2023 (2) TMI 788 - HC - Customs

Validity of DGFT notification upheld as policy decision, not delegation of statutory powers. Writ petitions dismissed.

UNION OF INDIA Versus UNIK TRADERS

The court upheld the validity of the impugned notification issued by the Director General of Foreign Trade (DGFT) on 4-6-2008, finding that it was a ... Import of betel nuts - fixation of price - Constitutional Validity of Notification dated 4-6-2008 issued by the Director General of Foreign Trade - delegation of power - specific bar under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992 - applicability of principle of lex specialis derogat legi generali. HELD THAT:- The import of betel nut/areca nut was permissible freely, provided the c.i.f. value (cost, insurance and freight) is Rs. 35 per kg. and above and subject to payment of customs duty prescribed by the Central Government. The reason for the Central Government for taking such a policy decision has also been explained by the appellants. Whether the impugned Notification issued by the DGFT is without jurisdiction in view of the specific bar under Section 6(3) of the Foreign Trade Act? - HELD THAT:- The Gujarat High Court had an occasion to deal with a similar Notification issued by the DGFT by prescribing a minimum c.i.f. value for cashew kernels and while dealing with the issue, the authentication order issued by the President of India in favour of the DGFT was considered in M/S. PAM AGRO INDUSTRIES A PARTNERSHIP FIRM & 1 OTHERS VERSUS UNION OF INDIA & 1 OTHERS [2021 (3) TMI 910 - GUJARAT HIGH COURT] has held that DGFT has not exercised powers under section 3 of the Foreign Trade Act but has merely authenticated an order which relates to the DGFT in accordance with the authentication rules. Therefore, the contention raised by the petitioners that DGFT has no authority to issue such notification is not sustainable. Insofar as the Central Government authenticating the DGFT to issue the Notification, it must be deemed to be a notification issued only by the Central Government. Stricto sensu, the bar under Section 6(3) of the Foreign Trade Act would have applied only if the DGFT had exercised a statutory power - In the present case, the authentication at the best can only be held as an executive exercise of a power by the President of India through the DGFT. Hence, the impugned notification published in the Gazette under Section 5 of the Foreign Trade Act cannot be held to be ultra vires as was contended by the Learned Counsel for the Writ Petitioners. Even if the notification is taken to have been issued by the DGFT by virtue of authentication by the Central Government, whether such authentication can be made, in view of the specific manner/procedure provided under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992, and where the Foreign Trade (Development and Regulation) Act, 1992, prescribes a procedure to be done in a particular manner? - HELD THAT:- Since the notification has been issued in line with Section 5 of the Foreign Trade Act and there are no illegality or diversion in the procedure since the notification was technically issued by the Central Government by authenticating the DGFT to issue the same. Thus, there was no delegation of power by the Central Government to DGFT and the Notification was issued in accordance with Section 5 of the Foreign Trade Act and the findings of the Learned Single Judge to the contrary are hereby set aside. Even if the impugned notification is taken to have been issued by the DGFT by way of authentication by the Central Government, whether the Central Government is entitled to place restriction on the import of areca nuts and fix the value under the Foreign Trade (Development and Regulation) Act, 1992 or such restriction of imports and fixation of tariff can be carried out only in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975? - HELD THAT:- The Central Government has been given very wide powers under Section 3(2) of the Foreign Trade Act which includes the power to prohibit, restrict or otherwise regulate in all cases or in specified classes of cases, import or export of goods. When any order is passed by the Central Government under Section 3(2) of the Foreign Trade Act, it shall be deemed to have been prohibited or restricted or regulated under Section 11 of the Customs Act. The Customs Tariff Act is nothing but an Act which provides for rates at which duties of customs shall be levied under the Customs Act as specified in the First and Second Schedules. This Act is not a stand-alone enactment and it goes along with the Customs Act. Hence, any order passed by the Central Government under Section 3(2) of the Foreign Trade Act must be considered to be an exercise of a