TMI Blog2020 (8) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... any source that sufficient evidence exits regarding increased imports; serious injury or threat of serious injury to the domestic industry; and causal link between increased imports and serious injury or threat of serious injury to the domestic industry. By another order dated 2nd July, 2020 the Union of India was directed to file an affidavit clearly stating whether the impugned notifications are in the nature of quantitative restrictions and if so whether the procedure under Section 9A of the FTDR Act read with Safeguard Measures (Quantitative Restrictions) Rules, 2012 had been followed and to produce the relevant record thereof. Challenge to the role and authority of the DGFT to issue the Notifications and Trade Notice and interpretation of the words total quantity - HELD THAT:- The effect of the Notifications, as noticed and beyond doubt, is to bring the specified commodities from free to the restricted category and therefore the imports in question would require a prior authorisation for import. The requirement of licence is nothing but authorisation. Therefore, in terms of paragraph 2.10, the imports of the specified commodities would only be by the actual user , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cability is a generic term which means to embrace a small inventory of means of judicial control over the use in a particular law suit of the direct applicability of the treaty. As in case of act of transformation , even in direct application cases, some jurisdictions accept the principle of partial direct application and, therefore, the treaty is directly applicable for some purposes and not others. While interpreting the domestic law enshrining Human Rights (and sometimes environment issues) this Court on some occasions has relied on international conventions and treaties where the terms of any legislation are absent, not clear or are reasonably capable of more than one meaning. In such cases, where there are statutes, rules etc. the meaning which in consonance with the treaties can be relied upon, for there is a prima facie presumption that the Parliament did not intend to act in breach of international law, including State treaty obligations. Part-III of the Indian Constitution a-priori incorporates and recognises the Human Rights, consequently recourse to international conventions can be made to interpret and borrow explicit terminologies and nuances to bailiwick Human Ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XII of GATT-1994 states that notwithstanding the provisions of paragraph (1) of Article XI, any contracting party, in order to safeguard its external financial position and its balance of payments, may restrict the quantity or value of merchandise permitted to be imported, subject to the provisions of paragraphs of that Article. Notwithstanding Section 9A, the Central Government continues and has authority to impose quantitative restrictions by an order under Section 3(2) of the FTDR Act. Principle of Lex specialis derogat legi generali, therefore, is not applicable to the case in hand - Section 9A has to be interpreted as an escape provision when the Central Government i.e. the Union of India may escape the rigours of paragraph (1) of Article XIX of GATT-1994. Section 9A is not a provision which incorporates or transposes paragraph (1) of Article XI into the domestic law either expressly or by necessary implication. The impugned notifications would be valid as they have been issued in accordance with the power conferred in the Central Government in terms of sub-section (2) to Section 3 of the FTDR Act. The powers of the Central Government by an order imposing restriction on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleadment are allowed. 2. Considering the nature of controversy involved, this Court, with the consent of the counsels for the parties, vide order dated 29th June 2020 had deemed it appropriate to hear and decide challenge to the validity of the notifications dated 29th March 2019 bearing S.O. Numbers. 1478-E,1479-E, 1480-E and 1481-E pending in several Writ Petitions filed before different High Courts. We have also examined and decided the connected challenge to the Trade Notice dated 16th April 2019 issued by the Directorate General of Foreign Trade on the ground of excessive delegation as not being in accord with sub-section (2) to Section 3 read with the bar under sub-section (3) to Section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as FTDR Act ). 3. Accordingly, we had heard arguments and by this common judgment would be disposing of the respective Writ Petitions, subject matter of these Transfer Petitions. This decision would also apply to the Writ Petitions filed by the intervening applicants. 4. For the sake of convenience, we would be referring the Central Government and the authorities collectively as the Union of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Conditions of items of Chapter 7 of the Indian Trade Classification (Harmonized System), 2017, Schedule-I (Import Policy), as under: Exim Code Item Description Existing Policy Existing Policy Condition Revised Policy Condition 0713 1000 Peas (Pisum Sativum) including Yellow peas, Green peas, Dun peas and Kaspa peas Restricted Restricted for the period from 1 st January, 2019 to 31st March, 2019 During the period from 1st April, 2019 to 31st March, 2020, total quantity of 1.5 Lakh MT of Peas shall be allowed against licence as per the procedure to be notified by Directorate General of Foreign Trade 0713 90 10 Split 0713 90 90 Other 2. This notification shall come into force with effect from 1st April, 2019. xx xx xx S.O. 1480(E).- In exercise of powers conferred by section 3 of the Foreign Trade (Development and Regulation) Act, 1992 (22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This notification shall come into force from 1st April, 2019. 