TMI Blog2023 (2) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... a in favour of the DGFT was considered in M/S. PAM AGRO INDUSTRIES A PARTNERSHIP FIRM 1 OTHERS VERSUS UNION OF INDIA 1 OTHERS [ 2021 (3) TMI 910 - GUJARAT HIGH COURT ] has held that DGFT has not exercised powers under section 3 of the Foreign Trade Act but has merely authenticated an order which relates to the DGFT in accordance with the authentication rules. Therefore, the contention raised by the petitioners that DGFT has no authority to issue such notification is not sustainable. Insofar as the Central Government authenticating the DGFT to issue the Notification, it must be deemed to be a notification issued only by the Central Government. Stricto sensu, the bar under Section 6(3) of the Foreign Trade Act would have applied only if the DGFT had exercised a statutory power - In the present case, the authentication at the best can only be held as an executive exercise of a power by the President of India through the DGFT. Hence, the impugned notification published in the Gazette under Section 5 of the Foreign Trade Act cannot be held to be ultra vires as was contended by the Learned Counsel for the Writ Petitioners. Even if the notification is taken to have been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specialis derogat legi generali will not have any application to the case in hand. There are no illegality in the issuance of the impugned notification dated 4-6-2008. The notification is only an expression of a policy decision taken by the Central Government and the DGFT was authenticated to issue the notification - petition dismissed. - W.A. (MD) Nos. 396-406 of 2009 and M.P. (MD) Nos. 2, 3, 3, 3, 3, 3, 3, 3, 3, 3 & 3 of 2009, - - - Dated:- 28-10-2022 - J. Nisha Banu and N. Anand Venkatesh, JJ. Ms. L. Victoria Gowri, Assistant Solicitor General, for the Appellant. Shri B. Sathish Sundar and A.K. Jayaraj, for the Respondent. JUDGMENT These Writ Appeals have been filed by the Union of India, Director General of Foreign Trade and the Commissioner of Customs, against the Common Order passed by the Learned Single Judge allowing the writ petitions filed by the respondents and thereby declaring the Notification dated 4-6-2008 issued by the Director General of Foreign Trade as illegal, arbitrary and unconstitutional. 2. The writ petitioners are importers of betel nuts and spices. They were importing the betel nuts from various countries. Considering the loca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has carefully considered the submissions made on either side and the materials available on record and also the common order passed by the Learned Single Judge. On considering the same, three broad issues are involved in these batch of writ appeals and they are : (a) Whether the impugned Notification No. 15 (RE-2008)/2004-09, dated 4-6-2008 was issued by the Director General of Foreign Trade (hereinafter referred to as DGFT for brevity), without jurisdiction, in view of the specific bar under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992 or whether the impugned notification was not issued by the DGFT by way of delegation and it was issued by the DGFT only on authentication by the Central Government, as per the Government of India (Allocation of Business) Rules, 1961? (b) Even if the notification is taken to have been issued by the DGFT by virtue of authentication by the Central Government, whether such authentication can be made, in view of the specific manner/procedure provided under Section 6(3) of the Foreign Trade (Development and Regulation) Act, 1992, and where the Foreign Trade (Development and Regulation) Act, 1992, prescribes a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic interest in order to protect the interests of the domestic producers on the following considerations : (a) The low priced import of betel nut was causing decline in domestic prices and consequential loss to the domestic betel nut growers. The complaints were also received in regard to the imported betel nut of being an inferior quality. Therefore, in order to prevent import of inferior quality betel nut and to bring the cost of imported betel nut close to the price of domestic betel nuts so that the domestic farmers can be provided adequate remunerative price for their produce, the impugned notification was issued in the interest of the domestic producers and also in public interest in order to provide protection to the domestic betel nuts farmers against low quality and cheaper priced imports. (b) A considerable number of farmers directly employed in the production of around 5 Lakh MT of betel nuts from around 4 lakh hectares of land in Assam, Kerala and Karnataka and other people directly or indirectly employed in the production, processing, business and trading of betel nuts in the country. (c) The bulk quantities of substandard low-priced betel nut was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers Conferred under Section 5 of the Foreign Trade (Development Regulation) Act, 1992 read with para 2.1 of the Foreign Trade Policy, 2004-2009 according to which the Central Government is empowered to make Amendment in Schedule I (Imports) of ITC (HS) classification of Export Import Items, 2004-2009 