wide power conferred on the Central Government and the provisions of the Customs Act and the Customs Tariff Act mutatis mutandis will automatically apply - the principle of lex specialis derogat legi generali will not have any application to the case in hand. There are no illegality in the issuance of the impugned notification dated 4-6-2008. The notification is only an expression of a policy decision taken by the Central Government and the DGFT was authenticated to issue the notification - petition dismissed. Issues Involved:1. Jurisdiction of the Director General of Foreign Trade (DGFT) in issuing the impugned Notification.2. Validity of the Notification under the specific procedure prescribed by the Foreign Trade (Development and Regulation) Act, 1992.3. Applicability of the Customs Act, 1962 and the Customs Tariff Act, 1975 in relation to the Foreign Trade (Development and Regulation) Act, 1992.Issue-Wise Detailed Analysis:1. Jurisdiction of the DGFT in Issuing the Impugned Notification:The primary issue was whether the DGFT issued Notification No. 15 (RE-2008)/2004-09, dated 4-6-2008, without jurisdiction, given the specific bar under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992. The court examined Sections 3, 5, and 6 of the Foreign Trade Act, which delineate the powers of the Central Government and the DGFT. Section 6(3) explicitly prohibits the delegation of powers under Sections 3, 5, 15, 16, and 19 to the DGFT. However, it was argued that the DGFT did not act under delegated authority but was merely authenticated by the Central Government to issue the notification. The court referred to the Government of India (Allocation of Business) Rules, 1961, and the Authentication (Orders and other Instruments) Rules, 2002, which allow such authentication. The court cited precedents from the Delhi High Court and the Supreme Court, which upheld similar notifications issued by the DGFT. The court concluded that the DGFT did not exercise statutory powers but was authenticated to issue the notification on behalf of the Central Government, thus not violating Section 6(3).2. Validity of the Notification under the Specific Procedure Prescribed by the Foreign Trade Act:The court addressed whether the notification, even if authenticated by the Central Government, followed the procedure prescribed under Section 6(3) of the Foreign Trade Act. The court reiterated that the DGFT was not acting under delegated power but was merely executing a policy decision of the Central Government. The court emphasized that the notification was issued in public interest to protect domestic betel nut farmers from low-priced imports. The court found that the policy decision was backed by sufficient data and deliberations, including consultations with the Directorate of Areca nut and Spices Development and import data from the Directorate-General of Commercial Statistics & Intelligence. The court concluded that the notification was issued in compliance with Section 5 of the Foreign Trade Act and did not involve any procedural irregularities.3. Applicability of the Customs Act and the Customs Tariff Act:The third issue was whether the Central Government could impose restrictions on imports and fix values under the Foreign Trade Act or if such actions should be governed by the Customs Act and the Customs Tariff Act. The court examined the interplay between the Foreign Trade Act and the Customs Act, noting that Section 3(3) of the Foreign Trade Act deems goods restricted under it to be prohibited under Section 11 of the Customs Act. The court cited the Supreme Court's judgment in Union of India v. Asian Food Industries, which held that the Foreign Trade Act provides a composite scheme for regulating foreign trade, and any restrictions under it would automatically invoke the provisions of the Customs Act. The court also referred to the Supreme Court's judgment in Union of India v. Agricas LLP, which affirmed that the Central Government has wide powers under Section 3(2) of the Foreign Trade Act to regulate imports and exports, and such actions do not require separate notifications under the Customs Act. The court concluded that the principle of generalia specialibus non derogant (special things derogate from general things) does not apply, and the Central Government's actions under the Foreign Trade Act are valid and enforceable.Conclusion:The court found no illegality in the issuance of the impugned notification dated 4-6-2008, as it was an expression of a policy decision taken by the Central Government and authenticated by the DGFT. The court set aside the Learned Single Judge's order and dismissed all the writ petitions, allowing the writ appeals filed by the Union of India and the departments.