TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 835
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....2. Rule. Heard finally with the consent of the learned counsel appearing for the parties. 3. The petitioners are the companies incorporated under the Companies Act, 1956, and are dealing in the business of rice and rice related products. The petitioners company claim to be one of the companies of the group by name "Greta Group", which has various kinds of business activities, namely rice milling, power generation and trading of metal scraps in India and overseas market. The petitioners companies have its corporate office in Nagpur and also in other parts of the world. 4. The respondent No. 1 is the Union of India. The respondent No. 2, the Director General of Foreign Trade is a statutory Authority regulating and controlling foreign trade in India. Respondent No. 3 is the Head of Central Excise and Customs Department. The respondent Nos. 4 to 10 are the Heads of respective Divisions of the Custom Department working under the directives of the respondent No. 3 and implement the policies framed by the respondent Nos. 1 and 2. As the facts in all these petitions are identical, the facts in Writ Petition No. 5601 of 2023 are considered here. 5. The petitioners, by these petitions, ra....
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....Broken 2,500 13.07.2023 SE23Y-00066 Roop International General Trading Indian White Rice 11,750 Total (in M.T.) 79,250 7. In order to fulfill its obligation for exporting the products in pursuance to the aforesaid sale contracts, the petitioners are claimed to have entered into various purchase contracts for the purchase of sale of Non-Basmati Rice and accordingly, advance has been paid and received under the said contracts. It is submitted that respondent Authorities are well aware of practice of advance sale and purchase contracts prevailing in the trade. It is also contended that the provision is arbitrary, hasty and illogical decision was taken without having regard to this fact. Huge stakes are involved which has not been looked into, while the said Notification was brought into force. In view of the Foreign Trade Policy issued by the Central Government under Section 5 of the Act of 1992, the amendments carried out therein shall only have a prospective effect and not retrospective effect. The Foreign Trade Policy provides for protection to those who were holders of letter of credit and the retrospective effect could not have been given to t....
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....e of rice", such as what was the price of rice in global market for some period. Similarly, for the reason ii) "Food Security was at risk in India", the respondent Nos. 1 and 2 were required to state the quantity of rice available as well as quantity of rice required for the entire country and the quantity of rice to be exported. For the reason "Price stabilization of food items", relevant data ought to have been placed on record. There is no data placed on record in respect of production and export of Non-basmati rice. All these details have not been supplied. Therefore, the impugned Notification suffers from malice in law. As such, there is no justification for impugned amendment to the export policy. 8.8. It is further argued that paragraph No. 1.05 of the Foreign Trade Policy, 2023 provides for "Transitional arrangement" Clause (b). Therefore notwithstanding change in the policy, the exporter who has commitment through Irrevocable Commercial Letter of Credit (ICLC) before date of imposition of such restriction and was permitted to export the balance quantity of goods as per value and period available in the ICLC, for availing which the exporter had to register ICLC with jur....
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....ent, authenticated in the manner specified in the Rules made by the President. If that notification was as per the provisions and under the Authority of the President that would not have been challenged but it is already brought on record by the petitioners that in spite of repeated request, no information is supplied by the respondent that by which order the powers are delegated to the DGFT. 8.11. In support of his contentions, Mr. Bhangde, learned Senior Counsel for the petitioners relied on the judgments of various High Courts and the Hon'ble Apex Court as under : i) Parag Milk and Milk Products Ltd. vs. Union of India, 2007 SCC OnLine Bom 716, ii) Cellular Operators Association of India and Ors. vs. Telecom Regulatory Authority of India,2016) 7 SCC 703, iii) K. S. Paripoornan vs. State of Kerala and Ors.,(1994) 5 SCC 593, iv) Director General of Foreign Trade and Anr. vs. Kanak Exports and Anr.,(2016) 2 SCC 226. v) Food Corporation of India Vs. M/s Kamdhenu Cattle Feed Industries (1993) 1 SCC 71. vi) Parisons Agrotech Pvt. Ltd. And Anr. vs. Union of India and Ors., (2015) 9 SCC 657. vii) State of Jharkhand vs Brahmaputra, (2023) 10 SCC 634. 9. In reply, the lear....
