Section 19(3) of the Act, rendering it non est in law. The respondents argued that the notification should be read as an exercise of power under Section 5, which does not necessitate laying before the Parliament. However, the court found that even if the notification was issued under Section 5, the DGFT still lacked jurisdiction due to Section 6(3). Additionally, there was no evidence that the Order dated March 24, 1993, which purportedly empowered the DGFT, was published in the Official Gazette, further invalidating the notification.3. Economic feasibility and operational impact on the petitioner:The petitioner, engaged in the newspaper publication business, argued that the notification adversely affected their ability to import newsprint economically. The requirement to import large quantities directly was not feasible for small businesses due to financial and storage constraints. The court acknowledged the operational difficulties imposed by the notification, which required compliance with onerous requisitions at the time of import, leading to significant financial and logistical burdens.4. Validity and scope of the impugned notification under relevant statutory provisions:The court examined whether the notification was an amendment or a clarification of the foreign trade policy. Citing precedents, the court concluded that the DGFT could issue clarifications but not amendments to the policy. The impugned notification sought to amend the existing policy, which was beyond the DGFT's jurisdiction. The court referenced cases like Atul Commodities Private Limited v. Commissioner of Customs, which distinguished between amendments and clarifications, reinforcing that the DGFT overstepped its authority.Conclusion:The court quashed the impugned notification dated June 3, 2016, issued by the DGFT. The notification was found to be issued without jurisdiction and not in compliance with procedural requirements. The economic and operational impacts on the petitioner were also considered significant. The court disposed of the related applications and petitions, rejecting the respondents' prayer for stay.