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2019 (6) TMI 692
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.... 27.3.2019, the learned advocates for the respective parties were heard on the merits of the case and the following order came to be passed : "1. Heard Mr. Alok Yadav, learned counsel with Mr. Parth Contractor, learned advocate for the petitioner in Special Civil Application No.15181 of 2018; Mr. M. C. Bhatt, learned counsel with Mr. R. D. Raval, learned advocate for the petitioner in Special Civil Application No.15620 of 2018; Ms. Trusha Patel, learned standing counsel for the Director General of Foreign Trade in Special Civil Application No.15181 of 2018; Mr. Nikunt Raval, learned standing counsel for the Director General of Foreign Trade in Special Civil Application No.15620 of 2018 and Mr. Parth Bhatt, learned standing counsel for the respondent customs authorities in both the petitions. 2. Arguments are concluded. Matters to be posted for dictation of judgment on 3rd April, 2019. 3. In the meanwhile, the learned standing counsel for the Director General of Foreign Trade and for the customs authorities shall file affidavits in Special Civil Application No.15620 of 2018, explaining as to under what circumstances a huge quantity of 7500 MT of yellow peas were permitted t....
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....striction under the Foreign Trade Policy, 20152020. 5.3 Pursuant to these contracts, consignments of 1044.4 MT, 386.650 MT, 708.455 MT, 509.630 MT and 542.050 MT came to India on 02.07.2018, 20.06.2018 and 29.07.2018 respectively. The goods have since then been stored at the Free Trade Warehousing Zone at Mundra Port. 5.4 Notification No.50/2017Cus dated 30.06.2017 was issued by the Customs Department granting exemption from the import duty on various goods which inter alia included yellow peas. 5.5 Subsequently, Notification No.4/20152020 dated 25.04.2018 was issued by the DGFT carrying the amendment in import policy against Exim Code 0713 1000, whereby import of peas was placed from 'free' to 'restricted'. In other words, vide Notification No. 4/20152020 dated 25.4.2018, import of peas was restricted. With regard to the implementation of Notification No.4/20152020 dated 25.04.2018, Trade Notice No. 05/2018 dated 9.5.2018 and Trade Notice No. 12/2018 dated 18.5.2018 were issued by the DGFT. 5.6 Subsequently, the Ministry of Commerce vide Notification No. 15/20152020 dated 2.7.2018, carried out further amendment in the import policy of peas and the restriction which was eff....
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....reby it restricted the import of peas till 30.9.2018. The relevant portion of the notification reads as under: " S.O (E): In exercise of powers conferred by Section 3 of FT (D&R) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 20152020, as amended from time to time, the Central Government hereby, makes the following amendment in ITC (HS) 2017, Schedule 1 (Import Policy). Import of Peas classified under Exim Code 07131000 (including Yellow peas, Green peas, Dun Peas and Kaspa peas) Is "Restricted" till 30.9.2018. Effect of this Notification : Import of Peas classified under Exim Code 07131000 (including Yellow peas, Green peas, Dun Peas and Kaspa peas) is "Restricted" till 30.9.2018." 5.12 Being aggrieved the petitioner filed the present petition challenging the said notification. Subsequently, by a notification dated 28.12.2018 the import of peas came to be restricted till 31.3.2019, moved an amendment to the petition challenging the said notification which was allowed. 6. In Special Civil Application No.15620/2018 (hereinafter referred to as "the second petition"), the petitioner is engaged in the business of import and export of the agricult....
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....on) till 29.8.2018 was free. Thus, during the period JuneJuly 2018, when the shipments came to India in terms of the three contracts dated 13.4.2018, 19.4.2018 and 20.4.2018, there was no restriction at all on import of yellow peas. According to the learned counsel there was not even a shadow of restriction prevailing on the yellow peas up to 29.8.2018 and hence the petitioner should be allowed to clear the yellow peas imported by it because there was no restriction at all before 30.8.2018. It was further submitted that Notification No.31/2015 dated 29.8.2018 by which the restriction was withdrawn does not even refer to the first restriction Notification No.4/2015 dated 25.4.2018 and only gives a reference to the subsequent restriction Notification No. 15/2015 dated 2.7.2018. According to the learned counsel, therefore, for the period prior to 2.7.2018, there seems to be no restriction at all. 7.1 The learned counsel further contended that Notification No.32/20152020 dated 30.8.2018 is bad in law inasmuch as it is a standalone notification issued for the first time on 30.8.2018. It does not even refer to any of the past restricting notifications nor does it try to save the acts d....
