Tariff quota review needs clear criteria and hearing before mid-year reallocation of gold bullion quotas

Mid-year revision of tariff rate quota allocations for gold bullion under the India-UAE CEPA was criticised because the review standard had not been clearly communicated, the affected parties were not heard, and the re-assessment was made before licence expiry. The Court noted that the earlier allocation minutes did not set out the criteria for reduction or re-allocation, and that the public notice relied on concerned a different year and only one utilisation bracket, so it did not provide a clear basis for the FY 2024-25 exercise. The DGFT was directed to reconsider the objections afresh, while the existing allocations were maintained until that exercise was completed.

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Issues: Whether the mid-year revision of tariff rate quota allocations for gold bullion under the India-UAE CEPA could be sustained when no criteria for review had been communicated, no hearing was afforded, and the affected allotments were revised before the expiry of the licences.

Analysis: The review mechanism indicated in the earlier allocation minutes did not specify the governing criteria for possible reduction or re-allocation. The public notice relied upon by the respondents addressed only one utilisation bracket and was issued for a different financial year, so it did not supply a clear basis for the impugned FY 2024-25 review. The Court treated the exercise as a review undertaken without adequate prior notice of the applicable standard and without giving the petitioners an opportunity to be heard. Since no re-allocation had yet been operationalised, the Court considered it appropriate to direct the DGFT to examine the objections afresh and to maintain the existing allocations in the meantime.

Conclusion: The impugned revision was not finally approved. The matter was sent back for fresh consideration by the DGFT, with the existing allocations directed to continue until that exercise was completed.

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