Prospective operation of export prohibitions protects completed customs clearance and vested export rights under foreign trade law.

A foreign trade policy expression such as "restriction" or "regulation" may, in context, include a prohibitory export measure, but its scope must be read with the statutory framework and the stage of export compliance. A prohibition notification under the foreign trade regime operates prospectively and cannot retrospectively defeat exports where the exporter has already completed customs clearance formalities and obtained permission for clearance and loading. Later clarificatory action cannot remove a vested or accrued export right already protected by the applicable policy and customs procedure.

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Issues: (i) Whether the expressions "restriction" and "regulation" in Clause 1.5 of the Foreign Trade Policy, 2004-2009 include prohibition of exports. (ii) Whether the export prohibition notification dated 27 June 2006 and the clarificatory notification dated 4 July 2006 could operate retrospectively so as to defeat exports for which the customs clearance process had already been completed.

Issue (i): Whether the expressions "restriction" and "regulation" in Clause 1.5 of the Foreign Trade Policy, 2004-2009 include prohibition of exports.

Analysis: The policy, the Foreign Trade (Development and Regulation) Act, 1992, and the Customs Act, 1962 formed a composite scheme for regulating foreign trade. The expression "restriction" or "regulation" is capable, in context, of covering a prohibitory measure, but the words "prohibit", "restrict" and "regulate" are not interchangeable and must be applied according to the text and context of the instrument. The Court held that the legal effect of the export ban had to be examined with reference to the relevant statutory and policy framework and the stage at which export formalities were completed.

Conclusion: The expressions could, in the setting of the policy and statute, accommodate a prohibitory measure, but their operation depended on the statutory context and the stage of export compliance.

Issue (ii): Whether the export prohibition notification dated 27 June 2006 and the clarificatory notification dated 4 July 2006 could operate retrospectively so as to defeat exports for which the customs clearance process had already been completed.

Analysis: The Court held that a prohibition issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with Section 3(2) of that Act could operate only prospectively. Once the proper officer had made an order permitting clearance and loading under Section 51 of the Customs Act, 1962, the exporter had complied with the relevant procedure. The policy and the Handbook protected exports already handed over to customs, and a vested or accrued right could not be destroyed by later publicity in the media or by a subsequent amendment. The clarificatory notification could not validly take away completed or protected export transactions.

Conclusion: The later notification could not retrospectively defeat the protected exports, and the Gujarat High Court was correctly upheld while the Delhi High Court's view was not sustained.

Final Conclusion: Export prohibition under the foreign trade regime was treated as prospective in operation, and completed customs clearance under the statutory export procedure was protected against later retrospective curtailment.

Ratio Decidendi: A prohibitory export notification under the foreign trade law operates prospectively and cannot retrospectively divest a vested or accrued export right where the exporter has already complied with the customs clearance procedure and obtained permission for clearance and loading.

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