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TaxTMI 
TaxTMI 
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2024 (8) TMI 32
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....yers on different dates for export of the Non-Basmati India White Rice for the quantities mentioned in the respective contracts / agreements. The foreign buyers have issued irrevocable Letters of Credit in favour of the petitioners, who in turn and to fulfill the contractual obligations placed purchase orders on their local suppliers for procuring the Rice. The petitioners are required to supply the agreed quantities as per the schedule mentioned in the agreements / contracts. 3. On 20.07.2023, the 1st respondent issued Notification No. 20 of 2023 in exercise of powers under Section 3 r/w Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 r/w Para 1.02 and 2.01 of the Foreign Trade Policy-2023 prohibiting export of Non-Basmati White Rice (semi milled or wholly milled rice, whether or not polished or glazed: other) with immediate effect. Subsequently, the 1st respondent issued Trade Notice No.23 of 2023, dated 18.08.2023 clarifying certain conditions in Para No.2 of the Notification dated 20.07.2023. Aggrieved by the same, the petitioners invoked the jurisdiction of this Court under Article 226 of the Constitution of India. 4. Heard Mr. S. Srinivasa Reddy, learn....
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....sel contends that when there is a ban on the earlier occasions, shipments were allowed where irrevocable Letters of Credit were issued on or before the date of the Notifications imposing ban, that in respect of the present Notification, no such benefit was extended and no reasons are forthcoming as to why the export policy in terms of Para 1.05 of the Foreign Trade Policy-2023 was deviated. 7. The learned Senior Counsel further contends that in the light of the policy of the Government in vogue all these years and under a legitimate expectation of the same, petitioners procured polypropylene bags and the requisite quantities of Non-Basmati Indian White Rice by placing purchase orders with their local suppliers before issuance of the impugned Notification dated 20.07.2023. While submitting that most of the petitioners have stored substantial quantities of Non-Basmati Indian White Rice in different warehouses at different locations, he contends that as they were not permitted to export the agreed quantities of rice as per the contracts / agreements and Letters of Credit thereof which are much prior to the impugned Notification dated 20.07.2023, the petitioners will have to contest I....
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....hers (2007) 4 SCC 737, 4) Navjyoti Coop. Group Housing Society & Others v. Union of India & Others (1992) 4 SCC 477 and 5) Indian Ex-Servicemen Movement and others v. Union of India & Others (2022) 7 SCC 323, the action of the respondents is not sustainable. 9. Mr. G.L. Nageswara Rao, learned counsel while adopting the arguments advanced by the learned Senior Counsel, contends that the action of the 1st respondent is not tenable in Law and the impugned Notification is liable to be set aside. 10. On the other hand, the learned Additional Solicitor General of India while opposing the submissions made on behalf of the petitioners, advanced arguments by drawing the attention of this Court to the relevant Sections of the Foreign Trade (Development and Regulation) Act, 1992. He submits that Sections 3 and 5 of the said Act-1992 empowers the Central Government to make provisions relating to imports and exports and formulate the Foreign Trade Policy by Notification in the Official Gazette and as per Section 6 of the said Act-1992, the Director General of Foreign Trade shall advise the Central Government in the formulation of the Foreign Trade Policy and shall be responsible for carrying ....
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....footing, having paid the Export Duty on 17 shipping bills prior to the issuance of the impugned Notification dated 20.07.2023, out of 28 shipping bills. 12. Referring to one of the purchase orders dated 15.06.2023 (Ex.P3, Page 29), he submits that as per Clause No.18 which deals with Force Majeure, the fulfillment of the contract is subject to the GAFTA force majeure clause. He submits that in view of the said provision, the contractual obligations between the petitioners and their foreign buyers are adequately protected and the apprehensions of the petitioners with regard to damages / compensation / penal consequences etc., are not well founded. He submits that Para 1.02 of the Foreign Trade Policy is incorporated in Public Interest and the scope of Judicial Review in policy matters is very limited. While stating that the supply of Non-Basmati White Rice of specified quantities to the neighbouring friendly Countries is pursuant to a sovereign decision keeping in view the foreign relations with small countries and human needs in under developed countries, he submits that even such a decision is in accordance with the impugned Notification. He also submits that those exports are no....
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....e not even met and the policy cannot be given retrospective effect and the respondents are silent about the effect of Letters of Credit and other aspects. He submits that nothing is stated as to what made the respondents to detract from the earlier policy and the rights vested on the petitioners pursuant to the existing policy cannot simply be taken away, that too without issuing any notice or assigning any reasons. He submits that the existing procedure cannot be done away without any notice and in fact, either in the impugned Notification or in the Trade Notice, was there any statement as to how the Public Interest would be effected by virtue of the supplies / export of Non-Basmati Indian White Rice? He also submits that no material is placed to substantiate the stand of the respondents or justifying the exclusion of Para 1.05 of the Foreign Trade Policy without any reasons. The learned Senior Counsel submits that it is mere ipse dixit of the respondents. He submits that the counter-affidavit is silent as to why the contracts with the foreign buyers or shipments backed up with Letters of Credit are excluded. He submits that the action of the respondents in allowing some of the ex....