6. The Trade Notice dated 16th April 2019 issued by the DGFT had laid down the modalities for making applications for import of Peas, beans of Moong and Urad and Pigeon Peas and had inter alia stipulated as under: a. Applications are invited online from the intending millers/refiners (having own refining / processing capacity) of pulses for its import as per ANF-2M of FTP 2015-20 to DGFT, at policy2-dgft@nic.in besides the concerned jurisdictional Regional Authorities. 7. Earlier, the Union of India had issued a notification dated 25th April, 2018 under Section 3 of FTDR Act read with the paragraphs 1.02 and 2.01 of the Export Import (EXIM) policy 2015-2020 by which peas were revised from free to restricted category for a period of three months, with a stipulation that during the period 1st April, 2018 to 30th June, 2018 total quantity of 1 lakh MT of Yellow Peas minus the quantity already imported from 1st April, 2018 would be allowed against licence as per the procedure to be notified by the DGFT. The words already imported were defined to include shipment already arrived from 1st April,2018 to 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of modifying or amending the EXIM policy as the specified items were withdrawn from the free category and moved to restricted category. But, the DGFT, a statutory authority under the provisions 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 Section 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. (b) 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. (c) The Notifications and trade notices suffer from the vires and defects mentioned by this Court in Director General of Foreign Trade and Another v. Kanak Exports and Another (2016) 2 SCC 226. (d) The notifications and the trade notices offend the rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to parties and adjudication by the Authorised Officer, which statutory mandate has not been followed. Under sub-rule (4) to the above Rule, the Authorised Officer has power to initiate suo moto action if he is satisfied with the information received from any source that sufficient evidence exits regarding increased imports; serious injury or threat of serious injury to the domestic industry; and causal link between increased imports and serious injury or threat of serious injury to the domestic industry. Taking note of the submission, we had directed the parties to file brief written submissions and the propositions which they propose to canvass in the context of the issues to be dealt with by this Court. The Union of India was also asked to file a Statement/Note disclosing number of registered licences dealing with import of goods and quantity of average annual consumption of the concerned goods in the country. By another order dated 2nd July, 2020 the Union of India was directed to file an affidavit clearly stating whether the impugned notifications are in the nature of quantitative restrictions and if so whether the procedure under Section 9A of the FTDR Act read with Safeguar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DGFT is an agent of the Central Government and attached office to it. Further, clause (2) of Article 77 provides that validity of an order or instrument made or executed in the name of the President, authenticated in the manner specified in the Rules made by the President, shall not be called in question on the ground that it is not an order or an instrument made or executed by the President. Therefore, the contention of issuance of the impugned notification sans authority, cannot be sustained. 16. FTDR Act vide Section 3(2), as elucidated and examined below, authorises the Central Government to prohibit, restrict or otherwise regulate the import or export of goods, by an order published in the Official Gazette. FTDR Act vide Section 11(1) prohibits imports or exports of goods in contravention of the FTDR Act, the rules and orders made thereunder and the EXIM Policy. Section 5 of the FTDR Act authorizes the Central Government to formulate and announce the EXIM Policy by notification in the Official Gazette. Under Section 11(2) of the FTDR Act, when a person makes or abets or attempts to make any import or export in contravention of the FTDR Act, any rule or order made thereu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrary to the express language of the notification but would frustrate the intent and object of restricting the imports of the stated goods by prescribing a quota. We decline and would not accept this farfetched and somewhat drivel interpretation of simple and straight forward words. 18. We would also reject the contention raised by the importers that the Trade Notices issued by the DGFT violate Sections 3 and 5 read with sub-section (3) of Section 6 of the FTDR Act as they had the effect of superseding the Notifications or imposing a new criterion and eligibility condition not envisaged by the notifications. The legal effect of the notifications was to amend the EXIM policy whereby the specified commodities would henceforth not be free (importable without restriction) but would fall in the restricted category. Once the commodities were shifted to the restricted category, the requirement of licence would flow from the mandate of Section 3 of the FTDR Act read with Rule 4 of the Foreign Trade (Regulation) Rules, 1993. Rule 4 reads as under: 4. Application for grant of licences A person may make an application for the grant of a licence to import or export goods in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is nothing but authorisation. Therefore, in terms of paragraph 2.10, the imports of the specified commodities would only be by the actual user , unless the actual user condition was specifically dispensed with or diluted by the DGFT. The Directorate by specifying that the licence would be issued to the miller or refiner