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TMI Blog2024 (8) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... d Notification, the existing policy with regard to export of Non-Basmati White Rice is changed in public interest and the export of the same is prohibited by carving out certain exceptions. Therefore, the impugned Notification cannot be held to be contrary to the Foreign Trade Policy. Whether the policy can be given retrospective effect and allowed to take away the vested rights? - HELD THAT:- In Shrijee Sales Corporation case [ 1996 (12) TMI 61 - SUPREME COURT ], the Hon ble Supreme Court of India was dealing with an Appeal filed against the judgment of the High Court of Delhi challenging the Notification granting exemption to imports of Polyvinyl resins (PVC) falling within Chapter 39 of the First Schedule to the Customs Tariff Act, 1975. In the light of the provisions of the Customs Tariff Act under Section 25, the Hon ble Supreme Court of India inter alia, held ' The imposition and exemption of customs duty are the chief vehicles of the Government to protect a domestic market and to steady the level of prices. The tariffs are its chosen instruments to shield domestic production from foreign competition.' In Unicorn Industries case [ 2019 (9) TMI 791 - SUPREME COURT ], t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion can be interfered with, if the same is violative of principles of natural justice or Doctrine of Legitimate Expectation? - HELD THAT:- In the present case the petitioners / exporters had acted upon the existing Foreign Trade Policy-2023, entered into agreement / contracts with foreign buyers, pursuant to which the Letters of Credit were issued in their favour and therefore justified in raising the contention based on doctrine of legitimate expectation. However, in the light of the Constitutional Bench decision of the Hon ble Supreme Court in SIVANANDAN CT AND OTHERS VERSUS HIGH COURT OF KERALA AND OTHERS [ 2023 (7) TMI 1438 - SUPREME COURT] the contentions with reference to Doctrine of Legitimate Expectation cannot be upheld - In the light of the expression of the Hon ble Supreme Court that the legitimate expectation is not a legal right and that shall yield to the public interest, the question is answered against the petitioners and no prior notice need be issued. The Writ Petitions are disposed of holding that the impugned Notification shall have prospective effect only, in so far as the Writ petitioners herein are concerned, and the same shall not impede the petitioners exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representing the respondents 1 2 along with Mr. Y.V. Anil Kumar, learned Central Government Counsel and Mr. Y.N. Vivekananda, learned Senior Standing Counsel for Customs CGST for respondents 3 4. Perused the material on record. 5. Learned Senior Counsel for the petitioners made elaborate submissions with reference to the Notification dated 20.07.2023 and the relevant paras in the Foreign Trade Policy, 2023. He submits that by virtue of the impugned Notification dated 20.07.2023, temporary export of Non-Basmati White Rice is permitted only if anyone of the conditions mentioned in Para No.2 of the said Notification are satisfied, but export of the said Rice is not permitted in respect of the consignments pursuant to the contracts / agreements entered and irrevocable Letters of Credit thereto issued in favour of the petitioners, prior to the date of the impugned Notification. He submits that neither in the Notification dated 20.07.2023 nor in the subsequent Trade Notice No.23 of 2023 dated 18.08.2023, reasons as to why the export of Non-Basmati White Rice is prohibited have been assigned. 6. Referring to Para 1.05 of the Foreign Trade Policy-2023, the learned Senior Counsel would fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel submits that the petitioners will also have to face the legal consequences for failure to comply with the obligations in respect of the purchase orders placed on the local suppliers. He also submits that no prior notice was issued to the petitioners / exporters before issuing the impugned Notification and had such prior notices were issued, the petitioners would not have entered into contracts / agreements with the local suppliers or the foreign buyers and avoided the possible civil and penal consequences. He submits that the action of the 1st respondent prohibiting the exports as contemplated in the impugned Notification without affording opportunity to the petitioners is violative of principles of natural justice, amounts to arbitrary exercise of power and the impugned Notification is therefore liable to be set aside. 