AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 232
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....y seeds against the existing policy and a direction to amend the existing policy, in as much as, the allocation of quantity imported is done in the name of importer. BRIEF BACKGROUND: 2. Poppy seeds can be freely imported under Schedule I of the Imports Policy, ITC (HS), 2017 ["Imports Policy"], subject to certain conditions. On 29th July, 2016, Ministry of Commerce and Industry vide Notification No. 17/2015-20, by amending the Condition 3 of the Section II of Chapter-12 of Schedule-I of Imports Policy, empowered Department of Revenue (Respondent No. 1) to issue guidelines regarding the import of Poppy Seeds in the Country, which may inter-alia provide for fixing of country cap, quantitative restrictions, etc. The amended condition reads as follows: "...(3) Import of Poppy Seeds (Exim Code No. 1207 91 00) shall be allowed subject to the following conditions: a) Import permitted only from Australia, Austria, France, China, Hungary, the Netherlands, Poland, Slovakia, Spain, Turkey and Czech Republic, United Kingdom, Democratic People's Republic of Korea, Macedonia, Germany and Ukraine; b) The importer shall produce an appropriate certificate from ....
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....nce, Government of India. The CBN shall upload the details of sales contract so registered by it on the online system. TMO shall allow the export in respect of only those contracts so registered by CBN. 6. The TMO shall provide a legal production certificate for the poppy seeds to exporters following the submission of sales contract and the completion of other necessary procedures." 2.2. On 25th June, 2019, the Ministry of Finance, Department of Revenue, issued the Impugned Guidelines for Registration of Sales Contract for Import of Poppy Seeds from Turkey. The Guidelines are meant to carry into effect the terms contained in the MoU entered into between the Government of Turkey and the Government of India, by laying down guidelines for the determination of the Country Cap; the process for registration of sales contract; the procedure to be followed by the Central Bureau of Narcotics ["CBN"] for the registration of the sales contract, once the same are reflected on the Portal to be maintained by Turkish Grain Board ["TMO"] (as per the MoU), verification of the Importers, limits on the Number of containers and quantity which each applicant/importer is permitted to import ....
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.... is found to be false, misleading or fictitious, I/we shall be liable for action in terms of provision of law for the time being in force." 3.3. Respondent-1 framed guidelines dated 25th June, 2019 for the crop year 2019-2020 providing inter alia for the procedure for registration of sales contract. Though framed for the crop year 2019-2020, these guidelines continue to operate even for the crop year 2021-2022. These guidelines, inter alia, provide for a cap of 450 MT per applicant. 3.4. It is also mentioned in public notice that application for registration of sales contract would be entertained by respondent -2 only once such sale contract is registered with TMO. 3.5. Government of Turkey has then made a "Sectoral Announcement" providing for the following: a) 20% of the product price has to be paid in advance or is secured by an irrevocable letter of credit for each sales contract, to be made on or before 20th January, 2022. b) The details of such contracts along with proof of payment are to be submitted to the concerned Turkish Ministry of Commerce on or before 31st January, 2022 c) A chart is attached to the announcement mandating the exporte....
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....has happened in Turkey, so the Indian Courts have no Jurisdiction, the theft of quota of poppy seed allocated to Petitioners has been done by Indian importer sitting in India under the Jurisdiction of this Court. Furthermore, the case of Devki Global Capital Pvt. Ltd. and Ors. v. Union of India and Ors 2021 (375) ELT 3 (Del.)., is not applicable in the present case as the policy therein was for crop year 2019-2020 where principle of allocation was first-come-first-serve basis, where allocation of quota was in doubt. The facts of this case are thus different. In present case, allocation of poppy seed quota has been done on proportional basis i.e., all the contracts where 20% of contract amount was sent to Turkey by the Indian importer before 20th January, 2022 has been allotted about 30% of the quantity applied for. So, all the contracts of Petitioners have been allocated at 30% of the quantity applied for. As mentioned, 450 MTs is the cap per applicant. So, one applicant at maximum can be given 135 MTs of quota of poppy seed (30%). However, CBN has issued registration to some importer for quantities as large as 431 Metric tonnes by making theft of quota allotted to others. In suppo....