has, therefore, just clarified that the actual user alone will be permitted to import the restricted goods mentioned in the notification for which a prior authorisation or licence is required. The importers are traders and it is not the case of any of the importers that they are the actual users . Further, none of the importers have applied for a licence or authorisation for import of the restricted commodities. Violation of clause 9.03 of the EXIM Policy defining the expression Actual User , is neither alleged nor argued before us. 20. The importers have raised the contention that the expression if such imports used in the second sentence of paragraph 2.10 only qualifies the first sentence of paragraph 2.10. We do not accept the contention, for paragraph 2.10 consists of two parts. The first part relates to goods which are freely importable without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secretariat and staff, replaced GATT and came into existence, as the international organisation for overseeing and regulating functioning of the multilateral trade system. GATT-1994 in nutshell is a rule-oriented package consisting of multilateral trade agreements annexed to a single document and works on the basis of single undertaking approach whereby all agreements annexed become binding on all the members as single body of law. The main agreement consists of the preamble and XVI articles establishing the WTO, four annexures and declarations, decisions and understandings. Annexure I to the multilateral agreement is divided into three parts. Annexure 1A consists of the GATT-1994 and twelve other agreements on agriculture; application of sanitary and phytosanitary measures; textiles and clothing; technical barriers to trade; trade related investment measures; anti-dumping duty; rules of customs valuation; rules of pre-shipment valuation; rules of origin; import licensing procedures; subsidies and countervailing measures; and safeguards. Article II of GATT-1994 limits tariff charges to those agreed in the Schedules of Concessions, while Article I lay down the principle of Most Favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not undermined. Articles XXII 4 provides for sympathetic consideration and consultation and satisfactory solution with respect to any matter affecting the operation of GATT-1994. Article XXIII 5 allows a GATT contracting party to make a complaint should it consider that another contracting party is directly or indirectly nullifying, impairing the GATT-1994 or otherwise impeding attainment of its objective: (a) by failure in carrying out its obligations; (b) by measures, even when they are not in conflict with GATT-1994; and (c) in any other situation. These Articles emphasise on the need for consultation, withdrawal of conflicting measures and mutual satisfactory solution of the matter by the contracting parties concerned, consistent with the GATT-1994. Albeit on failure to reach a satisfactory adjustment within reasonable time or in case of (c) (supra), the matter is to be referred to the Contracting Parties to investigate and make recommendations to the offending party or make a ruling on the matter, as appropriate. As the question of invocation and jurisdiction of the national or domestic court arises for consideration in the present case, we would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinarily complex and vary from country to country depending upon constitutional and other municipal rules. Further, a number of legal and constitutional issues regarding international treaties arise in domestic law, like the power to negotiate, sign and exit a binding international obligation or treaty, validity of a treaty under the national constitutional law, power to implement the treaty obligations and applicability of treaty in domestic law including the principle of invocability or justiciability as contrasted from direct applicability and hierarchy of norms in domestic law where the treaty norms conflict with the norms of the domestic law. There is no uniformity in approach on these aspects as there are different national systems of treaty applications 6 . Two aspects relevant in the present case are; (i) applicability of the international treaty in domestic law and (ii) invocability of the treaty in municipal law and before the municipal courts. 7. In spite of there being different constitutional and statutory approaches on applicability, the States as signatories to the international treaty are under an obligation to act in conformity and bear responsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat international law and municipal law exist separately and cannot have effect on or overrule the other. Consequently, the municipal laws and international laws can operate simultaneously as they regulate different subject matters. International law is between sovereign States, while the municipal law applies within the State and regulates legal relationship between the citizens/subjects inter se and the citizen/subject and the State. Monistic legal systems include international treaties in domestic law. Monism takes the form of assertion of the supremacy of the international law even within the national sphere, with the understanding and belief that an individual is a subject of international law. International norms provide the basic norms for the national legal order, and both are a part of the same systems of norms. 