8. The learned counsel also submits that in similar circumstances, Writ Petitions challenging the Notifications imposing restriction on the exports of rice were filed and pursuant to the interim orders granted in the writ petitions, supplies / exports have been made and the said writ petitions were disposed of as the same were rendered infructuous. While conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred on the Central Government to make amendments to the Foreign Trade Policy in Public Interest by way of Notification. He submits that prior to the impugned Notification export of Non-Basmati White Rice is free, but considering the majority of population and in view of the escalation of prices, the Ministry of Consumer Affairs after elaborate discussions in the interest of public, thought it expedient to control the prices, therefore the Central Government in exercise of powers under Sections 3 and 5 of the Act, issued the Notification in question and strict implementation of the same is required. He submits that the inter-Ministerial Committee after deliberations further has taken a conscious decision to give concessions, as set out in the Notifications. The Additional Solicitor General further submits that considering the various representations, the Central Government issued the clarification vide Trade Notice No.23 of 2023 dated 18.08.2023 to the effect that Conditions (i)(ii) and (iii) of Para No.2 of the impugned Notification dated 20.07.2023 are independent of each other and export is allowed in case of compliance of anyone of the conditions of Para No.2 of the said Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial activities cannot seek benefit of the Notification in respect of the supply of Non-Basmati White Rice to the said countries. Relying on the decisions of the Hon ble Supreme Court reported in Union of India Others v. Unicorn Industries (2019) 10 SCC 575, Parisons Agrotech Private Limited another v. Union of India Others (2015) 9 SCC 657, Balco Employees Union v. Union of India (2002) 2 SCC 333 and Shrijee Sales Corporation Others v. Union of India (1997) 3 SCC 398 , the learned Additional Solicitor General of India urges for dismissal of the Writ Petitions. 13. Supplementing the arguments advanced by the learned Additional Solicitor General of India, Mr. Y.V. Anil Kumar and Mr. Y.N. Vivekananda also made further submissions. Mr. Y.V. Anil Kumar submits that the contention with regard to legitimate expectations of the petitioners cannot be appreciated. He submits that it is not a legal right and even otherwise the same is subservient to public interest. He submits that in view of the overriding / overwhelming public interest, the Government to grapple with the Food Security took a policy decision, pursuant to which the impugned Notification has been issued. He submits that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India. 15. While contending that no public interest is involved, the learned Senior Counsel submits that as seen from the Notifications filed along with I.A.No.1 of 2024 in W.P.No.33148 of 2023 with regard to supply of Non-Basmati Indian White Rice to the countries mentioned therein, the quantities are far more than the quantities agreed to be supplied by the petitioners to their foreign buyers. In reply to the contentions with reference to GAFTA and the arbitration proceedings etc., the learned Senior Counsel would reiterate that the petitioners have to incur huge expenditure, that they have already suffered huge loss and their exports business which is the main source of income would be seriously affected, causing irreparable loss and prejudice to the petitioners. Stating that there is no dispute with regard to the jurisdiction of the Courts in interfering with the matters concerning public policy, the learned Senior Counsel submits that it is not a thumb rule and there is no bar to exercise powers under Article 226 of the Constitution of India, if the action complained is arbitrary and violative of the rights guaranteed to the petitioners under the Constitution of India. He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mati rice. Consignments of Non-basmati rice will be allowed to be exported under following conditions: i. where loading of Non-basmati rice on the ship has commenced before this Notification; ii. where the shipping bill is filed and vessels have already berthed or arrived and anchored in Indian ports and their rotation number has been allocated before this Notification; The approval of loading in such vessels will be issued only after confirmation by the concerned Port Authorities regarding anchoring/berthing of the ship for loading of Non-basmati rice prior to the Notification; iii. where Non-basmati rice consignment has been handed over to the Customs before this Notification and is registered in their system / where Non-basmati rice consignment has entered the Customs Station for exportation before this Notification and is registered in the electronic systems of the concerned Custodian of the Customs Station with verifiable evidence of date and time stamping of these commodities having entered the Customs Station prior to 20.07.2023. The period of export shall be upto 31.08.2023. iv. Export will be allowed on the basis of permission granted by the Government of India to other co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving entered the Customs Station prior to 20.07.2023. The period of export shall be upto 31.08.2023. 