TaxTMI 
TaxTMI 
2023 (2) TMI 788
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....betel nuts. 3. The grievance of the Writ Petitioners was that through the impugned Notification issued by the Director General of Foreign Trade, the importers were directed to import the betel nuts provided that the c.i.f. value (minimum import price) of the betel nuts was fixed at Rs. 35/- per kg. According to the petitioners, such fixation of price by issuing a Notification under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as 'the Foreign Trade Act') by the Director General of Foreign Trade (DGFT) is arbitrary and unconstitutional and beyond the powers of the DGFT. 4. The appellants took a stand that a policy decision was taken by the Central Government to fix the c.i.f. value of Rs. 35/- per kg., keeping in view the domestic prevailing prices and to protect the interests of the domestic cultivators to ensure that the prices of the domestic produce do not fall. According to the appellants, the DGFT was only authenticated by the Central Government to issue the Notification and there was no delegation and that the policy decision of the Central Government which was taken after hearing the grievance of all concerned,....
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....e only in that manner or not at all as held by the Hon'ble Apex Court in Babu Verghese and Others v. Bar Council of Kerala and Others reported in AIR 1999 SC 1281, tracing this principle from the judgment of Taylor v. Taylor reported in (1875) 1 Ch D 426? (c) Even if the impugned notification is taken to have been issued by the DGFT by way of authentication by the Central Government, whether the Central Government is entitled to place restriction on the import of areca nuts and fix the value under the Foreign Trade (Development and Regulation) Act, 1992 or such restriction of imports and fixation of tariff can be carried out only in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 and as an ancillary issue, whether the Foreign Trade (Development and Regulation) Act, 1992 must be considered to be a General Act and the Customs Act, 1962 and the Customs Tariff Act, 1975 should be considered to be Special Acts and thereby, the principle of generalia specialibus non derogant (special things to derogate from the general things) will apply? 8. The appellants had filed counter affidavits in all the writ petiti....
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....; The bulk quantities of substandard low-priced betel nut was being imported into India. Due to this type of imports, the market rate had drastically decreased and the demand for the indigenously produced betel nut had reduced considerably in most of the Indian markets in the States of West Bengal, Bihar, U.P. and other markets where major quantities of betel nut is consumed. This had adverse effect on the domestic betel nut industry. The low-priced imported betel nuts has been posing a threat and a challenge to the employment and consequential interest of the domestic producers, cultivators and other allied persons. (d) In order to generate perfect competition between the home produce and imported betel nuts by eliminating the monopoly of the low-cost imported betel nut of inferior quality. (e) Protection to the home producers from being dislodged in the competition in the realm of low-cost imported betel nuts resulting in inevitable unemployment necessitated the Government to issue such a Notification. (f) To create conditions for treatment of imported betel nuts at par with t....
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....try was also consulted with the Directorate of Areca nut and Spices Development, Calicut (under Union Ministry of Agriculture). It was reported that the average domestic price of betel nut during the year 2006-07 varied between Rs. 66 to Rs. 75 per kg. As per the import data of betel nut for the year 2006-07 collected from the Directorate-General of Commercial, Statistics & Intelligence (DGCIS), Kolkata, the import price of betel nut (whole) comes to Rs. 15.50 paise per kilogram and that of split betel nut comes to Rs. 13 per kilogram. Thus, as per the information received from the DGCIS, the import price of imported betel nut is very low compared to the domestic prevailing prices. This low import price could be low either on account of very low international prices or on account of probable under invoicing having been resorted to by the importers. Whatever may be the reasons for low import price of betel nut, it was considered necessary to provide protection to the domestic producers of betel nut to enable them to get a reasonable rate of remuneration of their produce. Therefore, in order to protect the interests of the domestic growers of betel nut and to provide a level....
