2021 (1) TMI 524 - HC - Customs

Trade Notice Cannot Amend Trade Notification under Foreign Trade Act

The Court held that a Trade Notification issued under Section 3 of the Foreign Trade (Development and Regulation) Act cannot be amended by a Trade Notice. ... Power to make provisions relating to imports and export - amendment of foreign trade notification - trade notice as clarification versus amendment - statutory manner of exercise of delegated power - Foreign Trade Policy applicability to SEZs and EOUsAmendment of foreign trade notification - trade notice as clarification versus amendment - statutory manner of exercise of delegated power - Foreign Trade Policy applicability to SEZs and EOUs - A Trade Notice cannot be used to amend or modify a Trade Notification issued under the FTDR Act; clarification which effects an amendment must be issued in the statutory manner. - HELD THAT: - The Court examined the scope of the powers under the FTDR Act and the Foreign Trade Policy and applied the settled principle that where a statute prescribes a particular manner for doing an act, that manner must be followed. Notification No.8/2015-20, dated 12.06.2019, was issued under Section 3 read with the Foreign Trade Policy and imposed Minimum Import Prices applicable to imports including SEZs and 100% EOUs. Trade Notice No.50/2019-20, dated 14.02.2020, which declared that the MIP was not applicable to EOUs and SEZs, had the effect of altering the import policy embodied in the earlier notification. The Court held that such a substantive clarification which changes the applicability of the notification is not a mere administrative elaboration but an amendment to the notification; therefore it could not be effected by a Trade Notice not issued in the manner mandated by the statute. Relying on the legal principle that statutory powers must be exercised in the prescribed manner, the Court concluded that the Trade Notice improperly amended the Notification and was susceptible to being set aside. The Court also noted the statutory purpose of Section 3 in enabling prohibitions or restrictions to protect domestic production and standards, including in relation to SEZs and EOUs, and that such policy changes require formal notification in the Official Gazette.Trade Notice No.50/2019-20, dated 14.02.2020, insofar as it clarifies or excludes SEZs and 100% EOUs from the MIP imposed by Notification No.8/2015-20 dated 12.06.2019, constitutes an impermissible amendment by notice and is set aside.Final Conclusion: Writ petition allowed; Trade Notice No.50/2019-20 dated 14.02.2020 is quashed. Respondents remain free to amend Notification No.8/2015-20 by following the statutory procedure. Issues Involved:1. Whether a Trade Notification can be amended by a Trade Notice under Section 3 of the Foreign Trade (Development and Regulation) Act, 1992.2. The validity of Trade Notice No.50/2019-20, dated 14.02.2020, in relation to Notification No.8/2015-20, dated 12.06.2019.Detailed Analysis:1. Amendment of Trade Notification by Trade Notice:The core question in this writ petition is whether a Trade Notification issued under Section 3 of the FTDR Act can be amended by a Trade Notice. The petitioner contends that once a notification is issued under Section 3, it cannot be amended by a Trade Notice, but only by another notification. According to the petitioner, the Trade Notice in question attempts to amend the rigor of the original notification, which is not permissible.2. Validity of Trade Notice No.50/2019-20:The petitioner challenges Trade Notice No.50/2019-20, dated 14.02.2020, which clarifies that the Minimum Import Price (MIP) on cashew kernels is not applicable for imports by 100% Export Oriented Units (EOUs) and Special Economic Zones (SEZs). The petitioner argues that this Trade Notice effectively amends Notification No.8/2015-20, dated 12.06.2019, which set a minimum import price for cashew kernels to protect the Indian market from low-quality imports.The respondents defend the Trade Notice, stating it merely clarifies the original notification without modifying the policy. They argue that the relaxation given to SEZs and EOUs does not constitute a policy amendment and, therefore, does not require a separate notification.Legal Provisions and Interpretation:Section 3 of the FTDR Act:Section 3 empowers the Central Government to regulate imports and exports by issuing orders published in the Official Gazette. It allows for prohibiting, restricting, or regulating the import or export of goods or services.Section 5 of the FTDR Act:Section 5 allows the Central Government to formulate and amend the foreign trade policy by notification in the Official Gazette. The proviso specifies that any exceptions, modifications, or adaptations for SEZs must also be notified in the Official Gazette.Judicial Precedents:The petitioner cites several judgments to support their argument that statutory acts must be done in the manner prescribed by the statute and not otherwise. For instance, in 'State of Bihar and Another V. J.A.C. Saldanha and others,' it was held that when a statute requires a thing to be done in a certain manner, it must be done in that manner alone. Similarly, in 'Babu Verghese and Others V. Bar Council of Kerala,' the Supreme Court reiterated that if a statute prescribes a specific manner for doing an act, it must be done in that way or not at all.Court's Findings:The Court finds that Notification No.8/2015-20, dated 12.06.2019, was issued under Section 3 of the FTDR Act and amended the import policy conditions for cashew kernels. Any further amendment or clarification should also comply with Section 3 and not be done through a mere Trade Notice. The Court opines that the Trade Notice No.50/2019-20, dated 14.02.2020, which states that the MIP is not applicable to EOUs and SEZs, constitutes an amendment to the original notification. Therefore, such an amendment cannot be made through a Trade Notice without following the statutory procedure.Conclusion:The Court concludes that the impugned Trade Notice is an amendment to the original notification and should have been issued in accordance with the statutory procedure under Section 3 of the FTDR Act. Consequently, the Trade Notice No.50/2019-20, dated 14.02.2020, is set aside. The respondents are not precluded from issuing any further amendments to Notification No.8/2015-20 in the manner prescribed by law. The writ petition is allowed, and there is no order as to costs.