11. Most jurists draw distinction between direct application of treaties in domestic law, and national legal systems that mandate and require act of transformation for an international treaty to apply and be a part of domestic law. Direct application means and mandates that the treaty norms, either wholly or to some extent, are directly treated as norms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act or legislate. This could lead to exclusive European Union external competence even in the area of shared internal competence. European Union Law enjoys primacy over the laws of the member states and may have direct effect. Union legislators are on equal footing and are directly elected to the European Parliament and the Council for the European Union. However, both European Union and member States are members of the WTO and are contracting parties to GATT-1994. International agreements concluded by European Union become integral part of the European Union s legal order and are hierarchically positioned between the two founding treaties and the ordinary secondary legislation, which principle applies to GATT-1994. On this basis it has been held that the European Union law is to be interpreted in light of the WTO obligation to ensure GATT-1994 consistent interpretation of the European Union legislation. At the same time, authors and jurists have observed that individuals and member States challenge for GATT-1994 incompatibility secondary legislation have received different answers as in some cases it has been held that international agreement will only be granted direct effect if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are affected by an Act of Parliament which is necessary for the provisions of the particular treaty to be operative within the United Kingdom. Further and at the same time, there is a presumption in English law that legislation is to be construed as to avoid conflict with international law. This specifically applies when interpretation to the Act of Parliament is in question, i.e. while interpreting the enactment as a consequence of the act of transformation . The courts would intend to bring the treaty into effect if the provisions are unambiguous unless they have no choice. In United Kingdom, the legislature is required to enact laws, that incorporate and transform treaties or treaty norms into domestic law. Variation of this approach is to be found in other countries like Germany and Italy. Thus, there is great diversity of national constitutional systems regarding international treaty application. 14. It would be now appropriate to refer to the principle of invocation . Invocability in simple terms refers to justiciability; admissibility of a claim before the national courts. It is not connected with the defence or merits of the defence. In case where an act of transforma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he executive power under sub-clause (a) with which we are not concerned. Chapter I of Part XI of the Constitution, captioned Relations between the Union and the Sates vide different Articles stipulates that in respect of List 1 of the 7th Schedule the Parliament has exclusive power to make laws for the whole or any of the territory of India; in respect of List II (State List) the legislatures of the States have exclusive power to make laws for the whole or any part of the States; and in respect of List III (Concurrent List) the Parliament and the State Legislatures have the power to make laws. For the purpose of the present case, Article 253 of the Constitution is important as it states that notwithstanding anything in the foregoing provisions of this Chapter, the Parliament has the power to make laws for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or decisions made at any international conference, association or body. 16. Constitutional Bench of this Court in Maganbhai Ishwarbhai Patel Etc. v. Union of India (1970) 3 SCC 400 had examined the question whether the Government of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnational Law is primarily a law between States only and exclusively, treaties can normally have effect upon States only. This rule can, as has been pointed out by the Permanent Court of International Justice, be altered by the express or implied terms of the treaty, in which case its provisions become selfexecutory. Otherwise, if treaties contain provisions with regard to rights and duties of the subjects of the contracting States, their Courts, officials, and the like, these States must take steps as are necessary according to their Municipal Law, to make these provisions binding upon their subjects, Courts, officials, and the like. (page 924) Referring to the power under Article 73 of the Constitution and the power of the Parliament to make laws in terms of Article 253, Shah, J. had further observed: 80...By Article 73, subject to the provisions of the Constitution, the executive power of the Union extends to the matters with respect to which the Parliament has power to make laws. Our Constitution makes no provision making legislation a condition of the entry into an international treaty in times either of war or peace. The executive power of the Union is vested i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplications under such treaties/agreements/conventions are binding upon the Union of India (referred to as the State in Maganbhai's case) these treaties/agreements/ conventions are not by their own force binding upon Indian nationals . (iv) The making of law by Parliament in respect of such treaties/agreements/conventions is necessary when the treaty or agreement restricts or affects the rights of citizens or others or modifies the law of India, (v) If the rights of citizens or others are not affected or the laws of India are not modified then no legislative measure is needed to give effect to such treaties/agreements/conventions. 19. Even earlier in Gramophone Company of India Ltd. v. Birendra Bahadur Pandey and Others (1984) 2 SCC 534, this Court had held as under: 5. There can be no question that nations must march with the international community and the Municipal law must respect rules of International law even as nations respect international opinion. The comity of Nations requires that Rules of International law may be accommodated in the Municipal Law even without express legislative sanction provided they do not run into conflict with Acts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... International Law per se or proprio vigore has not the force or authority of civil law, till under its inspirational impact actual legislation is undertaken. The individual citizens, therefore, cannot complain about their breach in the municipal courts even if the country concerned has adopted the covenants and ratified the operational protocol. 