TaxTMI 
TaxTMI 
2022 (3) TMI 1505
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....ice - HS CODE 1006 40 00, with effect from 9.9.2022. In the alternative, it is prayed to declare that notification dated 8.9.2022 would not apply to the broken rice procured by petitioner No.1 prior to the date of the notification. The petitioner seeks permission to export 3006.110 M.T. of broken rice. 2.1 It is further prayed to declare that the abrupt change in policy by issuing notification dated 8.9.2022 banning the export of broken rice, was arbitrary. The petitioner has called in question the action on part of the respondents in not permitting export of consignments of the commodity broken rice already procured by the petitioner before the date of imposition of the prohibition. 3. The petitioner No.1, a company registered under the provisions of the Companies Act,2013, is engaged in the business of export of different agricultural products. The petitioner No.1 is a wholly owned subsidiary of Krishak Bharti Cooperative Limited which is a multi-state co-operative society formed to cater to the needs of the farmers in the entire country. It was stated that Krishak Bharti Cooperative Limited (KRIBHCO) established the petitioner No.1 company to export agro commodities from India....
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....n No.31/2015- 2020 dated 8th September, 2022 and the message exchange date between the Indian and foreign bank / swift date has been prior to 8th September, 2022, as per procedure to be notified separately by Directorate General of Foreign Trade." 3.5 Thus, the quota of the aforesaid quantity of the broken rice in question was allowed to be exported by the distributing amongst the applicants whose Letters of Credit were opened before the notification dated 8th September, 2022 and the message exchange date between Indian and Foreign bank / swift date also had been prior to 8th September, 2022 to be exported during the year 2022-2023 was notified. In connection with the aforesaid notification, Trade Notice dated 14th October, 2022 came to be issued by the Ministry whereby the procedure to be complied with for obtaining permission under the quota notified as above came to be outlined. The procedural conditions mentioned in the said Trade Notice included that the on-line applications for export of broken rice under HS Code 1006 40 00 filed from 16.10.2022 to 20.10.2022 would be considered. The Director General of Foreign Trade reserved right to decide and alter the modalities of dist....
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.... was not consumable item, nor it was supplied in the Public Distribution System. It is only 25% broken rice are made available under Public Distribution System. The policy would also result into deprivation of foreign exchange earnings, it was sought to be submitted. It was submitted that even otherwise, the abrupt change in the policy put the petitioner and other similarly situated exporters in great difficulties and their vested rights were adversely affected. It was submitted that the petitioner had entered into contract with the third party for exporting quantity already procured. It was submitted that default in carrying out the obligations under the contract, would lead to sufferance of further damages, and liquidated damages. It was submitted that by contracting and procuring the commodity to export it, the petitioner altered its position, that the petitioner acted in view of the policy already prevailing and that due to sudden change, the ban put the petitioner to an irreversible situation. 4.1.1 It is also the case of the petitioner that in the year 2001, similar prohibition was acted upon in respect of export of non-Basmati rice by issuing notification dated 24.10.2007 a....
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....h is consumed by the domestic population and it is this rice which is distributed through the public distributor services to the APL and BPL ration card holders. 4.3.1 What was further submitted by learned senior advocate for the petitioners was that the rice with HSN Code 1006 40 00 which are made subject mater of prohibitory notification are 100% broken rice which are not used in India for human consumption nor they are the commodity which is part of Public Distribution System. There has been price difference too, it was indicated. It was further stated that the major use of 100% broken rice HSN Code 1006 40 00 is for human consumption in poor and vulnerable countries like Dakar, Senegal, Togo, Niger, Chad, Sudar, Mail etc.. It was contended that major use of 100% broken rice in India is for animal and cattle feeding and this category of broken rice could also be used for ethanol manufacturing. What was thus highlighted was that 100% broken rice which are prohibited are not consumed in India by the human population in any manner. Therefore, the ground of food security aspect for issuing the notification to prohibit the export thereof was without any basis, it was submitted. 4.4....