to protect the interest of the domestic betel nut farmers. The issuance of the above notification is a policy decision of the Central Government in exercise of the powers conferred under the above Act. 2. Before the fixation of minimum import/floor price of betel nut at the rate of Rs. 35/- per kilogram and above notified vide Notification No. 15/RE2008/2004-2009, dated 4-6-2008, various representations were received from the domestic producers suggesting fixation of floor price for betel nut at the rate of Rs. 60 to Rs. 65 per kilogram. In 2007, the matter in regard to prevailing prices of betel nut in the country was also consulted with the Directorate of Areca nut and Spices Development, Calicut (under Union Ministry of Agriculture). It was reported that the average domestic price of betel nut during the year 2006-07 varied between Rs. 66 to Rs. 75 per kg. As per the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 3 and 5 of the Act, shall be exercised only by the Central Government and by no other authority. 14. Keeping the above provisions in mind, the impugned notification dated 4-6-2008, is extracted hereunder : TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART-II, SECTION-3, SUB SECTION (ii) GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRY DEPARTMENT OF COMMERCE NOTIFICATION No. 15(RE-2008)/2004-2009 NEW DELHI, DATED 4th June, 2008 SO. (E) In exercise of powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Foreign Trade Policy - 2004-09, the Central Government hereby amends Schedule-I (Imports) of the ITC (HS) Classifications of Export and Import Items, 2004-09 as under : 1. Import Policy for the following items will be amended as follows : Exim Code Item Description Policy Policy Conditions Betel Nuts : 0802 90 10 Whole Free Import permitted freely provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. In Vinayaga Marine Petro Limited v. Union of India, 2019 (366) E.L.T. 210, an identical issue was raised before the Delhi High Court contending that the notification was ultra vires as it had not been issued by the Central Government but by the Ministry of Commerce and DGFT. Repelling the contention, the High Court held as under : 29. The contention that the Gazette Notification quoted above is invalid as it was not an order of the Central Government under Section 3 read with Section 5 of the FT Act is erroneous and should be rejected. Notification in the heading states; published by the Ministry of Commerce and Industry, Department of Commerce, Director General of Foreign Trade. The first paragraph of the Notification records :- the Central Government hereby amends the import policy conditions against 173 HS Codes under Chapter 72 and had imposed the conditions as per annexure . 30. Clearly, this is a Notification by the Central Government and not an act of delegated legislation exercised by the Director General of Foreign Trade under sub-section (3) to Section 6 of the FT Act. Section 6(3) of the Act states that the Central Government may by an order published i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it is not an order or an instrument made or executed by the President. 33. The website of the Ministry of Commerce and Industry, Department of Commerce, states that Director General of Foreign Trade is an agent of the Central Government and attached office to it. 34. The Notification No. 38/2015-2020 is a Notification of the Central Government under Section 3 read with Section 5 of the FT Act as stated in the Notification itself. It is not a Notification published by Director General of Foreign Trade as a delegatee of the Central Government performing any act traceable to delegation under sub-section (3) to Section 6 of the FT Act. Merely because Director General of Foreign Trade had published the order on behalf of the Central Government/Government of India would not affect its legality and make the Notification invalid. Such notifications have been issued since long and we have come across, in fact, an order issued as early as on 31st December, 1993. The respondents have also pointed out that the Director General of Foreign Trade is ex officio Additional Secretary in the Government of India. This being the position, the second contention of the petitioners is rejected. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said notification goes contrary to such policy. 31. This Court in case of Premium Pulses Products Kusum Agency (supra), while considering such notification issued by the Central Government under section 3 of the Foreign Trade Act, held as under : 12. A perusal of the impugned notification reveals that by virtue of such notification the Central Government, in exercise of powers conferred by section 3 of the Act read with paragraphs 1.02 and 2.01 of the Act as amended from time to time, has amended the import policy of items of Chapter 7 of ITC (HS) 2017, Schedule-1 (Import Policy) as provided thereunder. On a plain reading of the notification, it is clear that powers under section 3 of the Act have been exercised by the Central Government, and it is the Central Government which has amended the import policy. At the same time it can also be seen that such amendment bears the signature of the Director General of Foreign