TaxTMI 
TaxTMI 
2026 (9) TMI 1137
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....ed in the business of import and trade of gold jewellery, gold dore bars and other precious metals. One of the objects of the Petitioner is to deal with the metal and ornaments, jewellery, stones, etc. The objects of the Petitioner as mentioned in the Memorandum of Association reads as under: "III. The objects for -which the Company is established are: - (A) THE MAIN OBJECTS TO BE PURSUED BY THE COMPANY ON ITS INCORPORATION ARE: - To carry on the business of manufacture, Buy, sell, import, export, trade, retail, -wholesale. Refine, prepare, distribute, Fabricate, process, produce, grow, make, supply, Stock, commercialize, polish, design, display, examine, grind, grade, assort, develop, modify, build, encourage, alter, dismantle, provide, exchange, remove Set, convert, finish, cut, fit, trim. Contract, sub-contract, supply, turn to contract, supply, turn to account, let hire and to act as agent broker, merchants, agents, C & F agents, job worker consigner, contractor, vendor, collaborators, stockists, distributors or Otherwise to deal in all kind of products, goods, commodities and merchandise Of and for human & leaving creature care, use and consumption i....
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....of virtue, art and antiques and to deal, trade and establish showroom, shop for trading of goods for the above business. 3. To cut, saw, clean, polish, sort drill, string and set up lapidary of diamonds, precious and semi-precious stones and to buy, sell, import, export and otherwise deal in rough and polished diamonds, both industrial and gem quality and other precious and semi-precious gems, pearls and stones. 4. To carry on the business of testing, evaluation, appraisal and certification of gemstones, jewellery, minerals, curios, antiques and other works of art and to work as certified valuers. 5. To carry on in India or elsewhere the business to manufacture, produce, process, prepare, commercialise, cut, polish, set, design, display, exchange, examine, finish, grind, grade, assort, import, export, buy, sell, resale, demonstrate, market and to act as agent, broker, indentor, liasioner, adatias, representative, C & F agents, export house, valuer, sales promoter, supplier, provider, merchants, stockists, distributor, wholesaler, retailer or otherwise to deal in all shapes, sizes, varieties, description, specifications, applications & designs of rough, ra....
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....ein an amendment was introduced into the import policy and policy conditions for import of gold. The said notification reads as under: MINISTRY OF COMMERCE AND INDUSTRY (Department of Commerce) (DIRECTORATE GENERAL OF FOREIGN TRADE) NOTIFICATION NO. 19 /2023 New Delhi, the 12th July, 2023 Subject: Amendment in import policy and policy condition of Gold Covered under HS code 71131911, 71131919 & 71141910 of Chapter 71 of Schedule -I (Import Policy) of ITC (HS) 2022. S.O. 3111.-In exercise of powers conferred by Section 3 and Section 5 of Foreign Trade (Development &Regulation) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy 2023, as amended from time to time, the Central Government hereby amends the import policy and policy condition of specific ITC (HS) Codes under Chapter 71 of Schedule -I (Import Policy) - ITC (HS), 2022, as under: HS codes Item Description Existing Import Policy Existing Policy Condition Revised Import Policy Revised Policy Condition 71131911 --- Of gold:- Unstudded Free - Restricted However, import under a valid INDIA-UAE CEPA TRQ shall be permitted freely without a....
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....LC, 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." 6. As per the above Transitional Arrangements, while the import of gold was changed from free to restricted, an exemption was granted in respect of those importers and exporters who had commitments through Irrevocable Commercial Letters of Credit (hereinafter 'ICLC') prior to the date of the notification. 7. The case of the Petitioners in these petitions is that there were orders that were placed by the Petitioner with their Indonesian supplier, resulting in raising of invoices on the following dates i.e., 2nd June, 2023, 5th June, 2023, 6th June, 2023, 7th June, 2023 and 3rd July, 2023. Pursuant to the invoices raised, advance payments were made of a substantial sum of money. The details of the invoices and the payments made by the Petitioners are as under: TRANSACTION DETAILS Kundan Care Products Limited (WP 432/2024) S....