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....the same, as contemplated under the contracts, were made prior to the date of the first restriction dated 25.4.2018 or restriction dated 2.7.2017 and restriction dated 30.8.2018 and, therefore, these notifications cannot curtail the right of the petitioner and the petitioner had correctly imported the yellow peas. 7.5 Next, it was submitted that by issuing the impugned notification, the doctrine of legitimate expectation has been violated by the Central Government. In support of such submission, the learned counsel placed reliance upon the decisions of Supreme Court in Union of India v. Asian Food Industries, 2006 (204) ELT 8 as well as decision in case of Director General of Foreign Trade and another v. Kanak Exports and another, 2015 (326) ELT 26, for the proposition that the Government cannot take away a vested right of an assessee by issuing a circular or a notification which is retrospective in effect. The attention of the court was invited to the interim order dated 28.6.2018 of the Madras High Court whereby Notification No.4/20152020 dated 25.4.2018 has been stayed as well as order dated 16.8.2018 of the Madras High Court whereby Notification No. 15/20152020 dated 2.7.2301....
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....e restriction was till 30.9.2018, and the notification placing such restrictions was withdrawn on 29.8.2018, one month before the expiry of the period stipulated in the withdrawn notification, the petitioner was under the belief that import of peas would now be free at least for a period of one month, since the restriction for the period from 30.8.2018 to 30.9.2018 was lifted. It was submitted that there is nothing in the notification dated 29.8.2018 to indicate that it was adhoc in nature and, therefore, on the same day, that is, on 29.8.2018, the petitioner placed two orders and paid the necessary amounts. However, on 30.8.2018, he was informed that by the impugned notification, the restriction was imposed again. 8.1 It was argued that the action of the respondents of withdrawing the restriction and thereafter, imposing restriction on the next day is arbitrary and there is no logic behind it. It was submitted that the petitioner acted on the basis of the promise held out by the respondents that the restriction on import of peas was removed. However, the respondents arbitrarily once again imposed the restriction to the detriment of the petitioner. It was submitted that the actio....
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.... would be denial of equality. Reliance was placed on the decision of the Supreme Court in case of The Gujarat State Financial Corporation v. M/s. Lotus Hotels Pvt. Ltd., (1983) 3 Supreme Court Cases 379, wherein it has been held thus: "9. It was next contended that the dispute between the parties is in the realm of contract and even if there was a concluded contract between the parties about grant and acceptance of loan, the failure of the Corporation to carry out its part of the obligation may amount to breach of contract for which a remedy lies elsewhere but a writ of mandamus cannot be issued compelling the Corporation to specifically perform the contract. It is too late in the day to contend that the instrumentality of the State which would be 'other authority' under Article 12 of the Constitution can commit breach of a solemn undertaking on which other side has acted and then contend that the party suffering by the breach of contract may sue for damages but cannot compel specific performance of the contract. It was not disputed and in fairness to Mr. Bhatt, it must be said that he did not dispute that the Corporation which is set up under Section 3 of the State Fina....
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....rt Cases 409, wherein it has been held thus : "23. It was also contended on behalf of the Government that if the Government were held bound by every representation made by it regarding its intention, when the exporters have acted in the manner they were invited to act, the result would be that the Government would be bound by a contractual obligation even though no formal contract in the manner required by Article 299 was executed. But this contention was negatived and it was pointed out by this Court that the respondents "are not seeking to enforce any contractual right: they are seeking to enforce compliance with the obligation which is laid upon the Textile Commissioner by the terms of the Scheme, and we are of the view that even if the Scheme is executive in character, the respondents who were aggrieved because of the failure to carry out the terms of the Scheme were entitled to seek resort to the Court and claim that the obligation imposed upon the Textile Commissioner by the Scheme be ordered to be carried out". It was thus laid down that a party who has, acting in reliance on a promise made by the Government, altered his position, is entitled to enforce the promise agains....
