Tariff classification power under foreign trade law is limited; prima facie stay granted against a DGFT notification.

DGFT trade-control powers under the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy permit regulation, restriction and prohibition of imports and exports, but do not prima facie extend to altering tariff classification from one Customs Tariff chapter heading to another. That function is attributed to the statutory scheme under the Customs Tariff Act, which provides the mechanism for amending the First Schedule by notification subject to its safeguards. On that basis, a strong prima facie case was found and ad-interim stay of the impugned notification was granted, with provisional release of the imported goods on furnishing a bond.

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Issues: Whether the Director General of Foreign Trade had power, under the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy, to issue a notification altering the classification of Roasted Areca Nuts from one chapter heading to another, and whether the petitioners were entitled to ad-interim stay of the impugned notification.

Analysis: Section 11A of the Customs Tariff Act, 1975 empowers the Central Government, if satisfied that public interest so requires, to amend the First Schedule by notification, subject to the statutory safeguards in that provision. By contrast, the DGFT notification was issued under Section 3 and Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with the relevant Foreign Trade Policy provisions governing amendments, restrictions, and prohibitions on imports and exports. On a prima facie reading, those provisions permit regulation of trade and the imposition of restriction or prohibition, but do not confer power on the DGFT to change tariff classification from one chapter to another, a function that lies within the statutory framework of the Customs Tariff Act.

Conclusion: The petitioners established a strong prima facie case, and ad-interim stay of the impugned notification was granted with consequential provisional release of the imported goods on furnishing a bond.

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