2019 (1) TMI 784 - HC - Customs

Effect of Notification No.38/2015-2020 - effective date of notification - retrospective or prospective effect of notification - import of freely importable items, which was later on restricted by the impugned notification - various items including mild steel varieties like Hot Rolled Coils, Cold Rolled Coils, Hot Rolled Steel Plates, Pre Painted Steel Coils etc. - Contention of the petitioners is that as per the mandate of Section 3 of the Foreign Trade (Development and Regulation) Act, 1992, the Notification would be effective from the date of publication in the Gazette of India and not from the date when public notice or trade notice was issued. Held that - The Notification No.38/2015-2020 though made public by way of trade notice on 5th February, 2016 fixing MIP against 173 HS Codes under Chapter-72 of the ITC (HS)-2012, Schedule-I (Import Policy) would be effective and applicable from 11th February, 2016. However, this does not imply that the writ petitions would succeed and have to be allowed for the imports into India were made on or after 11th February, 2016, i.e., the date on which the Notification has been published in the Official Gazette. Notification is not being given retrospective effect to make it effective to imports made from a date prior to publication in the Official Gazette. Notification was effective from the date when it was published in the Official Gazette and accordingly would apply to imports made on or after 11th February, 2016. Notification No.38/2015-2020 dated 5th February, 2016 published in the Official Gazette on 11th February, 2016 was in force on the date of import of goods by the petitioners as the import was post publication in the Official Gazette on 11th February, 2016. We would not be giving retrospective effect to Notification No.38/2015-2020, when we hold that it would apply to all import on or after 11th February, 2016 - The argument that the respondents have given retrospective effect to the Notification No.38/2015-2020, which can be only prospective, falters and is rejected. Notification No.38/2015-2020 even if it was published in the Official Gazette on 11th February, 2016 had specific exemption in restricting the same to import/shipments under LoCs opened prior to the date of Notification, i.e., 5th February, 2016. Paragraph 2 of the Notification No.38/2015-2020 refers to the date of the Notification and not the date on which it was published in the Official Gazette - In the present case, the LoCs were opened between 5th February, 2016 till 11th February, 2016, when the Notification No. 38/20152020 was uploaded on the web-site of the Respondents on 5th Februray,2016 and was published in the Official Gazette on 11th February, 2016. No doubt, paragraph 2 refers to paragraph 1.05 of the Foreign Trade Policy 2015-2020, but in the context that the importers would comply with the conditions stated therein, i.e., the condition for registration. Conditions regarding opening of LOCs before 5th February, 2016 would over-ride and prevail over paragraph 1.05(b) of the Foreign Trade Policy 2015-2020, as provided and stated in the clause itself. Expression unless otherwise stipulated in paragraph 1.05(b) would apply as paragraph 2 of the Notification No.38/2015-2020 stipulates to the contrary. The factual position in the present writ petitions is identical in facts in the case of M/s Agri Trade India Services (P) Ltd. 2006 (8) TMI 370 - DELHI HIGH COURT decided by the Supreme Court in M/s Asian Food Industries 2006 (11) TMI 10 - SUPREME COURT OF INDIA , in favour of the Revenue. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Effective date of the Notification No. 38/2015-2020.
2. Validity of the Notification issued by the Directorate General of Foreign Trade (DGFT).
3. Retrospective application of the Minimum Import Price (MIP) conditions.
4. Exemption of imports under Letters of Credit (LoCs) opened before the notification date.

Issue-wise Detailed Analysis:

1. Effective Date of the Notification No. 38/2015-2020:
The primary issue was whether the Notification No. 38/2015-2020, dated 5th February 2016, was effective from the date it was put on the website (5th February 2016) or from the date it was published in the Official Gazette (11th February 2016). The court held that the notification would be effective from the date of its publication in the Official Gazette, i.e., 11th February 2016. This conclusion was based on the mandate of Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 (FT Act), which requires that orders made by the Central Government be published in the Official Gazette to be effective. The court emphasized that publication in the Official Gazette is a condition prescribed to operationalize and make the order effective.

2. Validity of the Notification Issued by the DGFT:
The petitioners contended that the DGFT was not authorized to issue the notification as the power under the FT Act vests exclusively with the Central Government. The court rejected this contention, stating that the notification was indeed issued by the Central Government and not as an act of delegated legislation by the DGFT. The notification clearly stated that it was published by the Ministry of Commerce and Industry, Department of Commerce, and that the Central Government had amended the import policy conditions. Therefore, the notification was valid and issued by the Central Government under the FT Act.

3. Retrospective Application of the MIP Conditions:
The petitioners argued that the notification should not have retrospective effect from 5th February 2016, as it was only published in the Official Gazette on 11th February 2016. The court held that the notification did not have retrospective effect and would apply to imports made on or after 11th February 2016. The court referred to the Supreme Court's decision in Director General of Foreign Trade and Another versus Kanak Exports and Another, which held that subordinate legislation could only be prospective unless the rule-making authority was vested with the power to make retrospective subordinate legislation under the statute. The court concluded that the notification was not given retrospective effect and applied only from the date of its publication in the Official Gazette.

4. Exemption of Imports under LoCs Opened Before the Notification Date:
The petitioners challenged paragraph 2 of the notification, which exempted imports/shipments under irrevocable LoCs opened before 5th February 2016, arguing that the date should be 11th February 2016. The court held that the date of the notification (5th February 2016) was valid for the purpose of paragraph 2, as this was the date on which the decision to impose MIP was made public via the website, even though it was not gazetted until 11th February 2016. The court emphasized that paragraph 2 of the notification specifically referred to the date of the notification and not the date of its publication in the Official Gazette. The court also referred to paragraph 1.05(b) of the Foreign Trade Policy 2015-2020, which allows for exemption of imports under irrevocable LoCs established before the date of imposition of restrictions, provided the conditions stated therein are met.

Conclusion:
1. The notification No. 38/2015-2020 dated 5th February 2016 is effective and applicable to imports made on or after 11th February 2016, the date of its publication in the Official Gazette.
2. The notification was validly issued by the Central Government and not as an act of delegated legislation by the DGFT.
3. The notification does not have retrospective effect and applies only from the date of its publication in the Official Gazette.
4. Exemption for imports under irrevocable LoCs is valid for LoCs opened before 5th February 2016, the date the notification was made public, even though it was not gazetted until 11th February 2016.

Final Order:
The writ petitions were dismissed, and the court concluded that the notification was valid and effective from 11th February 2016, with no retrospective effect. The exemption for imports under irrevocable LoCs opened before 5th February 2016 was upheld. No order as to costs was made.