3. This Directorate has received various representations from stakeholders including Customs Authorities seeking clarification with regard to condition (i), (i) (iii) of Para-2 of Notification dt.20.07.2023 that whether all the three conditions are independent of each other or exporter has to fulfill the conditions together. 4. In this regard, it is clarified that condition (i), (ii) (iii) of Para -2 of the Notification dt.20.07.2023 are independent of each other and export is allowed in case of completion of anyone of the conditions of Para 2 of Notification dt.20.07.2023, by the exporter. This issues with the approval of competent authority. (SK. Mohapatra) Joint Director General of Foreign Trade ****** To be Published in the Cams of Part-1 Section 3. Sub-Section (ii) Government of India Department of Commerce Directorate General of Foreign Trade Vanijya Bhawan, New Delhi Notification No. 29 / 2023 New Delhi, Dated 28 August, 2023 Subject: Amendment in Export Policy of Non-basmati rice under HS Code 1006 30 90. S.O.(E) The Central Government, in exercise of powers conferred by Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscal benefit issued before commencement of FTP 2023 shall continue to be valid for the purpose and duration for which it was issued, unless otherwise stipulated (b) Item wise Import/Export Policy is delineated in the ITC (HS) Schedule I and Schedule II respectively. The importability/ exportability of a particular item is governed by the policy as on the date of import/ export. The date of import/export is defined in para 2.17 of HBP 2023. Bill of Lading and Shipping Bill are the key documents for deciding the date of import and export respectively. In case of change of policy from 'free' to 'restricted/prohibited/state trading' or 'otherwise regulated', the import/export already made before the date of such regulation/restriction will not be affected. However, the import through High Sea sales will not be covered under this facility. Further, the import/export on or after the date of such regulation/restriction will be allowed for importer/ exporter who has a commitment through Irrevocable Commercial Letter of Credit (ICLC) before the date of imposition of such restriction/ regulation and shall be limited to the balance quantity, value and period available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly. (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. 4. xxx 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, inlike manner, amend that policy: Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette. 20. Thus, a conjoint reading of the statutory provisions, the Notifications and the Foreign Trade Policy would go to show that the Central Government is empowered to formulate and announce the Foreign Trade Policy and amend the existing policy and the same is not in dispute. However, the contention advanced on behalf of the petitioners is that the impugned Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch a policy decision or to indulge into the exercise of finding out whether there could be more appropriate or better alternatives. Once we find that parameters of Article 14 are satisfied; there was due application of mind in arriving at the decision which is backed by cogent material; the decision is not arbitrary or irrational and; it is taken in public interest, the Court has to respect such a decision of the executive as the policy making is the domain of the executive and the decision in question has passed the test of the judicial review. 23. In Shrijee Sales Corporation case (9 supra), the Hon ble Supreme Court of India was dealing with an Appeal filed against the judgment of the High Court of Delhi challenging the Notification granting exemption to imports of Polyvinyl resins (PVC) falling within Chapter 39 of the First Schedule to the Customs Tariff Act, 1975. In the light of the provisions of the Customs Tariff Act under Section 25, the Hon ble Supreme Court of India inter alia, held as follows: 43. Estoppel cannot be invoked where the result will be to compel the Government to continue the exemption which a competent enactment has validly authorised the executive to wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is contrary to law or mala fide, a decision bringing about change cannot per se be interfered with by the court. 93. Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any statutory provision or the Constitution. In other words, it is not for the courts to consider relative merits of different economic policies and consider whether a wiser or better one can be evolved. For testing the correctness of a policy, the appropriate forum is Parliament and not the courts. Here the policy was tested and the motion defeated in the Lok Sabha on 1-3-2001. 