Court upholds TRQ allocation under India-UAE CEPA as government policy, confirms turnover-based exclusion rules

The HC dismissed the petition challenging the allocation of the Tariff Rate Quota (TRQ) under the India-UAE CEPA for FY 2025-26. The court held that allocation of the TRQ is a policy decision of the government and the DGFT's role is to allocate quotas based on applications received and established policy parameters, including turnover criteria. Given the limited quota and numerous applications, the DGFT excluded applicants below the prescribed turnover threshold in line with notifications and regulatory precedent. The HC found no grounds to interfere under Article 226, affirming that the allocation process followed the relevant government notifications and policy guidelines.

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ISSUES:

Whether the respondent authority could impose a minimum average annual turnover threshold of Rs.25 crores over the preceding three financial years for allocation of Tariff Rate Quotas (TRQs) under India-UAE CEPA despite its prior deletion by a DGFT Public Notice.Whether the respondent's decision to exclude applicants below the turnover threshold and certain other categories from TRQ allocation is lawful and consistent with the applicable notifications and public notices.Whether the allocation of TRQs by the respondent constitutes a policy decision immune from judicial interference under Article 226 of the Constitution of India.Whether the petitioner was entitled to consideration for TRQ allocation based on the amended Public Notice removing the turnover condition.

RULINGS / HOLDINGS:

On the turnover threshold issue, the Court held that the respondent's imposition of a minimum average annual turnover of Rs.25 crores was in line with "established policy parameters and regulatory precedents" and consistent with the Customs Notifications and earlier Public Notices despite the deletion of condition (g) in a subsequent Public Notice.The Court found that the respondent was entitled to exclude certain categories of applicants, including those with turnover below Rs.25 crores, as part of the allocation criteria to ensure "proper utilization of the TRQ" and to maintain "an appropriate equilibrium" in allocation.The Court held that the allocation of the Tariff Rate Quota is a policy matter and that no interference is warranted under Article 226, given the broad discretion vested in the respondent to regulate and allocate quotas based on industry feedback and operational manageability.The petitioner's reliance on the deletion of condition (g) in Public Notice No. 06/2023 dated 17.04.2023 was rejected as the respondent's allocation decision was made pursuant to a considered policy exercise and consistent with the governing Customs Notifications and regulatory framework.

RATIONALE:

The Court applied the statutory framework under Section 25(1) of the Customs Act, 1962, and the relevant Customs Notifications No. 22/2022-Customs and No. 20/2023-Customs, which empower the Government to specify conditions for concessional customs duty under trade agreements like India-UAE CEPA.The Court examined the sequence of DGFT Public Notices and found that while condition (g) regarding turnover was deleted in Public Notice No. 06/2023, the respondent's allocation was guided by a policy decision taken in a meeting dated 29.04.2025, reflecting "broad principles" to ensure effective quota utilization and sectoral balance.The Court recognized the respondent's discretion to introduce qualitative parameters "in a phased manner" to regulate allocation, including turnover thresholds, to prevent under-utilization and sectoral imbalances.The Court emphasized that allocation of TRQs is a policy matter involving multiple considerations such as industry feedback, utilization rates, and regulatory precedents, which are not ordinarily subject to judicial interference under Article 226.No dissenting or concurring opinions were recorded.

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