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....es to meet their food security needs and based on the request of their Government." 9.1. It is submitted that prior intimation was not given as very purpose of the amendment will be defeated as it has to be implemented with immediate effect. As such, the notification is issued in a fair and reasonable manner. The notification was not issued with retrospective effect. It is issued in public interest which prevail over the private interest of exporters. It is submitted that the execution of contract is bound by law and regulation and sovereign power of Government cannot be circumscribed by entering into a contract. Thus, the contracts entered into by petitioners cannot be a bar in a sovereign decisions of Government of India. 9.2. The learned Dy. S. G. I., relied on the following citations: 1) Union of India Vs. International Trading Co. and another, (2003) 5 SCC 437 2) Union of India and Ors. vs. Agricas LLP and Ors., (2021) 14 SCC 341 10. The question of authority needs to be addressed first, for if we find that there was no authority to issue the notification, then the petition must succeed on that count alone. 10.1. A perusal of the notification dated 20/7/2003 (pg.47), i....
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....visions of FTDR Act, was not authorised to authenticate/issue an order amending or modifying the EXIM policy as this power vests with 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. 11.2. 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 11.3. The Notifications and trade notices suffer from the vires and defects mentioned by this Court in DG of Foreign Trade v. Kanak Exports, (2016) 2 SCC 226. 11.4. The notifications and the trade notices offend the right to equality and violate Article 14 of the Constitution. 15. At the outset, we must record that the importers, and in our opinion rightly, have not raised the contention that DGFT could not have notified the impugned notifi....
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.... would thus be apparent that a similar challenge as the present one, raised in Union of India and Ors. vs. Agricas LLP and Ors., (Supra) has been turned down by the Hon'ble Apex Court by observing that the Director General of Foreign Trade is an Ex-officio Additional Secretary in the Government of India and thus is an agent to the Central Government. The argument of Mr. Bhangde, learned Senior Counsel for the petitioners based upon Article 77 of the Constitution, has also been addressed and turned down. 10.4. The contention that the notification dated 20/7/2023 (pg.47) was without authority, therefore in view of Union of India and Ors. vs. Agricas LLP and Ors., (Supra), is not acceptable and is turned down. 11. It is not disputed, that prior to the notification No. 20/2023 dated 20.07.2023 (page 40) export of Non-Basmati Rice, was free thereby indicating that there were no restrictions for transport of the same. It is for the first time, by virtue of the aforesaid notification dated 20.7.23 the export of Basmati Rice under the revised export policy has been brought under the prohibited category. The notification dated 20.07.2023, does not spell out the reasons for this, which how....
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.... on the basis of permission granted by the Government of India to other countries to meet their food security needs and based on the request of their Government. 3. Export of Organic Non-basmati rice will be governed in accordance with Notification No. 03/2015-2020 dated 19th April, 2017 read with Notification No. 45/2015-2020 dated 29th November, 2022. 4. Effect of this Notification: Export Policy of Non-basmati white rice (Semi-milled or wholly milled rice, whether or not polished or glazed: Other) under HS Code 1006 30 90 is amended from "Free" to "Prohibited". Signed (Santosh Kumar Sarangi) Director General of Foreign Trade Ex-Officio Additional Secretary, Government of India E-mail: [email protected]" A perusal of this notification would therefore indicate, that export of Non-Basmati Rice (Semi milled or Wholly milled Rice, or whether or not polished or glazed; other) was brought into the prohibited category. The notification was indicated to come into immediate effect and it was specially mandated that the provisions of para 1.05 of the Foreign Trade Policy 23 regarding transitional arrangements was made inapplicable under the aforesaid notification for export of Non-Basm....
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....wed for importer/exporter who has a commitment through Irrevocable Commercial Letter of Credit (ICLC) before the date of imposition of such restriction/ regulation and shall be limited to the balance quantity, value and period available in the ICLC. For operational listing of such ICLC, the applicant shall have to register the ICLC with jurisdictional RA against computerized receipt within 15 days of imposition of any such restriction/regulation. Whenever, Government brings out a policy change of a particular item, the change will be applicable prospectively (from the date of Notification) unless otherwise provided for." 13. The provisions regarding transitional arrangement in the Foreign Trade Policy 2023 (FTP 2023 for the sake of ready reference), which came into effect from 01.04.2023 provided amongst other things, export on or after the date of any regulation/restriction for an exporter who had a commitment through irrevocable commercial letter of credit (ICLC) before the date of imposition of such restriction/regulation and was to be limited to the balance quantity value and period available in such ICLC , which ICLC was required to be registered with the jurisdictional regis....