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....ort has been placed in exercise of powers under section 3 of the Foreign Trade Act read with the Foreign Trade Policy which is in the nature of policy decision and hence, the scope of interference by this court is very limited. 9.1 It was submitted that the restriction placed on import of peas is a well deliberated decision and there is an object and rationale behind the policy. The attention of the court was invited to the averments made in the affidavitinreply filed on behalf of the respondents, wherein it has inter alia been stated thus: "VI. after InterMinisterial Consultations among Secretary, Department of Food & Public Distribution, Department of Food & Public Distribution, Department of Agriculture, Cooperation and Farmers, Welfare, Department of Consumer Affairs, Department of Commerce, Department of Revenue, Director General of Foreign Trade and Food Corporation of India, it was decided to restrict the import of peas (Pisumsativum), under Exim Code 0713 10 00. Accordingly the Government vide Notification NO 4 dated 25th April, 2018 amended the import policy of Peas (Pisumsativum), Under Exim Code 0713 10 00, from "Free" to "Restricted" for the period from 1st April, ....
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....nit value of import of peas works out to be much below that of chana/gram despite the 50% duty, which acts as an incentive to blend pea flour with gram flour for preparing besan. X Consequently, in order to boost the mandi prices of chana/Bengal gram the Government decided to restrict the import of yellow peas (HS Code 07131000) upto one lakh tons for three months from date of issue of notification to restrict supply of peas and create demand for chana/gram which is currently being harvested in various part of the country." 9.2 It was submitted that the impugned notification is not retrospective and does not affect any vested right of the petitioner. As regards the contention of the petitioner that he had already executed the contracts prior to the restrictions having come into force is concerned, the attention of the court was invited to the following averments made in the affidavitinreply filed on behalf of the respondents: "XI. Based on the demands from the trading community and keeping in view the trade impact, the Government took a conscious decision to review the situation and their InterMinisterial Committee under the Chairmanship of Secretary, Department of Food & P....
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....XVI Thus, the above sequence of events amply clarifies that despite the amendment in the import policy of "peas" from "free" to "restricted", the Government took all possible steps to address the grievances of the trade." 9.3 It was submitted that therefore, due care has been also taken to ensure that people who had placed contracts prior to the date of restriction coming into force did not have to incur losses, to the extent possible. It was submitted that insofar as the bill of entry presented by the petitioner on 30.8.2018 is concerned, in view of impugned notification having come into force, the petitioner was not permitted to import the same. It was submitted that for the purpose of considering whether the petitioner was entitled to import the goods in question, the relevant date is the date of import and that on the date when the goods were sought to be imported, they were restricted goods. 9.4 It was submitted that insofar as the validity of the impugned notifications are concerned, the same are in the nature of a policy decision taken by the Central Government and hence, the scope of interference in respect thereof in exercise of powers under article 226 of the Constitu....
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....ace without the import license/authorisation or the registration certificate issued by the DGFT. 9.6 It was submitted that since the notification dated 2.7.2018 had been withdrawn for technical reasons, immediately on the next day, the Central Government issued Notification No.32/20152020 dated 30.8.2018 restricting the import of peas till 30.9.2018. It was submitted that the above measures taken by the Government are in pursuance of its endeavours to strike a balance between the farmers and the importers and frame policies in the larger interest of the public, safeguarding the interests of both the domestic farmers/producers and the importers and, therefore, no interference is called for by this court. 10. Mr. Nikunt Raval, learned senior standing counsel for respondents No. 1 to 4 and 7 in the second petition, reiterated the submissions advanced by Ms. Trusha Patel, learned senior standing counsel for the respondents in the first petition and further submitted that the policy makers are not concerned with the date of contract. It was submitted that, nonetheless, in case of those who had entered into contracts prior to the restriction being placed initially on 25.4.2018, their....
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....ers are taken based on expert knowledge of the persons concerned and courts are normally not equipped to question the correctness of a policy decision. But then this does not mean that the courts have to abdicate their right to scrutinise whether the policy in question is formulated keeping in mind all the relevant facts and the said policy can be held to be beyond the pale of discrimination or unreasonableness, bearing in mind the material on record. Any decision be it a simple administrative decision or policy decision, if taken without considering the relevant facts, can only be termed as an arbitrary decision. If it is so, then be it a policy decision or otherwise, it will be violative of the mandate of Article 14 of the Constitution." 16. The power of the Court under writ jurisdiction has been discussed in Asif Hameed and Others v. State of Jammu and Kashmir and Others in paras 17 and 19, which read as under: "17. Before adverting to the controversy directly involved in these appeals we may have a fresh look on the inter se functioning of the three organs of democracy under our Constitution. Although the doctrine of separation of powers has not been recognised under the ....
