2006 (8) TMI 213 - HC - Customs

Court allows export of sugar covered by Letter of Credit, emphasizing compliance with Foreign Trade Policy

The court allowed the writ petition challenging the prohibition on exporting sugar covered by a Letter of Credit, emphasizing that exports permitted under ... Export of Sugar - Restriction - Date of effect Issues:Export of sugar covered by a Letter of Credit prohibited by a government notification.Analysis:The judgment pertains to a writ application challenging the authorities' action in disallowing the export of sugar covered by a specific Letter of Credit. The petitioner had entered into an agreement with a Bangladeshi purchaser for the supply of sugar, and the Bangladeshi purchaser had opened a Letter of Credit securing the price of the sugar. The petitioner procured the sugar from a specific company and had obtained necessary clearances for export. However, the Customs Authorities did not permit the export citing a government notification prohibiting sugar export after a certain date. The notification stated that the prohibition would remain in force until the end of the financial year and would not be applicable for exports against Letters of Credit opened before a specified date.The judgment highlighted the provisions of the Foreign Trade Policy, emphasizing that exports permitted freely under the policy should be allowed even if subjected to subsequent restrictions, provided the shipment is made within the original validity of the Letter of Credit established before the imposition of the restriction. The court underscored that the power to formulate and amend the Export and Import Policy is governed by the Foreign Trade (Development and Regulation) Act, requiring any amendment to be published in the Official Gazette to be effective. In this case, the Letter of Credit was opened before the issuance of the notification, rendering the prohibition inapplicable to the consignment covered by the pre-existing Letter of Credit.The judgment concluded by allowing the writ petition, directing the authorities to permit the export of sugar covered by the specific Letter of Credit, provided the shipment is completed within the Letter of Credit's validity period. The court also addressed the impending expiry of the Letter of Credit's validity, allowing for export within an extended period if the foreign buyer extends the Letter of Credit's validity. Additionally, the court refused the request for a stay on the judgment's operation, instructing all concerned parties to act in accordance with the judgment's operative portion based on the signed minutes.