21. Afore-quoted decisions are on the legal effect of international treaties in the domestic law in India. The ratio of these decisions primarily relates to and is confined to the requirement and mandate of the need for act of transformation to be a part and parcel of domestic law, which confers a right to invocability. The ratio of the above decisions has to be distinguished from decisions interpreting domestic law after the act of transformation consequent to which portions of GATT-1994 stand enacted thereby conferring right of invocability to parties. The decisions referred to in paragraphs 41 to 44 and relied upon by the importers fall in the second category. 22. This Court had the occasion to examine and interpret Customs Valuation Rules, 1988 that were framed keeping in view the GATT protocol and WTO agreement in Associate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its language. The imposition of antidumping duty is under Section 9-A of the Customs Tariff Act, 1975 and the Rules and is the outcome of the General Agreement on Tariff and Trade (GATT) to which India is a party. The purpose behind the imposition of the duty is to curb unfair trade practices resorted to by exporters of a particular country of flooding the domestic markets with goods at rates which are lower than the rate at which the exporters normally sell the same or like goods in their own countries so as to cause or be likely to cause injury to the domestic market. The levy of anti-dumping duty is a method recognised by GATT which seeks to remedy the injury and at the same time balances the right of exporters from other countries to sell their products within the country with the interest of the domestic markets. Thus the factors to constitute dumping are (i) an import at prices which are lower than the normal value of the goods in the exporting country; (ii) the exports must be sufficient to cause injury to the domestic industry. 25. In Commissioner of Customs, Bangalore v. G.M. Exports and Others (2016) 1 SCC 91, again while examining the question of levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in favour of a meaning that is consistent with the provisions of the treaty. (3) In a situation where India is a signatory nation to an international treaty, and a statute is made in furtherance of such treaty, a purposive rather than a narrow literal construction of such statute is preferred. The interpretation of such a statute should be construed on broad principles of general acceptance rather than earlier domestic precedents, being intended to carry out treaty obligations, and not to be inconsistent with them. (4) In a situation in which India is a signatory nation toan international treaty, and a statute is made to enforce a treaty obligation, and if there be any difference between the language of such statute and a corresponding provision of the treaty, the statutory language should be construed in the same sense as that of the treaty. This is for the reason that in such cases what is sought to be achieved by the international treaty is a uniform international code of law which is to be applied by the courts of all the signatory nations in a manner that leads to the same result in all the signatory nations. This Court also referred to clause (c) of Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent countries by laying down the minimum norm, as for example, the ILO Conventions, the court would freely avail the benefits thereof. 79. Those conventions to which India may not be a signatory but have been followed by way of enactment of new parliamentary statute or amendment to the existing enactment, recourse to international convention is permissible. This kind of stance is reflected from the decisions in People's Union for Civil Liberties v. Union of India, Madhu Kishwar v. State of Bihar, Kubic Darusz v. Union of India, Chameli Singh v. State of U.P., C. Masilamani Mudaliar v. Idol of Sri Swaminathaswami Swaminathaswami Thirukoil, Apparel Export Promotion Council v. A.K. Chopra, Kapila Hingorani v. State of Bihar, State of Punjab v. Devans Modern Breweries Ltd. and Liverpool London S.P. I Assn. Ltd. v. M.V. Sea Success I. GATT-1994 is an international convention framed after great deliberation and exercise, to develop and promote international trade. 27. While interpreting the domestic law enshrining Human Rights (and sometimes environment issues) this Court on some occasions has relied on international conventions and treaties where the terms of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like domestic product permitted to be marketed or produced, or, if there is no substantial domestic production of the like product, of a domestic product for which the imported product can be directly substituted; or (ii) to remove a temporary surplus of the like domestic product, or, if there is no substantial domestic production of the like product, of a domestic product for which the imported product can be directly substituted, by making the surplus available to certain groups of domestic consumers free of charge or at prices below the current market level; or (iii) to restrict the quantities permitted to be produced of any animal product the production of which is directly dependent, wholly or mainly, on the imported commodity, if the domestic production of that commodity is relatively negligible. Any contracting party applying restrictions on the importation of any product pursuant to sub-paragraph (c) of this paragraph shall give public notice of the total quantity or value of the product permitted to be imported during a specified future period and of any change in such quantity or value. Moreover, any restrictions applied under (i) above shall not be such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to a preference, the notice shall name the contracting party which has requested the action. In critical circumstances, where delay would cause damage which it would be difficult to repair, action under paragraph 1 of this Article may be taken provisionally without prior consultation, on the condition that consultation shall be effected immediately after taking such action. 