2025 (8) TMI 178 - HC - Customs

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 ... Direction to consider the Application of the Petitioner afresh for Tariff Rate Quota (TRQ) under India- UAE CEPA - allocation of the Tariff Rate Quota was made for the Financial Year 2025-26 by the respondent No.2. by not considering the applicants with average annual turnover below Rs.25 crores over the preceding three financial years - HELD THAT:- It appears that the Tariff Rate Quota under the India-UAE CEPA was determined as per the notification issued by the Central Government in the year 2022, and thereafter, pursuant to such notification, public notices have been issued by the DGFT for allotment of the Tariff Rate Quota in Annexure-IV of Appendix-2A in accordance with such said Notification No. 22/ 2022- Customs dated 30.04.2022. The conditions prescribed under the public notices issued by the DGFT are for the purpose of making the application for the allocation of the tariff quota. It is as per the Notification No. 22/2022, which is further followed by the Notification No. 20/2023-Customs dated 31.03.2023 issued in 2023, the DGFT is required to allocate the Tariff Rate Quota as stated therein. The allocation of the Tariff Rate Quota is nothing but the policy decision of the respondent government which only makes the petitioner eligible to make an applicatin for allotment of the Tariff Rate Quota under the India-UAE CEPA. However, at the same time, as per the norms it is for the DGFT to allocate such quota considering the number of applications made for allocation. For the Financial Year 2025-26, the meeting was held on 29.04.2025 of the Exim Facilitation Committee of the DGFT to discuss the allocation of the Tariff Rate Quota under the India-UAE CEPA and after considering the availability of the quota for quantity for allocation of the applicants, the Committee noticed that a large number of applications have been received against the limited available quota and mandatory information was already sought by the Trade Notice No 30/2024-25 on 12.02.2025 requiring the applicants to provide trunover details for the past three years and the current year relating to the Jewellery manufactured and the Jewellery traded and after receipt of such data, the respondent No.2 – Committee, arrived at a conclusion that the certain categories of the applicants were not required to be considered for allocation of quota in line with the established policy parameters and regulatory precedent which are reproduced by way of paragraph 6 hereinabove in the facts, and therefore, the same are not reproduced. Considering the reasonings given by the Committee to the effect that such allocation of the Tariff Quota is a policy matter, no interference is required to be made while exercising the extraordinary jurisdiction under Article 226 of the Constitution of India. The petition is therefore not entertained and is accordingly dismissed. 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.