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.... in para 12 and 13 of the petition, which have been supported by the copies of the purchase contracts at Annexure-K of the petition have not been denied by the respondent Nos. 3 and 5 in their submissions dated 23.09.2023. It is also material to note, that the reply by the respondent Nos. 3 and 5 does not whisper a single word as to why the transitional arrangement 1.05 in the FTP 2023, has not been made applicable to the impugned notification, as is the case of the reply of the respondent No. 3. The respondent No. 2 in his submission also does not speak anything about the applicability of the aforesaid transitional arrangements 1.05 in the FTP 2023, except for saying, that on account of request made by traders seeking clarification on the transitional arrangement as bulk shipments were stuck at Kandla Port, the Central Government by vide notification No. 29/2023 dated 29.8.23 clarified that where non-basmati rice consignment had been handed over to the customs before 21:57:01 Hours on 20.07.2023 and is registered in customs systems or has entered the customs station and is registered in the electronic systems with verifiable evidence of date and time of stamping of these commoditi....
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....ween the freedoms guaranteed and the control permitted under Article 19(6) must be struck in all cases before the impugned law can be said to be a reasonable restriction in the public interest. 21. In Food Corporation India vs. M/s Kamdhenu Cattle Feed Industries, (supra) it has been held as under: 7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is 'fairplay in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision-making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely t....
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....arbitrary and unreasonable, on the touchstone of Article 14 of the Constitution and therefore, open to judicial review. 25. The reason for converting the policy for export of Basmati Rice from free to prohibited as per contention of Mr. Deshpande, learned DSGI is the domestic food security situation in India, which as claimed to be at risk and the need for price stabilization of food items, as is indicated, from para-3 of the reply of the respondent No. 2 (Pg.138). For this it is contended, that there was due consultation with the nodal Departments such as Departments of Agriculture and Farmers Welfare, Department of Food and Public Distribution and Department of Consumer Affairs and it is stated that the consultation process had taken into account all data relating to production and export of non-basmati rice. It is however material to note that except for a plain statement in this regard which is contained in Paras-3 and 4 (Pg.138 and 139) of the reply of the respondent No. 2, there is nothing else therein in the nature of what was the form of consultation, what data was collected and considered, in spite of the fact, that by amendment to the petition by inserting ground L (Pg.3....
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....nd the doctrine of legitimate expectation, which is as under : "46. As regards the relationship between Article 14 and the doctrine of legitimate expectation, a three Judge Bench of Food Corporation of India vs Kamdhenu Cattle Feed Feed Industries, (1993) 1 SCC 71, speaking through Justice J. S. Verma, held thus: "7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is 'fair-play in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision-making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimat....
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....mit 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. Since at the time of making a concluded contract, the policy of free export, was in existence, the petitioners can be said to have had a reasonable and legitimate expectation to complete their obligations under the concluded contracts which were in existence, when the impugned notification was brought into force. 28. The right of a trader, to fulfill his obligation under the concluded contract, on the basis of the policy as was existing on the date when the contract was concluded, fell for consideration of this Court in Parag Milk and Milk Products Ltd. (supra). This is what has been held in that regard by the learned Division Bench of this Court. "9. In the present case it cannot be disputed that when the Letters of Intent were issued in favour of the petitioner the declared policy of the Government did not impose any ban upon export of SMP and its alike products. The right by virtue of the contract between the exporter and importer should settle for them. The expression "export....
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.... permit, could be refused for outweighing reasons of public interest, which were found to exist. 30. Testing the impugned notification on the anvil of the principle of legitimate expectation, vis-à-vis Article 14 of the Constitution, we find that no reasons are forthcoming from the respondents, for denial of the benefit of the transitional arrangements, in the FTP, 2023, to the petitioners, and, though the same has been granted, in the case of wheat, as indicated above, in a similar circumstance, denial of the same, in the impugned notification, is not justified. 31. There is yet another contention, of retrospectivity by Mr. Bhangde, learned Sr. Advocate for the petitioners contending, that the impugned notification would not have any retrospective effect. It is a settled position of law, that any policy, brought in by the Union, would not have any retrospective effect, unless the policy indicates so. The impugned notification, dated 20/07/2023 (Pg.40), indicates, that it has to come into immediate effect. This would indicate, its applicability, from the date it has been issued. Though it is contended, that it is retrospective in operation, the notification, does not indic....