3. (a) If agreement among the interested contracting parties with respect to the action is not reached, the contracting party which proposes to take or continue the action shall, nevertheless, be free to do so, and if such action is taken or continued, the affected contracting parties shall then be free, not later than ninety days after such action is taken, to suspend, upon the expiration of thirty days from the day on which written notice of such suspension is received by the CONTRACTING PARTIES, the application to the trade of the contracting party taking such action, or, in the case envisaged in paragraph 1 (b) of this Article, to the trade of the contracting party requesting such action, of such substantially equivalent concessions or other obligations under this Agreement the suspension ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies. (3) All goods to which any Order under sub-section (2) applies shall be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly. (4) Without prejudice to anything contained in any other law, rule, regulation, notification or order, no permit 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. xx xx xx 9A. Power of Central Government to impose quantitative restrictions. (1) If the Central Government, after conducting such enquiry as it deems fit, is satisfied that any goods are imported into India in such increased quantities and under such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd imminent danger of serious injury.] 31. Section 9A of the FTDR Act is the only section in Chapter IIIA with the heading Quantitative Restrictions and this section was inserted by Amendment Act 25 of 2010 with effect from 27th August 2010. Subsequently, in exercise of powers conferred by sub-section (3) to Section 9A of the FTDR Act, the Central Government had published and notified the Safeguard Measures (Quantitative Restrictions) Rules, 2012, which became applicable on the date of their publication in the Gazette of India dated 24 th May 2012, the relevant portion of which reads as under: xx xx xx 2. Definitions (b) Authorised Officer means the Authorised Officer designated as such under sub-rule(1) of rule 3; (c) increased quantity includes increase in import whether in absolute terms or relative to domestic production; (d) interested party includes (i) an exporter or foreign producer or the importer of goods (which is subject to investigation for purposes of imposition of safeguard quantitative restrictions) or a trade or business association, majority of the members of which are producers, exporters or importers of such goods; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... threat of serious injury to the domestic industry; and (ii) the duration of imposition of safeguard quantitative restrictions and where the period so recommended is more than one year, to recommend progressive liberalisation adequate to facilitate positive adjustment; and (e) to review the need for continuance of the safeguard quantitative restrictions. 5. Initiation of investigation.--- (1) The Authorised Officer shall, on receipt of a written application by or on behalf of the domestic producer of like goods or directly competitive goods, initiate an investigation to determine the existence of serious injury or threat of serious injury to the domestic industry, caused by the import of a goods in such increased quantities, absolute or relative to domestic production. (2) The application referred to in sub-rule (1) shall be made in Form appended to these rules and be supported with- (a) the evidence of - (i) increased imports as a result of unforeseen development; (ii) serious injury or threat of serious injury to the domestic industry; and (iii) a causal link between imports and the alleged serious injury or threat of serious injury; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule (1) of rule 5, to (a) the known exporters, or the concerned trade association; (b) the Governments of the exporting countries; and (c) the Central Government in the Ministry of Commerce and Industry: Provided that the Authorised Officer shall also make available a copy of the application, upon request in writing, to any other interested person. (4) The Authorised Officer may issue a notice calling for any information in such form as may be specified in the notice from the exporters, foreign producers and governments of exporting countries and such information shall be furnished by such persons and governments in writing within thirty days from the date of receipt of the notice or within such extended period as the Authorised Officer may allow on sufficient cause being shown. Explanation .--For the purpose of this rule, the public notice and other documents shall be deemed to have been received one week after the date on which these documents were put in the course of transmission to the interested parties by the Authorised Officer. (5) The Authorised Officer shall provide opportunity to the industrial user of the goods under investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed imports and in such cases, the Authorised Officer may refer the complaint to the authority for antidumping or countervailing duty investigations, as appropriate. 