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....e deemed to be goods and import or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly. (4) Without prejudice to anything contained in any other law, rule, regulation, notification or order, no permit or licence shall be necessary for import or export of any goods, nor any goods shall be prohibited for import or export except, as may be required under this Act, or rules or orders made thereunder. 5. Foreign Trade Policy. - The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy : Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette. 6. Appointment of Director General and his functions. - (1) The Central Government may appoint any person to be the Director-General of....
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....under : 1. Import Policy for the following items will be amended as follows : Exim Code Item Description Policy Policy Conditions Betel Nuts : 0802 90 10 Whole Free Import permitted freely provided cif value is Rs. 35/- per Kilogram and above. 0802 90 12 Split Free Import permitted freely provided cif value is Rs. 35/- per Kilogram and above. 0802 90 13 Ground Free Import permitted freely provided cif value is Rs. 35/- per Kilogram and above. 0802 90 19 Other Free Import permitted freely provided cif value is Rs. 35/- per Kilogram and above. 2. This issues in public interest. Sd/- (R.S. Gujral) Director General of Foreign Trade And Ex Officio Additional Secretary to the Govt. of India 15. The stand taken by the Writ Petitioners and as affirmed by the Learned Single Judge is that the above Notification was issued by the DGFT and such a power was delegated by the Central Government, when there is an express prohibition under Section 6(3) of the Foreign Trade Act. 16. The specific stand taken by the Central Government is that the Central Govern....
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....e under sub-section (3) to Section 6 of the FT Act. Section 6(3) of the Act states that the Central Government may by an order published in the Official Gazette authorise the Director General or such other officers subordinate to him to exercise any power under the Act, except powers under Sections 3, 5, 15, 16 and 19. Therefore, exercise of powers under Sections 3, 5, 15, 16 and 19 of the FT Act cannot be delegated. Notification No. 38/2015-2020 has not been issued by the Director General of Foreign Trade under a power delegated to him by the Central Government. 31. The Notification in question is issued by the Central Government and would be in terms of Article 77 of the Constitution of India. We would elaborate this aspect a little further, but first notice that the Director General of Foreign Trade is appointed by the Central Government under sub-section (1) to Section 6 of the FT Act. Director General is to advise the Central Government in formulation of Foreign Trade Policy and is responsible for carrying out the policy. As noted above, on plain reading of Notification No. 38/2015-2020, it is apparent that the Notification was issued by the Central Government, f....
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....t the Director General of Foreign Trade is ex officio Additional Secretary in the Government of India. This being the position, the second contention of the petitioners is rejected." This view was reiterated by the Supreme Court in Union of India and Others v. Agricas LLP and Others, reported in 2020 SCC Online SC 675 = 2020 (373) E.L.T. 752 (S.C.). 19. The Gujarat High Court had an occasion to deal with a similar Notification issued by the DGFT by prescribing a minimum c.i.f. value for cashew kernels and while dealing with the issue, the authentication order issued by the President of India in favour of the DGFT was considered in M/s. Pam Agro Industries and Others v. Union of India and Others through judgment dated 19-3-2021 [2021 (377) E.L.T. 815 (Guj.)] and the relevant portions are extracted hereunder : "29. On perusal of the above notification, it is clear that the same is issued under section 5 of the Foreign Trade Act read with paragraph no. 2.1 of the Foreign Trade Policy, 2009-2014, as amended from time to time by prescribing the minimum CIF value of cashew kernels under Chapter 8 of ITC (HS) 2012, Schedule 1 (Import Policy) per kilogram being Rs.....
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....se of the dispute raised in these petitions. On behalf of the respondents it has been contended that the import policy has been amended by the Central Government in exercise of powers under section 3 of the Act and that the DGFT has only authenticated the same in accordance with the Authentication Rules. In support of such submission, a notification dated 16th February, 2002 of the Ministry of Home Affairs whereby an order made by the President on 16-1-2002 has been published for general information has been placed on record, whereby in exercise of powers conferred under clause (2) of Article 77 of the Constitution, rules called the Authentication (Orders and other Instruments) Rules, 2002 have been framed. Rule 2 thereof provides that all orders and other instruments made and authenticated in the name of the President shall be authenticated, and specifies the persons who may authenticate the same. Item No. 12 therein provides that in case of orders and other instruments relating to the Directorate General of Foreign Trade, by the Director General of Foreign Trade, or the Additional Director General of Foreign Trade, or the Export Commissioner or Joint Director General of Foreign T....
