2024 (12) TMI 303 - HC - Customs

Imposition of quantitative restrictions on import of Maize Corn/Pop Corn - the petitioner s application for grant of permission to import 10,000 Metric Tonnes of Pop Corn/Maize Corn from Brazil-South came to be partially allowed whereby the permission to import only 2000 Metric Tonnes is granted - HELD THAT - The fact about the respondents having power to make provisions relating to imports and exports under Section 3 of the Act of 1992 is not in dispute. The Central Government in such an eventuality is required to publish an order in the official gazette making provisions for the development and regulation of foreign trade by facilitating imports and increasing exports. Sub-Section 2 of Section 3 of the Act of 1992 contemplates that the Central Government may 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. The stand taken by the respondents that under the FTP-2023, since authorization is not a right, the petitioner can only be granted authorization for 2,000 Metric Tonnes to import Pop Corn/ Maize Corn cannot be said to be substantiated based on exercise of statutory powers, rather such restrictions imposed by the respondents by granting authorization for only 2,000 Metric Tonnes of import of Maize Corn is without authorization under Section 9A of the Act of 1992 and also in absence of statutory provision to import Maize Corn - The exercise of discretion in the case in hand which is sought to be justified based on the examination of capacity of the petitioner is also not recognized under any of the statutory provisions or the rules framed under the provisions of the Act of 1992 or the FTP-2023. Admittedly, there are no principles to guide the Licensing Authority in the matter of grant of authorization and in such an eventuality, the expectation from the Licensing Authority or the Authority granting authorization is to act fairly and to adopt a procedure which can be said to be fairplay in action - In M/s Kamdhenu Cattle Feed Industries 1992 (11) TMI 275 - SUPREME COURT , the Apex Court has held that due observance of the statutory obligation as a part of good administration raises a reasonable or legitimate expectation in fairly treating every citizen. As a sequel of the impugned decision, the same will lead the petitioner suffering a business loss as it would be unable to work in the capacity that it has. There are no such statutory restrictions under Sections 3 and 9A of the Act of 1992, it is held that the reliance placed by the respondents on Clause 2.13 of the FTP-2023 lacks merit. Therefore the contention canvassed by the Deputy Solicitor General of India that the said clause confers ab.solute right in the respondents to reject authorization does not hold any water. The decision of the respondents in refusing to grant balance 8,000 Metric Tonnes authorization to the petitioner to import Maize Corn/Pop Corn pursuant to the application at Exhibit D is not sustainable and is held to be arbitrary and violative of Article 19 (1) (g) of the Constitution of India. It is declared that the petitioner is entitled for authorization to import another 8,000 Metric Tonnes of Maize Corn/Pop Corn pursuant to the application at Annexure D and such aurhorization be issued in favour of the petitioner expeditiously and in any case within a period of four weeks from the date of production of this order. Petition allowed.

Issues Involved:

1. Legitimacy of imposing quantitative restrictions on import of Maize Corn/Pop Corn.
2. Whether the petitioner has a right to import 10,000 Metric Tonnes of Maize Corn/Pop Corn.
3. The applicability of the principle of legitimate expectation.
4. The authority of the Central Government and DGFT under the Foreign Trade (Development and Regulation) Act, 1992.

Detailed Analysis:

1. Legitimacy of Imposing Quantitative Restrictions:

The petitioner, a century-old trading company, challenged the decision of the respondents to grant only a partial import license for 2,000 Metric Tonnes of Maize Corn/Pop Corn against the requested 10,000 Metric Tonnes. The court examined the provisions under Sections 3 and 9A of the Foreign Trade (Development and Regulation) Act, 1992, which empower the Central Government to impose quantitative restrictions through orders published in the Official Gazette. However, the respondents failed to demonstrate any such order or statutory provision that imposed quantitative restrictions on the import of Maize Corn/Pop Corn. Consequently, the court found the respondents' decision to restrict the import quantity unjustified and not based on any statutory authority.

2. Right to Import 10,000 Metric Tonnes of Maize Corn/Pop Corn:

The petitioner argued that Maize Corn under EXIM Code 1005 is a 'free item' for import as per the Import Policy and that the respondents' decision to limit the import to 2,000 Metric Tonnes was arbitrary. The court noted that the respondents did not provide any statutory basis or published order restricting the import of Maize Corn/Pop Corn. The court emphasized that the petitioner had been importing Maize Corn for a significant period and had demonstrated the capacity to process larger quantities. The court held that in the absence of statutory restrictions, the petitioner is entitled to import the full requested quantity of 10,000 Metric Tonnes.

3. Principle of Legitimate Expectation:

The petitioner contended that the respondents' decision violated the principle of legitimate expectation, as they had a reasonable expectation to import the requested quantity based on past practices and the absence of any statutory restrictions. The court agreed, referencing the doctrine of legitimate expectation, which requires the state to act fairly and consider reasonable expectations in decision-making. The court found that the respondents' arbitrary restriction on import quantity violated this principle, as the petitioner had a legitimate expectation to import 10,000 Metric Tonnes.

4. Authority of the Central Government and DGFT:

The court examined the powers of the Central Government and the Director General of Foreign Trade (DGFT) under the Act of 1992. It noted that while the Central Government has the authority to regulate imports and impose restrictions, such powers must be exercised through published orders in the Official Gazette. The DGFT cannot unilaterally impose restrictions or amend the EXIM Policy, as such powers are reserved for the Central Government. The court cited previous judgments affirming that procedural norms conflicting with the policy are invalid. The court concluded that the respondents' decision lacked legal backing and was arbitrary.

Conclusion:

The court ruled that the respondents' decision to restrict the import to 2,000 Metric Tonnes was arbitrary, lacked statutory authority, and violated the petitioner's rights under Article 19(1)(g) of the Constitution. The petitioner was entitled to import the remaining 8,000 Metric Tonnes as requested. The court directed the respondents to issue the necessary authorization within four weeks. The writ petition was allowed, and the rule was made accordingly, with no costs awarded.

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