25. In Unicorn Industries case (6 supra), the Hon ble Apex Court was dealing with exemption from payment of Excise Duty on the manufacture of pan masala and at para 37 held that The State could not be compelled to continue the exemption, though it was satisfied that it was not in the public interest to do so. The larger public interest would outweigh an individual loss, if any. 26. A conspectus of the above referred decisions of the Hon ble Supreme Court of India would undoubtedly make it clear that the Courts should be loath to interfere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Bombay High Court formulated the questions for consideration. While holding that the Notifications by the Central Government were issued in public interest, the Hon ble Supreme Court of India, inter alia, examined the issue as to whether the Notification dated 21.04.2004 r/w Notification dated 28.04.2004 seeking to exclude the export performance related to class of goods covered by Para 2 of the Public Notice dated 28.04.2004 would relate to public notice dated 28.01.2004 or is to be given prospective effect from the date of issuance of Notifications on 21.04.2004 and 23.04.2004. The Hon ble Supreme Court of India after referring to the earlier decisions at Para No.109 opined as follows: 109. Therefore, it cannot be denied that the Government has a right to amend, modify or even rescind a particular scheme. It is well settled that in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call trial and error method and therefore, its validity cannot be tested on any rigid prior considerations or on the application of any straitjacket formula. In Balco Employees' Union v. Union of India [Balco Employees' Union v. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and Regulation) Act-1992 does not confer any right to the authorities or enable them to issue any Notification which has the effect of imposing prohibition with retrospective effect or take away the vested rights accrued to the petitioners by virtue of the Foreign Trade Policy, 2023 prior to the issuance of the impugned Notification. Point No.2 is answered accordingly. Point No.3: 30. Learned Senior Counsel for the petitioners, as noted earlier, had inter alia contended that the impugned Notification is discriminatory in as much as the authorities, despite the petitioners having the Letters of Credit in their favour, are prohibiting them from exporting the Non-Basmati White Rice, whereas the exporters, who fulfilled the conditions are permitted to export the same. He submitted that such a classification is without any rationale or the object sought to be achieved i.e., prohibition of export of Non-Basmati White Rice in public interest. Though the said argument appears to be attractive at the first blush, this Court is not inclined to accept the same. The conditions imposed in the impugned Notification are clearly distinctive and enables the exporters who have already made arran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia while allowing the batch of appeals, recorded its conclusions as follows: 82. The doctrine of legitimate expectation, as has been mentioned above, is a facet of Article 14, and is essential to maintain the rule of law. Such a doctrine, which ensures predictability in the application of law, in its very essence, fights against the corrosion of the rule of law, and prevents arbitrary state action. 83. For a democratic state to function on the principles of equality and justice, the state must be ruled, not by its ruler, but by the law. In such a circumstance, to prevent such a contamination of the rule of law, the application of the doctrine of legitimate expectation becomes most important. If a state is allowed to make promises, and rescind the same without justification or explanation, it would lead to a situation wherein every action of the state would be bereft of accountability, and every person governed by the laws of this country would live in a state of fear and unrest, causing a chilling effect on the civil liberties of the people. 84. Hence, I am of the opinion that in the present case at hand, the Authority must be held accountable to the legitimate expectation created ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to dislodge the claim of legitimate expectation. 35. In the light of the expression of the Hon ble Supreme Court that the legitimate expectation is not a legal right and that shall yield to the public interest, the point No.4 is answered against the petitioners and no prior notice need be issued. 36. In so far as the contentions advanced by the learned Senior Counsel for the petitioners with reference to exports of Non-Basmati White Rice to the other countries pursuant to the Notifications dated 30.08.2023 etc., filed along with I.A.No.1 of 2024 in W.P.No.33148 of 2023, this Court is of the considered opinion that the said exports are permitted by the State in exercise of its powers and well within the policy of the Government of India. In so far as the contention advanced by the learned Additional Solicitor General and Mr. Y.V. Anil Kumar, with reference to the GAFTA 120 and the clause / conditions contained therein dealing with the event of force majeure, this Court is of the opinion that the petitioners / exporters cannot be driven to face the international arbitration proceedings by incurring huge expenditure. Such course of action not only cause serious prejudice and hards ..... X X X X Extracts X X X X X X X X Extracts X X X X
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