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.... Authentication Rules. Consequently, there was no delegation of power by the Central Government and the DGFT was merely authenticated by the Central Government to issue the notification under Section 5 of the Foreign Trade Act, pursuant to the policy decision taken by the Central Government. 21. The Learned Counsel for the Writ Petitioners brought to the notice of this Court the judgment of the Calcutta High Court in Bimal Kumar Modi case reported in 2014 (306) E.L.T. 97 (Cal.) and submitted that the Calcutta High Court considered a very similar notification issued by the DGFT wherein the c.i.f. value was fixed at Rs. 110 per kg. and above. The Learned Counsel specifically placed reliance upon Paragraph 17 of the judgment and the same is extracted hereunder : "17. The meaningful reading of Section 5 & Section 6 of the FTDR Act suggest that the power to formulate and announce the Foreign Trade Policy vest in the Central Government who can delegate some of its powers to the DGFT by taking recourse to Section 6. Sub-section (3) of Section 6 clearly prohibits the delegation of power by the Central Government exercisable under Sections 3, 5, 15, 16 & 19 of the said....
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....t pertains only to the bar for the Central Government to delegate the powers. Insofar as the Central Government authenticating the DGFT to issue the Notification, it must be deemed to be a notification issued only by the Central Government. Stricto sensu, the bar under Section 6(3) of the Foreign Trade Act would have applied only if the DGFT had exercised a statutory power. In the present case, the authentication at the best can only be held as an executive exercise of a power by the President of India through the DGFT. Hence, the impugned notification published in the Gazette under Section 5 of the Foreign Trade Act cannot be held to be ultra vires as was contended by the Learned Counsel for the Writ Petitioners. 23. Clause (2) of Article 77 provides for the authentication of orders and instruments in a manner as may be prescribed by the Rules. Vide S.O. No. 2297, dated 3-11-1958 published in the Gazette of India, the President of India has issued the Authentication (Orders and other Instruments) Rules, 1958. The said Rules have been superseded subsequently by the Authentication (Orders and other Instruments) Rules, 2002. The notification dated 4-6-2008 recites that the am....
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....ce of the Hon'ble Prime Minister of India, based on various representations and ultimately, the Government of India, in order to strike a balance, permitted to import betel nut freely, subject to the c.i.f. value of Rs. 35 per kg. and above. While fixing this price, the average domestic price of betel nut was also taken into consideration and import data was also collected from the concerned department and the Central Government thought it fit to fix the price at Rs. 35 per kg. and above. The c.i.f. value per kg. coupled with customs duty worked out to an average of Rs. 70 per kg. and this was in line with the average domestic price of betel nut prevailing at the relevant point of time. In view of the same, the policy decision taken by the Central Government is supported by sufficient data and such a policy decision cannot be interfered with by this Court. 26. Compliance with Article 77 can also be garnered by calling for and perusing the files of the DGFT. Such a course was explicitly held to be permissible by a Division Bench of this Court in Union of India v. K.S. Krishnaswamy, reported in 2005 SCC OnLine Mad 358 : (2005) 2 LLN 890 : (2005) 2 CTC 661, wherein it was obse....
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....ern itself with intricacies of trade and commerce. 60.2 It is neither within the domain of the courts nor the scope of judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor are the courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical. Wisdom and advisability of economic policy are ordinarily not amenable to judicial review. 60.3 Economic and fiscal regulatory measures are a field where Judges should encroach upon very warily as Judges are not experts in these matters." The Court concluded by observing as under : "71. The correctness of the reasons which prompted the Government in decision taking one course of action instead of another is not a matter of concern in judicial review and the court is not the appropriate forum for such investigation. The policy decision must be left to the Government as it alone can adopt which policy should be adopted after considering of the points from different angles. In assessi....