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....relation to invocation of principle of promissory estoppel. In Devi Multiplex & Anr vs State Of Gujarat & Ors. [(2015) 9 SCC 132], under a package scheme of incentives for tourism project, it was promised that the incentive for initial period of 2 years, to start the commercial operations would be extendable in the first instance by further period of 2 years subject to satisfactory progress. The extension was made available even at a subsequent stage. The different units including the appellant rested upon the said representation of the Government and based on that, came forward and altered their position. It was held that the State Government was bound by the principles of promissory estoppel. Yet another decision in Mahabir Vegetable Oils Pvt. Ltd. vs State Of Haryana [(2006) 3 SCC 620], was referred to, to highlight the proposition that where the party has altered the position and invested huge amount in setting up new industrial unit, as the facts were in that case, the State could not act against the long drawn course of action and promises meted out thereby. 4.6 On the other hand, learned advocate for the respondent relied on decision of the Supreme Court in Small Scale Indu....
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....tle the scope of judicial review even further. 5.1.1 For whatever considerations the change in the export policy of broken rice has been introduced banning the export, the area is not one to be probed by the Court. Although the petitioner has sought to contend that the ground of food security in the country put forward by the respondents to justify the change in the policy, to be factually incorrect, the Court would not substitute its own consideration against that of the policy makers. There may be host of considerations which may have actuated the respondents to prohibit the export of the broken rice. 5.1.2 The principle that the scope of judicial review in the economic policy decision and in the economic matters is minimal was emphasized in Small Scale Industrial Manufactures Association (supra). 5.1.3 The principle of promissory estoppel also cannot be applied when there has been a change in policy to contend that the changed policy should continue. The policy, the policy considerations and the change and alteration in the policy is the domain of Executive. In Unicorn Industries (supra), the Supreme Court stated with regard to the applicability of doctrine of promissory esto....
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....ion-maker has properly balanced the legitimate expectation as against the need for a change. In the latter case the court would obviously be able to go into the proportionality of the change in the policy. A change in policy can defeat a substantive legitimate expectation if it can be justified on Wednesbury reasonableness. The protection for substantive legitimate expectation is based on Wednesbury unreasonableness............The choice of the policy is for the decision-maker and not for the court. The legitimate substantive expectation merely permits the court to find out if the change in policy which is the cause for defeating the legitimate expectation is irrational or perverse or one which no reasonable person could have made. (Paras 38, 40 and 42) 5.2.4 It was explained about the doctrine of legitimate expectation thus, "The procedural part of it relates to a representation that a hearing or other appropriate procedure will be afforded before the decision is made. The substantive part of the principle is that if a representation is made that a benefit of a substantive nature will be granted or if the person is already in receipt of the benefit that it will be continued an....
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....nt past practice. An expectation for substantive benefit will arise in such circumstances. It is also viewed as a limb of natural justice. 5.2.8 An English decision in R. vs. North and East Devon Health Authority, ex parte, Coughlan [2001 (1) QB 213], identified three categories of legitimate expectation, which may also be noticed to understand the doctrine, (a) The court may decide that the public authority is only required to bear in mind its previous policy or other representation, giving it the weight it thinks right, but no more, before deciding whether to change course. Here the court is confined to reviewing the decision of Wednesbury grounds. This has been held to be the effect of changes of policy. (b) On the other hand the court may decide that the promise or practice induces a legitimate expectation of, for example, being consulted before a particular decision is taken. Here it is uncontentious that the court itself will require the opportunity for consultation to be given unless there is an overriding reason to resile from it in which case the court will itself judge the adequacy of the reason advanced for the change of policy, taking into account what fairness re....
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....ble for export. 6.2 At this stage, the decision of Andhra Pradesh High Court may be referred to. While dealing with Writ Petition No. 32049 of 2022 and others of 2022 in Sri Chitra Agri Exports & Others vs. Union of India, Andhra Pradesh High Court considered the similar controversy in relation to the very notification impugned in the petition. In that case also, the petitioner had collected the material to be exported and some part was stored in warehouse at different places for transporting the same to China. 6.2.1 It was observed by the Andhra Pradesh High Court that in relation to the effect of the notification dated 8.9.2022, even the authorities had accepted in principle that abrupt change in the policy would cause loss to the person who had acted on the basis of the existing policy by virtue of subsequent notification. The respondent also provided protection to such class of persons as was rightly noticed by the Andhra Pradesh High Court. The categories were mentioned in the subsequent notifications which class of exporters were allowed to export the quantity of broken rice though policy had brought into force prohibiting the export. 6.2.2 The Andhra Pradesh high Court pr....