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....ation / operation affecting pre-existing / subsisting contracts where advance payments have been made by Indian importers such as the Petitioner prior to the issuance of the Notification; ii. Issue an appropriate writ, order or direction declaring and striking down the provisions of Para 1.05(b) of Chapter-1 of the Foreign Trade Policy as being unconstitutional and violative of Article 14 of the Constitution of India; iii. Issue an appropriate writ, order or direction reading into Para 1.05(b) of Chapter-1 of the Foreign Trade Policy the requirement to extend the benefit of transitional provisions to cases where advance payments have been made by Indian Importers prior to the restriction/regulation/amendment of the Import Policy; iv. Issue an appropriate writ, order or direction to the Respondents to take urgent and requisite steps as per law to extend the benefit of transitional provisions to cases where advance payments have been made by Indian Importers, such as the Petitioner, prior to the restriction/regulation/amendment of the Import Policy; v. Issue an appropriate writ, order or direction for quashing / setting aside the Impugned Order dat....
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....ements, ld. Counsel prays that the benefit of the same be extended to the Petitioners. Insofar as the challenge to the Notification dated 12th July, 2023 or to the policy i.e., Paragraph 1.05(b) is concerned, the reliefs are not pressed by the Petitioners. 11. Ms. Shiva Lakshmi, ld. Counsel along with Mr. Balendu Shekhar, Advocate appearing for the Government vehemently urge that the purpose of the policy is to ensure that a balance is properly struck between countries with whom India has entered into various trade arrangements. As per the affidavit which has been placed by the Government, the DGFT had to issue this notification in order to ensure that any spike from a particular territory does not create an imbalance in the overall trade arrangements which India has entered into. 12. As per paragraph 5 of the affidavit filed by the Respondents, it is was found that the imports between March, 2023 to May, 2023 had surged to Rs. 947 crores which took away a benefit to the tune of Rs.236 crores under the Association of Southeast Asian Nations Free Trade Agreement (hereinafter, 'AFTA'). The Government found the surge in import of gold jewellery as being unusual and since the sam....
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....s submitted that limiting the transitional benefit to cases of Irrevocable Commercial Letter of Credit is a conscious decision of the Government in the form of para 1.05 of Foreign Trade Policy. The Irrevocable Commercial Letter of Credit is an elaborate procedure generally involving multiple Banks in exporting and importing countries and has greater sanctity and assurance regarding the contract. It is submitted that over the years provisions regarding sending remittance abroad have been liberalized in India, and it is easy for an importer to park a large sum of money just before the issue of a notification to circumvent the import policy measure brought out by the Government. It is submitted that any extension of transitional benefit to cases other than Irrevocable Commercial Letter of Credit is likely to erode the effectiveness of import policy measures and may deteriorate the very situation, import policy measure has aimed to correct. 8. It is submitted that the authority that has the power to amend the import policy, it also has the power to decide that the restriction will not be applicable to certain class of cases in public interest. The benefit was earlier extended to ca....
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.... the PRC are in any manner grossly unreasonable in order to call for any interference by us. The exercise of discretion to grant exemption is a delicate balance between balancing the hardship of the Petitioner and the adverse impact on trade." 14. It is further urged on behalf of the Respondents by the ld. Counsels that the payments which are made by the Petitioners have to be in compliance with provisions of Foreign Exchange Management Act (FEMA), 1999 as also the rules, regulations, directions and circulars issued by the Reserve Bank of India (hereinafter, 'RBI'). Ld. Counsels for the Respondents submit that in respect of these transactions and in terms of RBI's Circular No.4 dated 22nd May, 2022, only qualified jewellers are permitted to remit advance payments. The relevant portions of the submissions handed over by Ms. Shivalaxmi, ld. Counsel is set out below: "4. In terms of the Foreign Exchange Management Import of Goods and Services) Regulations read with the RBI Master Direction on Import of Goods and Services and various A.P. (DIR Series) Circulars issued from time to time, Authorised Dealer ("AD") Banks are required to undertake strict due diligence before per....