Trade, which is the root cause of the dispute raised in these petitions. On behalf of the respondents it has been contended that the import policy has been amended by the Central Government in exercise of powers under section 3 of the Act and that the DGFT ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely authenticated an order which relates to the DGFT in accordance with the authentication rules. Therefore, the contention raised by the petitioners that DGFT has no authority to issue such notification is not sustainable in view of above dictum of law. 20. The above judgments give the complete answer on the nature of power that was exercised by the DGFT. When the above judgment was passed, the Gujarat High Court had the advantage of looking into the judgment passed by the Learned Single Judge which is the subject matter in these writ appeals and also the judgment passed by the Calcutta High Court in Bimal Kumar Modi case. We are in complete agreement with the above judgment wherein it was categorically held that the DGFT did not exercise powers under Section 3 of the Foreign Trade Act and it was merely authenticated by the Central Government to issue the notification and such notification was issued only by virtue of the Authentication Rules. Consequently, there was no delegation of power by the Central Government and the DGFT was merely authenticated by the Central Government to issue the notification under Section 5 of the Foreign Trade Act, pursuant to the policy decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pite the specific embargo created under sub-section (3) of Section 6 of the FTDR Act. Though the Allocation of Business Rules entrusted the DGFT to act for the Central Government but in view of the specific embargo created under sub-section (3) of Section 6, the Central Government cannot delegate the power enshrined under Sections 3, 5, 15, 16 19 of the said Act to be exercised by the DGFT. 22. We are in respectful disagreement with the above view taken by the Calcutta High Court. A combined reading of the notification along with the Authentication Order, clearly shows that the impugned notification dated 4-6-2008 has been issued by the Government of India through the concerned Ministry and the DGFT was merely authenticated to issue this notification and the DGFT has not exercised any powers under Section 3 of the Foreign Trade Act. Hence, the embargo provided under Section 6(3) of the Foreign Trade Act pertains only to the bar for the Central Government to delegate the powers. Insofar as the Central Government authenticating the DGFT to issue the Notification, it must be deemed to be a notification issued only by the Central Government. Stricto sensu, the bar under Section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling with this issue, found that the DGFT cannot exercise a power under Section 5 of the Foreign Trade Act and take away certain incentives/privileges which had already accrued to the exporters by a notification issued by the Central Government. The Apex Court held that if at all such a notification is issued, it is only the Central Government which should have exercised such a power and not the DGFT. This judgment will not apply to the facts of the present case since the policy decision was taken by the Central Government and thereafter, the DGFT was only authenticated to issue the notification. The authentication order issued by the Ministry of Commerce, dated 24-3-1993 makes this position very clear. 25. The entire file pertaining to the policy decision taken by the Central Government was placed before us and we are satisfied that a lot of deliberations had gone up to the office of the Hon ble Prime Minister of India, based on various representations and ultimately, the Government of India, in order to strike a balance, permitted to import betel nut freely, subject to the c.i.f. value of Rs. 35 per kg. and above. While fixing this price, the average domestic price of betel nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... economic policy. The scope of judicial review in such matters is extremely minimal keeping in mind that Courts are not possessed of the skill and expertise of dealing with matters of economic policy which are best left to the wisdom of the executive. The wisdom of pursuing a particular economic policy is a matter for the executive and not the Courts. The parameters of review have been set out in a recent decision of the Supreme Court in Small Scale Industrial Manufactures Assn. v. Union of India, reported in (2021) 8 SCC 511, wherein it was held as under : 60. In catena of decisions and time and again this Court has considered the limited scope of judicial review in economic policy matters. From various decisions of this Court, this Court has consistently observed and held as under : 60.1 The Court will not debate academic matters or concern itself with intricacies of trade and commerce. 