9. Final findings.-- (1) The Authorised Officer shall, within eight months from the date of initiation of the investigation or within such extended period as the Central Government may allow, determine whether, as a result of unforeseen developments the increased imports of the goods under investigation has caused or threatened to cause serious injury to the domestic industry, and a casual link exists between the increased imports and serious injury or threat of serious injury and recommend (i) the extent and nature of quantitative restrictions which, if imposed, would be adequate to prevent or remedy serious injury and to facilitate positive adjustment, as the case may be; (ii) the extent of quantitative restrictions so that the quantity of imports is not reduced to the quantity of imports below the level of a recent period which shall be the average of import in the last three representative years for which statistics are available and justification if a different level is necessary to prevent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that if the Central Government is of the opinion that the domestic industry has taken measures to adjust to such serious injury or threat thereof and it is necessary that the safeguard quantitative restrictions should continue to be imposed, to prevent such serious injury or threat and to facilitate adjustments, it may extend the period beyond four years: Provided further that in no case the safeguard quantitative restrictions shall continue to be imposed beyond a period of ten years from the date on which such restrictions were first imposed. 14. Liberalization of safeguard quantitative restrictions. If the duration of the safeguard quantitative restrictions imposed under rule 10 exceeds one year, the restriction shall be progressively liberalised at regular intervals during the period of its imposition. (v) Contention of the importers on Sections 3 and 9A of the FTDR Act and the response by the Union of India. 32. Before we go on the interpretation of respective sections, namely, Sections 3 and 9A of the FTDR Act, we would like to reproduce in brief the contentions of the importers. The importers submit that the FTDR Act was introduced and enacted for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,51,408 2019-2020 6,66,69630 11 Quantitative restrictions were imposed in the financial year 2018-19. Further, the Union of India has themselves stated that there was serious injury to the domestic industry due to import of pulses and Peas. Our attention was drawn to paragraphs 5 and 9 of the written submissions filed by the Union of India, which read as under: 5. It is submitted that the farmers are one of the most important stakeholders in matters related to import / export of agricultural goods and the Government is required to strike a balance between the interests of domestic producers and importers. Thus, whenever it is observed that large scale imports of an item is adversely impacting the interest of the domestic producers, due to fall in prices in the local market, the Government in consultation with stakeholders concerned, tries to uphold the interests of domestic producers through suitable measures like restriction on import quotas etc. Xx xx Xx 9. It is submitted that since domestic production of pulses / grams has been very good, therefore the Government has imposed restrictions on the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 2018 onwards with a small window of annual quota for permitted imports. However, in view of the interim orders passed by the various High Courts, the actual imports of peas were to the tune of 8,51,408 MT and 6,52,607 MTs in 2018-2019 and 2019-2020 respectively, though the annual quota for these two years was 1/1.50 lakh MTs. The Government is presently holding a buffer stock of 26.94 lakh MT of Gram, against the target quantity of 3 lakh MTs. The Gram is being sold at ₹ 4,000 4,200 per quintal, which is below the MSP of ₹ 4,875/- per quintal. Imported CIF value of Yellow Peas is ₹ 2,028/- per quintal. Due to the pandemic, the farmers could be compelled to make panic disposal at much lower prices. In the further affidavit filed on 1st July 2020, the Union of India has stated that they had not issued any quota for Peas, Yellow Peas etc. as inspite of restricted quota of 1 lakh and 1.5 lakh MTs for Peas in the Financial Years 2018-19 and 2019-20, due to interim orders passed by the various High Courts, the actual import was 8.51 lakh MTs and 6.67 lakh MTs during the Financial Years 2018-19 and 2019-20, respectively. Consequently, it has been decided not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign trade, i.e. imports and exports. Sub-section (2) states that the Central Government can, by an order in the Official Gazette, make a provision for prohibiting or restricting or otherwise regulating, in all or specified cases and subject to such exceptions, if any, the import or export of goods and after the amendment vide Act 25 of 2010, services or technology. Sub-section (2) to Section 3, therefore, authorises the Central Government to, by an Order published in the Official Gazette, make provisions restricting the imports or exports. Imposition of quantitative restrictions on imports or exports would clearly fall within sub-section (2) to Section 3 of the FTDR Act. We are not concerned with the proviso to sub-section (2) in the present case. Sub-section (3) to Section 3 states that where an order is passed under sub-section (2) whereby the import or export of goods is prohibited, restricted or otherwise regulated, the goods in question would be deemed to be prohibited goods under Section 11 of the Customs Act, 1962 and accordingly the provisions of the latter Act would apply. 