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....o the Executive to take economic decisions is remarkably dealt with by this Court in R.K. Garg v. Union of India and the following discussion from the said judgment is again worth quoting: "8. Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J., that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straitjacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. The court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. Nowhere has this admonition been more felicitously expressed than in Morey v. Doud, 354 US 457: 1 L Ed 2d 1485 (1957) where Frankfurter, J., said in his inim....
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....round that the DGFT had no power to issue a notification under section 3 of the Foreign Trade Act. It appears that the court was taking a strict view of the matter and hence, with a view to comply with such orders, as is evident on a plain reading of the notification dated 29.8.2018, the notification dated 2.7.2018 extending the restriction on import of peas classified under Exim Code 0713 10 00 till 30.9.2018, came to be withdrawn. The said notification reads thus : "Government of India Ministry of Commerce & Industry Department of Commerce Udyog Bhawan, New Delhi Notification No. 31/20152020 Dated the 29 August, 2018 Subject - Withdrawal of Notification No.15 dated 02.07.2018 regarding amendment in import policy of Peas under Chapter 7 of the ITC (HS) 2017, ScheduleI (Import Policy) S.O.(E): In pursuance of the Order dated 28th June, 2018 of the Hon'ble High Court of Judicature at Madras in W.P. Nos. 15921 to 15924 of 2018 and W.M.P. Nos. 18916, 18917, 18919, 18920, 18922, 18923, 18925 and 18926 of 2018 and in compliance with the directions dated 24the of August, 2018 in WP No.21083 & 21084 of 2018 filed by M/s. AMRR Maharaja Dhall Mill, the Notification No 15 dat....
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....he Madras High Court cannot by any stretch of imagination be termed a promise held out by the respondents that the import of peas would be free henceforth. In fact, the notification itself clearly states as to why it has been issued. 16. At this juncture, reference may be made to the judgment and order dated 24.10.2018 passed by this court in BPS Minerals Export Pvt. Ltd. v. Union of India rendered in Special Civil Application No.15342/2018, wherein this court held thus : "11. Regarding the second contention, we may recall that Government of India has recalled the said restriction in order to protect the local farmers against cheaper imports. The notification was withdrawn only in view of the interim order passed by the Madras High Court and presumably to cure a technical defect. Very next day, the same set of restrictions was reimposed. The petitioner cannot argue that in this window of one day, the petitioner's imports should have been cleared. The petitioner had not made the imports during the period when even if we accept the petitioner's contention to be true, such restrictions did not apply." 17. Insofar as the reason as to why the restriction on import of peas....
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.... sought to be made applicable retrospectively. Hence the said decision would have no applicability to the facts of the present case. 20. It may be noted that restriction on import of peas came to be imposed initially by a notification dated 25.4.2018. The notification provides that during the period from 1st April to 30th June, 2018 total quantity of one lakh MT yellow peas minus the quantity already imported from 1.4.2018 till date would be allowed against license as per procedure to be notified by DGFT. The notification further provides that 'already imported' will include shipment already arrived from 1.4.2018 till 25.4.2018 and those shipments backed by Irrevocable Commercial Letter of Credit (ICLC) and Advance Payment made through Banking Channel before 25.4.2018. Both these categories will be required to be registered with Jurisdictional Regional Authority as per Para 1.05 of the Foreign Trade Policy, 20152020. The effect of the notification was that the import policy of Yellow Peas under Exim Code 0713 1000 was revised from 'free 'to 'restricted 'for a period of three months only. Thereafter, by Trade Notice No.5/2018 dated 9.5.2018, it was provided that, as already no....
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.... taken care of those contracts which have been issued prior to issuance of notification. 23. It has been contended on behalf of the petitioner in the first petition that transitional arrangements contemplated under paragraph 1.05 of Chapter 1A of the Foreign Trade Policy and Handbook of Procedures have not been followed in the present case. A perusal of clause (b) of paragraph 1.05 which provides for transitional arrangements shows that the same provides that in case an export or import that is permitted freely under FTP is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted, notwithstanding, such restriction or regulation, unless otherwise stipulated. This is subject to the condition that the shipment of export or import is made within the original validity period of an irrevocable commercial letter of credit, established before the date of imposition of such restriction and it shall be restricted to the balance value and quantity available and time period of such irrevocable letter of credit. For operationalising such irrevocable letter of credit, the applicant shall have to register the Letter of Credit with the Jurisdict....