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....ame is violative of principles of natural justice or Doctrine of Legitimate Expectation? Point No.1: 17. Before dealing with the points under consideration, it may be appropriate to extract the relevant notifications issued by the 1st respondent for ready reference: (To be Published in the Gazette of India Extraordinary Part-II, Section-3, Sub-Section (ii)) Government of India Department of Commerce Directorate General of Foreign Trade Vanijya Bhawan, New Delhi Notification No. 20/2023 New Delhi, Dated 20th July, 2023 Subject:-Amendment in Export Policy of Non-basmati rice under HS Code 1006 30 90. S.O. (E) The Central Government, in exercise of powers conferred by Section 3 read with section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No. 22 of 1992), as amended, read with Para 1.02 and 2.01 of the Foreign Trade Policy, 2023, hereby amends the Export Policy of Non-basmati rice against ITC (HS) code 1006 30 90 of Chapter 10 of Schedule 2 of the ITC (HS) Export Policy, as under: ITC HS Codes Description Export Policy Revised Export Policy 1006 30 90 Non-basmati white rice (Semi-milled or wholly milled rice, whether or not polished or glaze....
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....f DGFT 2. All Customs Commissionerate 3. Members of Trade Subject: Amendment of export policy of Non-basmati white rice (HS Code 1006 30 90) Expert 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 has been amended from 'Free' to 'Prohibited vide Notification No. 20/2023 dated 20.07.2023. 2. The provisions as under Para 1.05 of the Foreign Trade Policy, 2023 regarding transitional arrangement was not made applicable however, consignments of Non-basmati rice was allowed to be exported under following conditions: (i) where loading of Non-basmati rice on the ship has commenced before this Notification; (ii) where the shipping bill is filed and vessels have already berthed or arrived and anchored in Indian ports and their rotation number has been allocated before this Notification. The approval of loading in such vessels will be issued only after confirmation by the concerned Port Authorities regarding anchoring/berthing of the ship for loading of Non-basmati rice prior to the Notification; (iii) where Non-basmati rice consignment has been handed over to the Customs/custodian before thi....
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....and is registered in the electronic systems of the concerned Custodian of the Customs Station with verifiable evidence of date and time stamping of these commodities having entered the Customs Station prior to 21:57:01 hours on 20.07.2023. The period of export shall be upto 30.10.2023. ii. Export duty is paid before 21:57:01 hours on 20.07.2023 2. For removal of doubts, wherever the words/phrase "before this Notification" appears in the Notification No. 20/2023 [S.O. 3249(E)] dated 20th July, 2023, the same shall mean "before 21:57:01 hours on 20.07.2023" 3. Effect of this Notification: In relaxation of Notification No. 20/2023 dated 20th July, 2023 export of non-basmati white rice is allowed when export duty is paid before 21:57:01 hours on 20.07.2023. Para 2 (iii) of Notification No. 20/2023 dated 20th July, 2023 is amended to specify the date and time of effect of the Notification No. 20/2023 dated 20th July, 2023. (Santosh Kumar Sarangi) Director General of Foreign Trade Ex-Officio Additional Secretary, Government of India E-mail: [email protected] (Issued from F.No 01/91/171/010/AM23EC/e-33294) **** 18. The relevant paras in the Foreign Trade Policy, 2023 reads as fo....
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....items can be viewed under 'Regulatory Updates' at https://dgft. gov.in (b) Further, there are some items which are 'Free' for import/export, but subject to conditions stipulated in other Acts or in law for the time being in force." 19. Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992 inter alia deals with powers to make provisions relating to exports & imports and Foreign Trade Policy respectively and the same reads as follows: "3. Powers to make provisions relating to imports and exports.-(1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. (2) The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology: Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only ....
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....e Policy, this Court is required to examine whether the said Policy can be given retrospective effect and rights stated to have been accrued to the petitioners can be taken away. In this regard, the contention advanced by the learned Senior Counsel for the petitioners is that acting on the policy, which was in force, the petitioners have entered into contracts / agreements with the foreign buyers, secured Letters of Credit and placed orders / procured the Non-Basmati White Rice from the local dealers. He contended that the vested rights accrued to the petitioners by virtue of the policy that is in existence prior to the issuance of the impugned notification cannot be taken away under the guise of change in the policy, that too without any notice or opportunity to the petitioners. In opposition, placing strong reliance on the various decisions of the Hon'ble Apex Court referred to hereunder, it is contended on behalf of the respondents that the Notification in question was issued in public interest, that the legal position with regard to the interference of the Courts in policy matters is well settled and no reliefs as sought for can be granted. 22. In Parisons Agrotech Private Lim....
