TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 788
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.... 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, cannot be subjected to judicial review. 5. The Learned Single Ju....
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....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 petitions and the reasons assigned by them for taking a policy decision to fix a c.i.f. value for importat....
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.... 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 the betel nut produced indigenously. (g) To remove the resultant discrimination between the producers of South Indian States....
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....el 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 playing field to them and to ensure that the domestic prevailing price of betel nut does not fall down, the minimum floor price for import of betel nut has been fixed at Rs. 35 per kilogram ....
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.... 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 Foreign Trade for the purposes of this Act. (2) The Director General shall advise the Central Government in the formulation of the foreign trade policy and shall be responsible for carrying out that policy. (3) The Central Government ma....
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.... 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 Government did not delegate the power to the DGFT and that the Central Government only authenticated the DGFT to issue the impugned Notification. In order to explain the stand taken by the Central Government, the Learned Additional Solicitor General brought to the notice of this Court, the Government of India (Allocation of Business) Rules, 1961. These Rules are m....
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.... 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, for the Notification states that Central Government hereby amends the import policy. The decision taken to amend and issue the Notification was of the Central Government. 32. Referring to the constitutional provisions, the Supreme Court in Delhi International Airport Limited v. International Lease Finance Corporation, (2015) 8 SCC 446 had referred to Articles 77 and 163 of the Consti....
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....h 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. 288/- for cashew kernel (broken) for HS Code 0801 32 10 and Rs. 400/- for cashew kernel (whole) for HS Code 0801 32 20. Since 2013, the MIP for two different categories of cashew kernels broken and whole are in existence. 30. The power to issue such notification by the Director General of Foreign Trade came up for consideration before the Calcutta High Court in case of Bimal Kumar Modi (supra), wherein the notifi....
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....ent 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 Trade. Thus, the Authentication Rules specifically empower the Director General of Foreign Trade to authenticate instruments relating to the Directorate General of Foreign Trade. A perusal of the impugned notification reveals that the same has been issued by the Government of India, Ministry of Commerce and Industries, Department of Commerce, Directorate General of Foreign Trade. Thus, by the impugned notification the amendment made by the Ce....
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....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 Act. According to the DGFT, the executive functions of the Union is vested in the President which is required to be exercised by him either directly or to officers subordinate to him. All the executive actions of the Union is expressed to be taken in the name of the President who by Order and other instruments shall authenticate in a manner as may be specified in the Rules for convenient transactions of the business and for allocation amongst the Ministers. The All....
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....f 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 amendment has been effected by the Central Government and not the DGFT as contended. Secondly, it is also authenticated by the DGFT who is the ex officio Additional Secretary in the Government of India and is qualified to authenticate the instrument, as pointed out by the Delhi High Court. There is, therefore, no question of any violation of Article 77 in the light of the decision of the Supreme Court in Sable Waghire & Co. v. Union of India, (1975) 1 SCC 763, wherein it ....
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....d 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 observed thus : "Therefore the law is well settled now that Art. 77 of the Constitution of India is not mandatory but only directory in character. In this case the clarification, dated 11 May, 2001, is not expressed to be taken in the name of the President. Therefore we have decided to go through the file produced by the Learned Additional Solicitor-General to find out whether the clarification dated 11 May, 2001 is in compliance to the requirement of Art. 77 of the Constitution of In....
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....licy 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 assessing the propriety of the decision of the Government the court cannot interfere even if a second view is possible from that of the Government." 28. The second issue that has been framed by this Court also stands answered by virtue of the above discussion, since the notification has been issued in line with Section 5 of the Foreign Trade Act and we do not find any illegality or diversion in the procedure since the notification was technically issued by the Central Government by authenticating the DGFT to issue the same. Thus....
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.... 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 Policy for the years 2004-2009. It also exercised its power of amendment by issuing the notification dated 27-6-2006. Export of all commodities which were not earlier prohibited, therefore, was permissible till the said date. 30. The implementation of the said policy was to be made in terms of the procedures laid down in the Handbook. The provisions of the 1992 Act, the Foreign Trade Policy and the procedures laid down thereunder, thus, provide for a composite scheme. In implementing the said provisions of the scheme, in the event an order of prohibition, restrict....
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....aid 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 : "15. At the outset, we must record that the importers, and in our opinion rightly, have not raised the contention that the DGFT could not have notified the impugned notifications. The notifications themselves record that they were published by the Ministry of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade. The first paragraph of the notification states that they had been issued by the Central Government in exercise of powers conferred under Article 77 of the Constitution. Clearly, the notifications were issued by the Central Government, and not the DGFT that had perfor....
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....ention 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 reflects the said position and incorporates Article XI of the GATT-1994 which stipulates that there shall not be any provision or restrictions other than duty, taxes and other charges by any contracting party. Section 9A is almost a replica of Article XIX of the GATT-1994 and this is the only provision which confers power on the Central Government to impose 'quantitative restrictions' on imports. It, therefore, follows that unless the conditions of Section 9A of the FTDR Act are satisfied and the procedure prescribed under the Rules is followed, no 'quantitative restrictions' could have been imposed by the Union of India through the mediu....
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....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 the end use of Gram is mainly flour, commonly known as "Besan", used in preparations of Indian savouries. As per industry estimates, about 70% of the Gram produced is used in manufacture of Besan. It is informed that Yellow Peas are a near perfect substitute for Gram in the making of Besan. As the price of imported Yellow Peas in India is cheaper than the domestic market price of Gram, a huge shift in industry usage from Gram to Yellow Peas had happened. Increased supply of Yellow Peas had taken away Gram demand, the resulting in fall in prices of Gram. Thus, despite large scale procurement of Gram under the PSS scheme in Rabi 2018 and 2019, prices of Gram continued to be below the MSP announced by the ....
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....ort 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 cause serious injury to domestic industry. Section 9A is enacted as a safeguard mechanism in terms of Article XIX of the GATT-1994 and Article II of the WTO Agreement on Safeguards vide the Amendment Act, 2010. The notifications under challenge have been issued within the express terms of Section 3 of the FTDR Act which permits the Central Government to impose restrictions without any qualification of the nature specified in Section 9A. Power of the Central Government to restrict imports to limited quantities under Section 3 and quantitative restrictions under Section 9A of the FTDR Act are completely distinct and have no connection or interplay. The power under Section 3(2) of the FTDR Act is of a wide amplitude. Refe....
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....ly 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. At the same time, by using the phrase 'without prejudice to anything contained in any other law, rule, regulation, notification or order', it protects the operation of the other law, rule, regulation, notification or order to the extent that they do not directly or indirectly deal with the permit or licence necessary for import or export of goods or prohibit import or export of goods. Operation of such law, rule, regulation, notification or order not dealing with the permit or licence necessary for import or export on a prohibition of import of goods is, therefore, protected and not overridden. Sub-section (4) to Section 3 therefore gives limited primacy to the FTDR Act, restricting it to the scope and subject matter of the FTDR Act, an....
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....mulate 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." 67. Thus, the Central Government i.e. the Union of India has been given the necessary discretion and election with regard to framing of policies for import and export of goods, services and technology. Therefore, implementation of GATT-1994, including Article XI, is left to the Central Government by means of delegated legislation. 68. Clause (2) of Article XI of GATT-1994 states that provisions of paragraph (1) shall not extend to three specified situations as stated in sub-clauses (a), (b) or (c). Clause (c) deals with import restrictions on any agricultural or fisheries product, imported in any form necessary for enforcement of governmental measures specified therein. Similarly, Article XII of GATT-1994 states that notwithstanding the provisio....