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.... existing policy, any advance remittance made in lieu of imports, will not attract the penal provisions of either FEMA Guidelines or any of the Master Directions issued by the RBI. 4.3. It is submitted that Clause 19.3.11 of the FEMA Guidelines specifically states that Authorised dealers should not open letter of credit or allow remittance for import of goods included in the negative list requiring licence for imports. Further, Clause B.3 of Master Direction No. 17/2016-17 issued by the RBI allows opening of letters of credit and remittance for imports except for goods included in the negative list. Therefore, it is submitted that poppy seeds being freely importable under the existing policy, any advance remittance will not attract Penalties under Section 13 of FEMA. 4.4. The Impugned Guidelines framed by the Respondent for registration of sales contract for import of Poppy seeds from turkey are well-reasoned and non-discriminatory. 4.5. In order to understand the role of Respondent No. 2 with respect to disputes raised in the present Petition, it is quintessential to appreciate the policy which governs the import of poppy seeds into India. The Impugned Guidelines and the ....
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....nment of Turkey imposed a cap, limiting each contract to approximately 30% of the initially agreed quantity. They assert that, post-allocation by the Turkish Ministry of Commerce, revised contracts reflecting the 30% allocation are prepared in India, signed, and sent back to Turkish exporters, who then upload them onto the Turkish Grain Board's (TMO) online system. However, some of the Indian importers, in collusion with Turkish exporters, inflate these revised contracts beyond the stipulated 30%, thereby securing registrations for quantities in excess of the allotted cap. 6. To substantiate these claims, the Petitioners rely on mere assertions of fraudulent practices without providing tangible documentary evidence from the Turkish Ministry of Commerce or the TMO to support the existence of the alleged 30% cap. The Petitioners have not placed on record any official communication or directive from Turkish authorities establishing such a limit. In the absence of substantial evidence, the allegations remain speculative and conjectural. Without corroborative material, the Court cannot entertain assertions of cartelization or monopolistic practices based solely on the Petitioners' av....
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....r. 10. Furthermore, the Petitioners' contentions rest on their assumption that allocation processes employed by the Turkish authorities can be controlled or questioned by Indian authorities including this Court. However, it is essential to recognize that Turkey, being a sovereign nation, administers its own trade policies. The TMO's actions, including the registration of contracts and allocation of quotas, are governed by Turkish law and cannot be subjected to review by Indian courts. As noted in Devki Global, this Court cannot examine or direct the procedures followed by the TMO, nor can it adjudicate on how the cap or allocation is managed by the Turkish government. 11. The Petitioners' concern regarding the potential loss of the 20% advance payment made in foreign exchange stems from a private contractual arrangement between the Indian importers and the Turkish exporters. The guidelines framed under the MoU and the foreign trade policy require that advance payments be verified as part of the contract registration process. However, the Respondents have no role in ensuring the success of these private commercial transactions beyond the registration requirements. Once a contr....
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....fore, the Petitioners' claims must fail, as the import regulations in question are squarely within the Government's policy prerogatives 13. Moreover, the Petitioners argue that it is the responsibility of the Indian authorities to ensure that the country cap of 17,500 MT is distributed fairly among all participating importers. While the regulatory framework does ensure fair and transparent allocation within the country cap, the Petitioners overlook the critical fact that this framework operates within the confines of the MoU and the guidelines. The guidelines were designed to facilitate a regulated import mechanism while acknowledging Turkey's sovereign right to administer its export processes. The Court in Chailbihari Trading upheld the legality of these guidelines, noting that they seek to prevent cartelization and ensure that only bona fide importers participate. Therefore, the Petitioners' demand for imposing quantitative restrictions on contracts not shown on the TMO portal, based on allegations of collusion and fraud, is untenable. The Court cannot intervene in a foreign sovereign's internal process, nor can it direct the CBN to disregard established guidelines and MoU pro....