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....t and when to impose duty is left to the executive by the legislature. It will depend on the economic climate. New times require new measures. In a world of growing interdependence the first thing every country wants is protection for its domestic industry. 44. Governed by the market forces and the laws of supply and demand, if the Government finds that it must withdraw the exemption notification at once it can do so. What actuated the Government to take the step of exemption and reimposition was enlightened self-interest, such self-interest as would subserve the common good. The imposition and exemption of customs duty are the chief vehicles of the Government to protect a domestic market and to steady the level of prices. The tariffs are its chosen instruments to shield domestic production from foreign competition." 24. In Balco Employees Union case (8 supra), the Hon'ble Apex Court was inter alia, dealing with the issue whether the decision regarding disinvestments in a public company by the Union Government can be challenged in public interest by way of PIL. The Hon'ble Apex Court after detailed analysis of the matter with reference to various legal precedents including Narma....
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....ted to the Customs Authorities for export of chickpeas. Thereafter, a notification dated 04.07.2006 was also issued. Challenging the same, a Writ Petition was filed before the High Court of Gujarat and another Writ Petition was filed before the High Court of Delhi. The Hon'ble Supreme Court of India after referring to the provisions of Customs Act as also Foreign Trade (Development and Regulation) Act-1992, at para No.48 held as follows: "48. .... Prohibition promulgated by a statutory order in terms of Section 5 read with the relevant provisions of the policy decision in the light of sub-section (2) of Section 3 of the 1992 Act can only have a prospective effect. By reason of a policy, a vested or accrued right cannot be taken away. Such a right, therefore, cannot a fortiori be taken away by an amendment thereof." 27. In Director General of Foreign Trade case (2 supra) the Hon'ble Supreme Court dealt with a batch of appeals against the judgments of High Court of Judicature at Bombay and High Court of Gujarat at Ahmedabad in respect of Export Import (EXIM) Policy 2002-07 framed by the Central Government under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992.....
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....avour of another person?" 28. Further, the Hon'ble Apex Court after referring to a catena of decisions and thorough analysis of the matter at Para 121 inter alia held that the impugned decision reflected in the Notifications dated 21.04.2004 and 23.04.2004, did not take away any vested right of the exporters and amendments were necessitated by overwhelming public interest / considerations to prevent the misuse of the scheme. 29. In the present case, the petitioners claim that Letters of Credit were issued in their favour by the foreign buyers prior to the issuance of the impugned Notification and the same is not in dispute. It is also their case that pursuant to the agreement / contracts entered with the foreign buyers they have procured the Non-Basmati White Rice and therefore vested rights accrued to them in terms of the Foreign Trade Policy 2023, which provides import / export on or after the date of the regulation / restriction will be allowed for importer / exporter, who has a commitment through an irrevocable Commercial Letter of Credit before the date of imposition of such restriction / regulation. Clause 1.05 of the Foreign Trade Policy which was in force prior to 20.07.2....
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....the policy decision is contrary to the doctrine of legitimate expectation and the Court can interfere in the facts and circumstances of the case. In the counters, the respondents have taken a plea that the petitioners are claiming their rights based on a policy decision taken almost five years ago and the respondents have now changed the same based on the changed facts and circumstances and that the interference by the Court would amount to setting a precedent where a right can be claimed on the basis of policy decision taken almost five years ago which will thereby hinder the authority of the respondents to change the policy decisions in the larger public interest. Be that as it may. 32. In K.B. Tea Product Pvt. Ltd., (11 supra) the Hon'ble Apex Court was dealing with the appeals filed against the judgments of the High Court of Calcutta wherein the provisions of Bengal Finance (Sales Tax) Act-1941, replaced by the West Bengal Sales Tax Act-1994, fell for consideration. The Hon'ble Court dealt with the aspect of the Doctrine of Legitimate expectation and after referring to a catena of cases, formulated the principles for application of legitimate expectation. In Para 79 the Hon'bl....
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....C.T. case (10 supra) the contentions with reference to Doctrine of Legitimate Expectation cannot be upheld. In the said decision, the Hon'ble Apex Court referring to a fleet of earlier precedents held as follows: "37. This Court has consistently held that a legitimate expectation must always yield to the larger public interest. In Sethi Auto Service Station v. DDA, this Court clarified that legitimate expectation will not be applicable where the decision of the public authority is based on a public policy or is in the public interest, unless the action amounts to an abuse of power, the doctrine of legitimate expectation cannot be invoked to fetter valid exercise of administrative discretion. xxx xxx 41. The doctrine of legitimate expectation does not impede or hinder the power of the public authorities to lay down a policy or withdraw it. The public authority has the discretion to exercise the full range of choices available within its executive power. The public authority often has to take into consideration diverse factors, concerns, and interests before arriving at a particular policy decision. The courts are generally cautious in interfering with a bona fide decision of p....