TaxTMI 
TaxTMI 
2006 (8) TMI 370
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....tory and the evolution of cuisines around the world. In many countries, the currently popular cuisine is an adaptation of a foreign one. The popularity in our country of Chinese, Italian and recently Lebanese food bears testimony to this growing trend. Indian spices and pulses were among the earliest to be traded at the height of the ancient civilizations of Egypt, Greece and Rome. As much as we relish our chick peas (chana) and the imported Kabuli variety, our 'desi? chick peas it seems is equally popular abroad. Chick peas are devoured in many forms: The Arab speaking world relishes its falafel (ground chickpeas shaped into balls and fried) and hummus (a smooth thick mixture of mashed chick peas with garlic). Global trade in chick peas as in other pulses has indeed grown. The Act and the Policy 3. The relevant provisions of the Act may be first noticed. Section 3 of the Act reads as follows :- "3(1) The Central Government may by order published in the Official Gazette, make provisions for the development and regulation of Foreign Trade by facilitating imports and increasing exports; (2) The Central Government may also, by order published in the Official....
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....orts and Imports shall be free unless regulated free, except in cases where they are regulated by the provisions of this Policy or any other law for the time being in force. The item wise export and import policy shall be, as specified in ITC(HS) published and notified by Director General of Foreign Trade, as amended from time to time." 5. Whenever there is an amendment to the Policy, either in the area of the import or export, such change will doubtless affect transactions that are underway in the form of contracts already entered into prior to the change. To account for such transactions that may have already been entered into prior to the change, the Policy itself sets out the consequence of the change on such transactions in Para 1.5 which reads as under :- "1.5 In case an export or import that is permitted freely under this Policy is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted notwithstanding such restriction or regulation, unless otherwise stipulated, provided that the shipment of the export or import is made within the original validity of an irrevocable letter of credit established before ....
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...., sugar and pulses. At a Meeting of the Cabinet Committee on Pricing held on 22-6-2006, it was decided that there would be a ban on the export of pulses with a view to augmenting the supply side. It was decided to allow private players to import wheat and to a limited extent, sugar. 10. The Finance Minister met the Press soon after the Meeting of the Cabinet Committee on Pricing and announced these decisions. The newspapers of 23-6-2006 (photocopies of the news clippings have been placed on record) prominently announced the aforesaid decision of the Government of India. The Asian Age and the National Herald from New Delhi, both dated 23-6-2006, indicated in the headlines that the export of pulses was banned. The government claims that the electronic media also carried this news on 22-6-2006 itself. 11. Admittedly, the aforementioned ban on the export of pulses was not issued in the form of a notification simultaneously. That notification was issued on 27-6-2006, five days after the news of the ban appeared in the press. 12. Three days prior to the notification, on 24-6-2006, pursuant to the contract entered into between the TCP and Petitioner No. 2, and the ....
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....t permitted to be exported. 0713 40 00 Kg. Lentils Prohibited Not permitted to be exported. 0713 50 00 Kg. Broad beans (Vicia faba var major) and horse beans (Vicia faba var- Prohibited Not permitted to be exported. equina, vicia faba var minor) 0713 90 Kg. Other : Prohibited Not permitted to be exported. 0713 90 10 Kg. Tur (arhar) Prohibited Not permitted to be exported. 0713 90 91 Kg. Split Prohibited Not permitted to be exported. 0713 90 99 Kg. Other Prohibited Not permitted to be exported. 3. The above amendment shall remain in force for a period of six months from the date of its issue and shall not apply to imports already effected against Advance Licences/Authorisations issued prior to the date of issue of this notification. 4. This issues in Public Interest. &nb....
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....-6-2006 of the Foreign Trade Policy, 2004-2009. S.O.(E) In exercise of the powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (No. 22 of 1992) read with Para 1.3 and Para 2.1 of the Foreign Trade Policy, 2004-2009, the Central Government hereby makes the amendment in para 3 of Notification No. 15 dated 27th June 2006, to include the following sentence, at the end of the said para :- "Further the transitional arrangements notified under para 1.5 of the Foreign Trade Policy, 2006 shall not be applicable for export of pulses against irrevocable Letters of Credit opened on or after 22-6-2006 as the decision of the Government prohibiting the export of pulses was announced and got widely publicised on 22-6-2006 in the electronic and print media." 2. This issues in Public Interest. &nbs....