36. Sub-section (4) to Section 9A of the FTDR Act introduced by Act 25 of 2010 with effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be required under the FTDR Act, rules or orders made thereunder. The expression order , as per clause (h) to Section (2) of the FTA means any Order made by the Central Government under Section 3. It is, therefore, clear to us that there is no violation of Section 3 of the FTDR Act in the issuance of the impugned notifications or orders, which are intra vires and not ultra vires. 37. We have already reproduced and quoted Article XI of the GATT-1994 and have to say that the same has not been statutorily made a subject of act of transformation and incorporated in the domestic legislation, i.e. the FTDR Act. The FTDR Act does not legislate and transform Article XI of the GATT-1994. As noticed above, Section 3 of the FTDR Act empowers and authorises the Central Government, i.e. the Union of India to frame policy, rules or regulations for import or export of goods. The policy is framed under Section 5 of the Act, which reads as under: 5. Foreign Trade Policy. The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy: Provided that the Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be held that notwithstanding Section 9A, the Central Government continues and has authority to impose quantitative restrictions by an order under Section 3(2) of the FTDR Act. Principle of Lex specialis derogat legi generali, therefore, is not applicable to the case in hand. 40. Section 9A of the FTA was enacted by Act 25 of 2010 pursuant to the recommendations of the Standing Committee which has opined as under: Clause 9 seeks to insert a new Chapter IIIA, with heading Quantitative Restrictions , after Section 9 of the Act, pertaining to Power of the Central Government to impose Quantitative Restrictions. The Committee was informed that the proposed amendment seeks to make a clear provision in the Foreign Trade (Development and Regulation) Act for allowing Quantitative Restrictions (QRs) to be imposed to protect domestic industry from serious injury in case of a surge in imports. While such measures are available for all the WTO member countries, yet safeguard measures in the form of Quantitative Restrictions are not provided for under any Indian law. This is in accordance with the provision to incorporate safeguard measures in the form of Quantitative Restrictions, as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of statutory law or delegated legislation. 42. This being the position, Section 9A has to be interpreted as an escape provision when the Central Government i.e. the Union of India may escape the rigours of paragraph (1) of Article XIX of GATT-1994. Section 9A is not a provision which incorporates or transposes paragraph (1) of Article XI into the domestic law either expressly or by necessary implication. To hold to the contrary, we would be holding that the Central Government has no right and power to impose quantitative restrictions except under Section 9A of the FTDR Act. This would be contrary to the legislative intent and objective. Section 9A of the FTDR Act does not elide or negate the power of the Central Government to impose restrictions on imports under sub-section (2) to Section 3 of the FTDR Act. 43. In other words, the impugned notifications would be valid as they have been issued in accordance with the power conferred in the Central Government in terms of sub-section (2) to Section 3 of the FTDR Act. The powers of the Central Government by an order imposing restriction on imports under sub-section (2) to Section 3 is, therefore, not entirely curtailed by Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion 48. Accordingly, we uphold the impugned notifications and the trade notices and reject the challenge made by the importers. The imports, if any, made relying on interim order(s) would be held to be contrary to the notifications and the trades notices issued under the FTDR Act and would be so dealt with under the provisions of the Customs Act 1962. The Writ Petitions subject matter of the Transfer Petitions, subject to E above (What is not decided) are dismissed. Writ Petitions filed by the intervenors before the respective High Courts shall stand dismissed in terms of this decision. Pending application(s), if any, also stand disposed of in the above terms. No order as to costs. --------------------------- Notes 1. 9.03 Actual User is a person (either natural or legal) who is authorized to use imported goods in his/its own premise which has a definitive postal address. (a) Actual User (Industrial) is a person (either natural legal) who utilizes imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit which has a definitive postal address. (b) Actual Us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the difficulty is of the type described in paragraph 1 (c) of this Article, the matter may be referred to the CONTRACTING PARTIES. The CONTRACTING PARTIES shall promptly investigate any matter so referred to them and shall make appropriate recommendations to the contracting parties which they consider to be concerned, or give a ruling on the matter, as appropriate. The CONTRACTING PARTIES may consult with contracting parties, with the Economic and Social Council of the United Nations and with any appropriate inter-governmental organization incases where they consider such consultation necessary. If the CONTRACTING PARTIES consider that the circumstances are serious enough to justify such action, they may authorize a contracting party or parties to suspend the application to any other contracting party or parties of such concessions or other obligations under this Agreement as they determine to be appropriate in the circumstances. If the application to any contracting party of any concession or other obligation is in fact suspended, that contracting party shall then be free, not later than sixty days after such action is taken, to give written notice to the Executive Secretary ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