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....l questions involved herein. 26. A citizen of India has a fundamental right to carry out the business of export, subject, of course to the reasonable restrictions which may be imposed by law. Such a reasonable restriction was imposed in terms of the 1992 Act. 27. The purport and object for which the 1992 Act was enacted was to make provision for the development and regulation of foreign trade inter alia by augmenting exports from India. While laying down a policy therefor, the Central Government, however, had been empowered to make provision for prohibiting, restricting or otherwise regulating export of goods. 28. Section 11 of the 1962 Act also provides for prohibition. When an order is issued under sub-section (3) of Section 3 of the 1992 Act, the export of goods would be deemed to be prohibited also under Section 11 of the 1962 Act and in relation thereto the provisions thereof shall also apply. 29. Indisputably, the power under Section 3 of the 1992 Act is required to be exercised in the manner provided for under Section 5 of the 1992 Act. The Central Government in exercise of the said power announced its Foreign Trade Pol....
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.... the Central Government in terms of sub-section (2) to Section 3, read with sub-section (3) to Section 6 of the FTDR Act, which states that powers exercisable under Sections 3, 5, 15, 16 and 19 of the FTDR Act cannot be delegated to the DGFT or any other officer subordinate to the Director General. (b) Section 19(3) of the FTDR Act provides that every rule or every order passed by the Central Government shall be laid, as soon as may be after it is made, before each House of the Parliament while it is in session or thereafter. The impugned notifications had not been laid before the Houses of the Parliament. (c) The notifications and trade notices suffer from the vires and defects mentioned by this Court in Director General of Foreign Trade v. Kanak Exports [2015 (326) E.L.T. 26 (S.C.)]. (d) The notifications and the trade notices offend the right to equality and violate Article 14 of the Constitution." 33. The challenge to the authority of the DGFT to issue the notification was answered at Paragraph 15 of the judgment and for proper appreciation, the same is extracted hereunder....
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....nt made or executed by the President. Therefore, the contention of issuance of the impugned notification sans authority, cannot be sustained." 34. The above finding of the Apex Court sufficiently covers the first and second grounds that have already been answered by this Court. The finding of the Apex Court only strengthens the conclusion arrived at by this Court for the first and second issues. 35. The Apex Court thereafter took up the effect of Sections 3 and 9A of the Foreign Trade Act and considered it in consonance with the GATT, 1994 obligations and the following findings were rendered : "(v) Contention of the importers on Sections 3 and 9A of the FTDR Act and the response by the Union of India. 58. Before we go on the interpretation of respective sections, namely, Sections 3 and 9A of the FTDR Act, we would like to reproduce in brief the contentions of the importers. The importers submit that the FTDR Act was introduced and enacted for development and regulation of foreign trade by facilitating imports and augmenting exports from India and to make India competitive in conformity with GATT-1994 obligations. Section 3 of the FTDR Act....
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....It is submitted that the farmers are one of the most important stakeholders in matters related to import/export of agricultural goods and the Government is required to strike a balance between the interests of domestic producers and importers. Thus, whenever it is observed that large scale imports of an item is adversely impacting the interest of the domestic producers, due to fall in prices in the local market, the Government in consultation with stakeholders concerned, tries to uphold the interests of domestic producers through suitable measures like restriction on import quotas etc. xx       xx       xx 9. It is submitted that since domestic production of pulses/grams has been very good, therefore the Government has imposed restrictions on the import of peas. Yellow Peas which are largely imported to India are mainly grown in countries like Canada, Russia, Ukraine etc. Due to agro-climatic conditions of these countries they export peas in bulk. Therefore, price of Yellow Peas is lower in comparison to other imported/domestically available pulses, including Gram. It is to be noted that th....