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....Because the adoption of a date of an opening of LC i.e. 22nd June 2006 as a cut-off date (in Notification No. 19 dated 4th July 2006) for restricting and prohibiting exports on the ground that the decision to prohibit exports of pulses was announced and widely published in the electronic and print media on that date is wholly contrary to and in the teeth of the mandate under Section 5 which permits the export policy to take effect only from such date it is formulated and announced by a means a notification in the official gazette, that is to say, from the date of notification." 20. In reply to the writ petition, the Union of India and the DGFT, respondents 1 and 2 respectively, contended that the Central Government was fully within its powers to amend the Policy from time to time in public interest. Explaining the steps leading to the imposition of the ban, the counter affidavit stated thus : ".....the respondent Government in its bid to check the seasonal rise in prices of some essential commodities banned the export of pulses on 22-6-2006 and allowed the private sector to import wheat and sugar to augment the supplies and supplement the Government efforts through....
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....d 4-7-2006 by which the ban was made effective retroactively, i.e., from 22-6-2006, is to show that the petitioners and other exporters had acted with mala fide intentions with a view to causing wrongful loss to the public exchequer and wrongful gain to themselves. The precise assertion in the counter affidavit is in the following words :- "The respondent is under domain to issue such notifications in public interest and also regulate and check the high-rise prices of various essential commodities. Therefore, there is a rational and justification of the prohibition imposed by the respondents on the export of pulses and other essential commodities and the approach of utmost caution adopted by the respondents on the issue of abovementioned public interest for controlling the prices of essential commodities and such action of the respondents has in fact, dampen inflation and brought restrain in the market. It is also not out of place to mention here that the mala fide intentions of the petitioners and other exporters could be evident and judged from the fact that as per the information received by DGFT, so far (the actual figures may be much higher), irrevocable Letter of Credit....
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....d in the present petition. As a matter of fact the Petitioners have only challenged the retroactive operation of the same, which in our respectful submission is beyond the powers conferred under section 5 of the Act." 25. As regards the allegation pertaining to the manipulation in the shipping invoice, the petitioners sought to explain it as under :- "As stated earlier Petitioners had given a performance guarantee of approximate US 1.0 million to ensure the timely performance/supply. To save time the petitioners had started mobilizing Chick Peas from 21st June 2006. The Shipping Invoices cum packing lists were prepared on 22nd June 2006 to expedite the process at the end of the Petitioner. The said Shipping Invoices were forwarded to the Clearing and Handling Agent (CHA) at Kandla for further submitting with Customs, Kandla. The publication of the news of prohibition on export of pulses created confusion with the Custom Authorities as they were not sure about the pending/transitional exports. Thus the Customs Authorities informally refused to accept the Shipping Invoice till the time position was clear to them. Finally, the Notification was issued on 27th June 2006. The ....
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....rt of his submissions, Dr. Singhvi placed reliance, inter alia, on the decisions of the Hon'ble Supreme Court in Union of India v. M/s Ganesh Das Bhojraj - 2000 (116) E.L.T. 431 (S.C.) = AIR 2000 S.C. 1102, Arjan Singh v. State of Punjab - (1969) 2 S.C.R. 347; K. Narayanan v. State of Karnataka - AIR 1994 S.C. 55 and Mst. Rafiquennessa v. Lal Bahadur Chetri - AIR 1964 S.C. 1511. 28. In reply, Mr. P.P. Malhotra, the learned Additional Solicitor General of India, submitted as follows : (a) The power of the Central Government to either announce or amend the Policy is undeniable. By the very wording of the statutory provisions, the power to give effect to such change retroactively was implied. (b) It was permissible for the Central Government to introduce an amendment to the earlier notification dated 27-6-2006 so as to take away the benefit of Para 1.5 of the Policy. The impugned Notification dated 4-7-2006 was in effect only adding a further paragraph to the original Notification dated 27-6-2006 and if so read, the retrospective nature of the change would become apparent. (c) The petitioners cann....
