Transitional protection for pre-existing letters of credit barred retrospective export restriction on covered lentil consignments.

Export restrictions under the Foreign Trade Policy could not be applied retrospectively to consignments covered by an irrevocable letter of credit opened before the restrictive notification and amended before the cut-off date. The policy amendment took effect only on notification in the Official Gazette, and the transitional clause in the Foreign Trade Policy 2004-09 protected exports that were freely permitted where shipment was made within the original validity of the letter of credit, absent a contrary stipulation. The covered export of red whole lentils was therefore protected, and interference with shipment within the letter of credit period was not justified.

---

---

Issues: Whether the export prohibition introduced by the amendment to the Foreign Trade Policy could be applied to consignments covered by an irrevocable letter of credit opened before the restrictive notification and amended before the effective prohibition date.

Analysis: Export and import policy is framed and amended under section 5 of the Foreign Trade (Development and Regulation) Act, 1992, and any amendment takes effect only upon notification in the Official Gazette. The policy then in force permitted the export of lentils freely, and paragraph 1.5 of the Foreign Trade Policy 2004-09 preserved exports that had been permitted freely where shipment was made within the original validity of an irrevocable letter of credit established before the date of restriction, unless a contrary stipulation applied. The later notification, including the subsequent amendment of 4 July 2006, could not operate retrospectively so as to defeat exports covered by a letter of credit opened before the restriction and amended before the relevant cut-off date.

Conclusion: The restriction did not apply to the petitioner's consignments covered by the earlier letter of credit, and interference with their export was not justified.

Final Conclusion: The writ petition succeeded and the respondents were restrained from preventing export of the covered quantity of red whole lentils within the validity period of the letter of credit.

Ratio Decidendi: A policy restriction on export cannot be applied retrospectively to defeat exports protected by the transitional clause governing pre-existing irrevocable letters of credit, where the policy amendment operates only prospectively upon notification.

---