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....exception that has been given is in the case of commitments which have been made through ICLC. A Commercial Letter of Credit in international banking norms is nothing more than a promise given by the issuing bank to honour the commitment of payment upon production of documents such Bill of Trading, invoices, insurance documents, etc. 18. The ICLC is a mode or mechanism to ensure that payments are duly made by purchasers to the sellers, through an independent banking mechanism wherein the issuing bank assures the beneficiary bank of the payment which would be made upon the dispatch and the receipt of the concerned shipments. 19. The purpose of these ICLCs is nothing but to provide a security to ensure that the buyer is duly paid the agreed amount upon the dispatch being made of the goods - proved by furnishing of documents. 20. In the opinion of this Court, an Irrevocable Letter of Credit is a recognized mode of transaction which is honoured by banks and traders. However, in the present case, the advance payments made by the Petitioners clearly stand on a higher footing than even an ICLC inasmuch as when more than 90% of the payment has already been made by the Petitioners,....
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....nnot operate retrospectively, unless authorized by statute. In the era of the electronic publication of gazette notifications and electronic filing of bills of entry, the revised rate of import duty under the Notification No. 5/2019 applies to bills of entry presented for home consumption after the notification was uploaded in the e-Gazette at 20:46:58 hours on 16-2-2019." 25. The effect of giving a notification retrospective effect was also examined by the Apex Court in the case of Director General of Foreign Trade vs Kanak Exports 2015 (326) ELT 26, wherein it was held as under: "108. We may, in the first instance, make this legal position clear that a delegated or subordinate legislation can only be prospective and not retrospective, unless rule making authority has been vested with power under a statute to make rules with retrospective effect. In the present case, Section 5 of the Act does not give any such power specifically to the Central Government to make rules retrospective. No doubt, this section confer powers upon the Central Government to 'amend' the policy which has been framed under the aforesaid provisions. However, that by itself would not mean tha....
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.... made by Parliament. We are satisfied that clause (5) of Article 148 confers power on the President to frame rules operating prospectively only. Clearly then, the Rules of 1974 cannot have retrospective operation, and therefore, sub-rule (2) of Rule 1, which declares that they will be deemed to have come into force on 27-7-1956 must be held ultra vires." The reliance placed on the power to regulate under Section 3 of the Act is equally misconceived. Section 5 gives express power to formulate the policy and to amend it. This is specific power. The power to regulate therefore, cannot be read as a power to amend when a specific power to amend is given. If the power to regulate does not include the power to amend retrospectively such a power cannot be read into Section 3 of the Act. Section 21 of the General Clauses Act on which reliance is placed by learned Additional Solicitor General is also of no assistance to sustain the retrospective operation of the notification. Section 21 of the General Clauses Act embodies a rule of construction, nature and extent of application of which must inevitably be governed by the relevant provisions of the statute which confers powe....
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....er the arrival of the goods. Therefore, Respondents 4 and 5 fall in error in applying the Notification issued on 2-4-2026 to the goods of the petitioner. 16. Accordingly, the writ petition partly succeeds. Respondents 4 & 5 are directed to immediately assess, clear and grant out-of-charge to the petitioner's consignment covered under IGM No. 3020909 dated 2-4-2026, without insisting upon any import authorization/license under the impugned Notification No. 2/2026-27 dated 1-4-2026 subject to fulfillment of other official procedure. Rule is made absolute to the aforesaid extent." 27. In view of the aforementioned judgments of the Supreme Court, we find ourselves in agreement with the view taken by the Gujarat High Court. The factual position in the present case does not differ from what was before the Gujarat High Court. In the present case the imported goods were dispatched from the country of export on 31-3-2026 and 1-4-2026 respectively, and arrived at the Indian ports of import on 1-4-2026 and 2-4-2026, the tabular chart of which has been reproduced herein above. The last consignment imported by the Petitioner arrived at the Indian port of import on 2-4-2026 at ....