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....nbsp; Does this Court lack territorial jurisdiction to entertain this writ petition? (3) Is the impugned Notification dated 4-7-2006 ultra vires Section 5 of the Act and does it deserve to be declared to be illegal as such? (4) If the petitioners succeed on points 1 to 3 above, are they entitled to proceed with the export of the contracted quantity of Chick Peas? It may be mentioned here that in their written submissions, the respondents have made submissions and referred to case law on the point whether the petitioners could base their claim on promissory estoppel. However, since no such argument was advanced by the petitioners, we refrain from examining such issue. Re : Issue No. 1 31. In support of the writ petition, an affidavit has been filed of Shri Pradeep Jindal, son of Shri Faqir Chand Jindal, describing himself as the authorized representative of Petitioner No. 2. He also claims to be authorized to file the supporting affidavit on behalf of Petitioner No. 1. In response to the objection raised in a counter affidavit by the respondents to the effect that the petitioners have not disclosed how the deponent is ....
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....he export is to be made from Kandla in Gujarat. However, the impugned Notification dated 4-7-2006, and the earlier Notification dated 27-6-2006 imposing the ban on export of Chick Peas were issued by the DGFT in Delhi. What is centrally challenged in this writ petition is the Notification issued by the DGFT in Delhi. The petitioners admittedly made a representation on 28-6-2006 and handed it over in person during meeting with the DGFT in Delhi on 29-6-2006. This fact has been pleaded in the writ petition itself and not denied in the counter affidavit filed by the respondents. Applying the ratio of the aforementioned decisions of the Hon'ble Supreme Court to the facts on hand we are of the view that the facts pleaded in the writ petition show that these facts are integral to the cause of action which arose in Delhi, namely, the issuance of Notification dated 4-7-2006 by the DGFT, Delhi. We accordingly hold that this Court has the jurisdiction to entertain this writ petition. This point is accordingly answered in favour of the petitioners and against the respondents. Re : Issue No. 3 33. The principal ground on which the petitioners assail the validity of the impugned Noti....
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.... the Act, which has been extracted hereinabove, delegates to the Central Government the power to 'formulate and announce' the export and import policy and also to amend that policy 'from time to time'. The Foreign Trade Policy itself has been announced by a notification made by the Central Government in exercise of the power delegated to it under Section 5 of the Act. The Notification issued on 27-6-2006 as well as the impugned Notification dated 4-7-2006 are both instances of delegated legislation made by the Central Government in exercise of the power under Section 5 of the Act. 37. Mr. Malhotra sought to place heavy reliance upon the judgment of the Hon'ble Supreme Court in R.C. Tobacco v. Union of India (supra) to contend that as long as the measure was in public interest, it was open to the Central Government to impose a restriction from a retrospective date. The general power of imposing a ban through legislation from a retrospective date is undeniable. That general proposition hardly needs reiteration. However, what we are dealing here is a delegated legislation and the rules concerning retrospective delegated legislation are not identical with those governing legisl....
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....e electronic and print media. Therefore, it is submitted, there is nothing illegal or invalid in making the subsequent notification dated 4-7-2006. The question whether a change becomes effective only when persons affected by such change actually know of it, or it becomes effective from the date when it is officially notified has arisen earlier before the Courts. 40. In State of Maharashtra v. M.H. George - AIR 1965 S.C. 722, a ban was imposed on 25-8-1948 by the Central Government under Section 8 of the Foreign Exchange Regulation Act, 1947 on the bringing of gold into India. By a Notification of the same date issued by the Reserve Bank of India (RBI), this ban was not to apply provided the gold brought into India was on through-transit i.e. from places outside India for the purposes of transhipment to places similarly situated and where the gold so brought is not removed from the aircraft. On 8-11-1962, the RBI modified its notification dated 25-8-1948 and added an additional condition for exemption, i.e., the gold must have been declared in the 'Manifest' of the aircraft as transhipment cargo. Admittedly, this change was not officially notified till 24-11-1962. The respo....
