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2023 (8) TMI 1394 - HC - CustomsDoctrine of proportionality - Exemption under the Advance Authorisation Scheme - import of pepper was free under the Foreign Trade Policy 2015 2020 or not - competence of the DGFT to issue the notifications - Applicability of N/N. 42/2015-20 dated 06/12/2017 and N/N. 50/2015-2020 dated 05/02/2018 N/N. 53/2015- 2020 dated 21/03/2018 and N/N. 21/2015-20 dated 25/07/2018. HELD THAT - The notifications explicitly declare that they are issued by the Central Government in exercise of powers conferred by Section 3 of FT(D R) Act 1992 read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy. It is also pertinent to note that vide S.O.211(E) dated 16.01.2002 the President of India in exercise of the powers conferred by clause(2) of Article 77 of the Constitution has issued the Authentication(Orders and Other Instruments) Rules 2002. By virtue of the said rules the orders and other related instruments relating to the Directorate General of Foreign Trade made executed by the President can be authenticated by the DGFT Additional DGFT Export Commissioner or the Joint DGFT. As evident from the file notes pertaining to the impugned notifications the decision to issue the notification was taken after discussing the matter with the Minister. Hence there is substance in the contention that the notifications were issued by the Central Government in exercise of the powers conferred under Section 3 of the FT(D R) Act and the DGFT had only undertaken the ministerial act of publishing the notification. In such circumstances mere publication of the notifications by the DGFT cannot lead to the presumption that the notifications were issued without the concurrence of the Central Government. Therefore the challenge on the premise that the notifications were issued by the DGFT and not the Central Government is unsustainable. Section 19(3) of the FT(D R) Act also does not envisage the placing of the Orders and Rules before the Parliament to be a condition precedent. The provision also does not provide any consequence for non-compliance with the requirement. As such the requirement can be perceived only as directory. Being so its non-compliance cannot result in nullification of the notifications. Fixing of minimum piperine content of black pepper at 6% contrary to the prescription of 4% in the Food Safety and Standards (Food Products Standards and Food Additives) Regulations 2011 - HELD THAT - Irrefutably the FT(D R) Act is not a food related law for the FSS Act to have an overriding effect. Yet another relevant aspect is that under the impugned notifications the piperine content of light black pepper berries imported into India under Advance Authorisation Scheme for oleoresin alone is fixed as 6%. As the pepper imported under the Advance Authorisation Scheme is used for manufacturing oleoresin for the purpose of export the article of food is not for consumption in India. Hence Section 25 of the FSS Act is not attracted. It is to be noted that the entire quantity of pepper imported by the above three category of traders are exported whereas pepper imported by importers falling outside the categories is consumed in India itself. within the country. As such there is clear distinction between the exempted category and the other importers. It is trite that only similarly circumstanced persons are entitled to equal treatment. Moreover Article 14 will not come into play when the distinguishing rationale is based on justifiable reasons and the choice of differentiating one set of persons from the another has a reasonable nexus to the objective sought to be achieved. The objective behind the impugned notifications is to prevent the import of cheap quality pepper into India. As such the differentiation between two classes of importers has nexus with the objective. There are no merit in the challenge based on Article 19(1) (g) also since the effect of the notifications is only to restrict the import of black pepper and not to prohibit its import. The law imposing restrictions has to be treated as proportional if it is meant to achieve a proper purpose and the measures taken are rationally connected to the purpose. Applying the proportionality principle the restriction against import of pepper is found to be justified and unassailable. Petition dismissed.
Issues Involved:
1. Competence of DGFT to issue notifications. 2. Non-laying of notifications before Parliament. 3. Discrimination in Minimum Import Price (MIP) conditions. 4. Violation of fundamental right to do business. 5. Conflict with Food Safety and Standards Act (FSS Act). Summary: Competence of DGFT to Issue Notifications: The petitioners argued that the DGFT lacked the authority to issue the impugned notifications under Sections 3, 5, and 6 of the FT(D&R) Act, as these powers are vested with the Central Government. The court noted that the notifications were issued by the Central Government and merely published by the DGFT, as evidenced by file notes and the Authentication (Orders and Other Instruments) Rules, 2002. The court referenced the Supreme Court decision in *Union of India & Others v. Agricas LLP and Others* to affirm the DGFT's competence in this context. Non-laying of Notifications Before Parliament: The petitioners contended that the notifications were non est due to the failure to lay them before Parliament, as required by Section 19(3) of the FT(D&R) Act. The court, referencing *Atlas Cycle Industries Ltd. v. The State of Haryana*, concluded that the requirement to lay notifications before Parliament is directory, not mandatory, and non-compliance does not nullify the notifications. Discrimination in Minimum Import Price (MIP) Conditions: The petitioners argued that the MIP condition was discriminatory, as it applied only to ordinary importers/traders and not to imports under the Advance Authorisation Scheme, 100% EOUs, and SEZs. The court found a clear distinction between the exempted categories, which re-export the imported pepper, and other importers whose imports are consumed domestically. The court held that the differentiation had a reasonable nexus to the objective of preventing the influx of cheap quality pepper into India and was thus justified under Article 14. Violation of Fundamental Right to Do Business: The petitioners claimed that the notifications violated their fundamental right to do business under Article 19(1)(g) of the Constitution. The court held that the notifications imposed restrictions, not prohibitions, on the import of black pepper. Applying the principle of proportionality, the court found the restrictions justified and aimed at achieving a proper purpose. Conflict with Food Safety and Standards Act (FSS Act): The petitioners argued that the notifications' requirement for 6% piperine content conflicted with the FSS Act, which prescribes 4% for light black pepper. The court noted that the FSS Act's standards apply to food imports for consumption in India, whereas the impugned notifications pertained to imports under the Advance Authorisation Scheme for re-export. Thus, the notifications did not conflict with the FSS Act. Conclusion: The court dismissed the writ petitions, upholding the validity of the impugned notifications on all grounds.
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