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....0 lakh MTs. The Government is presently holding a buffer stock of 26.94 lakh MT of Gram, against the target quantity of 3 lakh MTs. The Gram is being sold at Rs. 4,000 - 4,200 per quintal, which is below the MSP of Rs. 4,875/- per quintal. Imported CIF value of Yellow Peas is Rs. 2,028/- per quintal. Due to the pandemic, the farmers could be compelled to make panic disposal at much lower prices. In the further affidavit filed on 1st July, 2020, the Union of India has stated that they had not issued any quota for Peas, Yellow Peas etc. as in spite of restricted quota of 1 lakh and 1.5 lakh MTs for Peas in the Financial Years 2018-19 and 2019-20, due to interim orders passed by the various High Courts, the actual import was 8.51 lakh MTs and 6.67 lakh MTs during the Financial Years 2018-19 and 2019-20, respectively. Consequently, it has been decided not to import Yellow Peas in the current Financial Year 2020-21. In the affidavit filed on 6th July 2020, with reference to Section 9A of the FTDR Act, the Union of India has stated that the said section is attracted only when the goods are imported into India in increased quantity and under such conditions as to cause or threaten to caus....
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.... amendment vide Act 25 of 2010, services or technology. Sub-section (2) to Section 3, therefore, authorises the Central Government to, by an Order published in the Official Gazette, make provisions restricting the imports or exports. Imposition of quantitative restrictions on imports or exports would clearly fall within sub-section (2) to Section 3 of the FTDR Act. We are not concerned with the proviso to sub-section (2) in the present case. Sub-section (3) to Section 3 states that where an order is passed under sub-section (2) whereby the import or export of goods is prohibited, restricted or otherwise regulated, the goods in question would be deemed to be prohibited goods under Section 11 of the Customs Act, 1962 and accordingly the provisions of the latter Act would apply. 64. Sub-section (4) to Section 9A of the FTDR Act introduced by Act 25 of 2010 with effect from 27th August, 2010, requires some elucidation. The sub-section on one hand states that no permit or licence shall be necessary for imports or exports of goods, nor any goods shall be prohibited from import or export, except as may be required under the FTDR Act, or the rules or orders made thereunder. A....
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....ct in the issuance of the impugned notifications or orders, which are intra vires and not ultra vires. 66. We have already reproduced and quoted Article XI of the GATT-1994 and have to say that the same has not been statutorily made a subject of 'act of transformation' and incorporated in the domestic legislation, i.e. the FTDR Act. The FTDR Act does not legislate and transform Article XI of the GATT-1994. As noticed above, Section 3 of the FTDR Act empowers and authorises the Central Government, i.e. the Union of India to frame policy, rules or regulations for import or export of goods. The policy is framed under Section 5 of the Act, which reads as under : "5. Foreign Trade Policy. - The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy : Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official....
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....li, therefore, is not applicable to the case in hand." 36. On a careful reading of the above findings of the Apex Court, it can be seen that the Central Government has been given very wide powers under Section 3(2) of the Foreign Trade Act which includes the power to prohibit, restrict or otherwise regulate in all cases or in specified classes of cases, import or export of goods. When any order is passed by the Central Government under Section 3(2) of the Foreign Trade Act, it shall be deemed to have been prohibited or restricted or regulated under Section 11 of the Customs Act. The Customs Tariff Act is nothing but an Act which provides for rates at which duties of customs shall be levied under the Customs Act as specified in the First and Second Schedules. This Act is not a stand-alone enactment and it goes along with the Customs Act. Hence, any order passed by the Central Government under Section 3(2) of the Foreign Trade Act must be considered to be an exercise of a wide power conferred on the Central Government and the provisions of the Customs Act and the Customs Tariff Act mutatis mutandis will automatically apply. In other words, the Central Government need not issu....