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....ncies v. Union of India - 1994 (72) E.L.T. 805 (S.C.) = AIR 1995 S.C. 360, a further attempt was made, although unsuccessfully, to get the Hon'ble Supreme Court to accept the contention that a notification would become effective only on the date that it was made available to persons affected by such notification and not from the date of its being published in the Official Gazette. The Court referred to M.H. George's case (supra) and B.K. Srinivasan v. State of Karnataka - AIR 1987 S.C. 1059 and held that once the prescribed mode of publication was complied with, it was immaterial whether the notification was actually made known to persons affected by it. The issue there was whether a notification dated 13-2-1986 under Section 25(1) of the Customs Act 1962 prescribing higher rates on import duties was effective from the date of such notification or only from the date when copies of which were made available to the importers, because admittedly such notification was not made available till 19-2-1986. The Hon'ble Supreme Court held that Section 25 of the Customs Act, 1962 had already prescribed the mode of granting exemption which was by a notification in the Gazette and once that mod....
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.... an order or rule is the official irrefutable affirmation that a particular order or rule is made, is made on a particular day (where the order or rule takes effect from the date of its publication) and is made by a particular authority; it is also the official version of the order or rule." (emphasis supplied) In conclusion, after referring to two earlier decisions, the Court held as under (SCC, p. 647) : "The above decisions of this Court make it clear that where a parent statute prescribes the mode of publication or promulgation that mode has to be followed and that such a requirement is imperative and cannot be dispensed with." In our view, the above decision in ITC Bhadrachalam Ltd. (supra) is a complete answer to the contention of the respondents that the ban became effective from a date earlier than the date of the actual notification. 44. Therefore, as far as the present case is concerned, applying the above law, there could be no manner of doubt that the only acceptable mode of bringing about the change in Policy is by a notification in the Official Gazette. Admittedly the ban on export of Chick Peas was notified on 27-6-2006 and it must be held that this ....
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.... the date of the said notification which is clearly indicated in the body of the notification itself, i.e., 27-6-2006. To this if we add, the Notification dated 4-7-2006 it would appear that the transitional arrangement would become unavailable from 22-6-2006, i.e., which is not a date from which the notification dated 27-6-2006 could possibly have had 'immediate effect'. We are afraid that it is not possible to construe the impugned Notification dated 4-7-2006 in this manner at all. 47. There is yet another problem with the impugned Notification dated 4-7-2006. What it in effect seeks to do is to make unavailable the benefit of the Para 1.5 of the Policy. In other words, the transitional arrangements that otherwise would stood protected notwithstanding the ban by the Notification dated 27-6-2006, would now by virtue of the impugned Notification dated 4-7-2006, not stand so protected. Mr. Malhotra urged that the volume of exports in the short period was so large that the public interest involved in the matter constituted sufficient justification for the government making the ban retrospective and at the same time make unavailable the benefit of para 1.5 of the Policy. He re....
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....tions had indeed taken place in the intervening period between then and 22-6-2006 when the ban was announced in the Press and 27-6-2006 when it was formally notified. However, it is for the government to explore other means of overcoming such difficulties in future by appropriate amendments to the Act which can permit the Courts to consider the effect of date of the notification to be the date on which it is announced by the Government in the media. In the present age of the internet, it is also possible that it might be the date on which it is posted on the official website of the Central Government. However, for the present, we have to apply the law as we find it. 50. Also, we are afraid that the public interest mantra cannot be repeated as a panacea for avoiding the consequence of mandatory legal provisions. As explained by the Hon'ble Supreme Court in ITC Bhadrachalam Ltd. (supra) there is a certain logic in stipulating the date on which a notification is officially gazetted to be the effective date. The Government may announce several policies and several changes to such policies in different fora. However, the specifics of such changes, the nuts and bolts of the schem....