60.2 It is neither within the domain of the courts nor the scope of judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor are the courts inclined to strike down a policy at the behest of a petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riff Act which are special enactments and the same cannot be done under the Foreign Trade Act which is a general enactment. In order to impress upon the doctrine of generalia specialibus non derogant, various judgments were cited before us. 30. The Apex Court in Union of India v. Asian Food Industries reported in (2006) 13 SCC 542 = 2006 (204) E.L.T. 8 (S.C.) was dealing with a case where the Central Government banned the export of pulses by issuing a notification under Section 5 of the Foreign Trade Act. The Apex Court considered the effect of Section 3(3) of the Foreign Trade Act qua Section 11 of the Customs Act and held as follows : 25. Would the terms restriction and regulation used in Clause 1.5 of the Foreign Trade Policy include prohibition also, is one of the principal questions involved herein. 26. A citizen of India has a fundamental right to carry out the business of export, subject, of course to the reasonable restrictions which may be imposed by law. Such a reasonable restriction was imposed in terms of the 1992 Act. 27. The purport and object for which the 1992 Act was enacted was to make provision for the development and regulation of foreign trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Courts challenging imposition of restrictions on import of Peas and pulses and interim orders were passed staying the notifications which had the effect of permitting imports without any restriction as to quota or licence. The primary grounds raised in the Writ Petitions before the High Courts were : (a) The impugned notifications issued by the DGFT had the effect 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 Sections 3, 5, 15, 16 and 19 of the FTDR Act cannot be delegated to the DGFT or any other officer subordinate to the Director General. (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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1) to Section 6 of the FTDR Act to advise the Central Government in formulation and carrying out the Foreign Trade Policy. Wherefore, even the website of the Ministry of Commerce and Industry, Department of Commerce, states that 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. 34. The above finding of the Apex Court sufficiently covers the first and second grounds that have already been answered by this Court. The finding of the Apex Court only strengthens the conclusion arrived at by this Court for the first and second issues. 35. The Apex Court thereafter took up the effect of Sections 3 and 9A of the Foreign Trade Act and considered it in consonance with the GATT, 1994 obligations and the following findings were re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Apr. - 31 Mar. Peas in metric ton 2014-2015 19,51,973 2015-2016 22,45,390 2016-2017 31,02,757 2017-2018 28,77,032 2018-2019 8,51,408 2019-2020 6,66,696 60. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the perfect substitute for Gram in making of Besan which is primarily used in preparation of Indian savouries. As the price of imported Yellow Peas in India is cheaper than the domestic price of Gram, a huge shift in industry usage from Gram to Yellow Peas has taken place. In these circumstances that the government has imposed restrictions from 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 MTs 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 Rs. 4,000 - 4,200 per quintal, which is below the MSP of Rs. 4,875/- per quintal. Imported CIF value of Yellow Peas is Rs. 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, Yello ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. It is a general provision which has no reference to GATT-1994. It authorises the Central Government to publish an order in the Official Gazette for development and regulation of foreign 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced with the expression Without prejudice to anything contained in any other law, rule, regulation, notification or order . Sub-section (4) to Section 3 of the FTDR Act, therefore, in the context of import and exports or prohibition of imports or exports of goods states that no permit or licence shall be necessary or required except as 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. 66. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling provision empowering imposition of quantitative restrictions after following the procedure in the situations referred to therein. However it does not limit and restrict the expans and power of the Central Government to prohibit, regulate or restrict imports of goods in terms of Section 3(2) of the FTDR Act. As a sequitur, it has to 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. 36. On a careful reading of the above findings of the Apex Court, it can be seen that the Central Government has been given very wide powers under Section 3(2) of the Foreign Trade Act which includes the power to prohibit, restrict or otherwise regulate in all cases or in specified classes of cases, import or export of goods. When any order is passed by the Central Government under Section 3(2) of the Foreign Trade Act, it shall be deemed to have been prohibited or restricted or regulated under Section 11 of the Customs Act. The Customs Tariff Act is nothing but an Act whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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