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TMI Blog2024 (10) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... m the Central Bureau of Narcotics (CBN) in India for importation. The key issue before the Court was whether the Indian authorities, particularly the CBN, could intervene in the registration process managed by the Turkish Grain Board (TMO) and whether the guidelines issued were arbitrary or discriminatory. The Court unequivocally held that the registration of sales contracts by the TMO is an internal matter governed by Turkish law and procedure, over which Indian authorities have no control or jurisdiction. It found that the role of Respondent No. 2, the CBN, is strictly limited to registering contracts that have been duly registered by the TMO. The Court accordingly observed that the allocation and registration of contracts are bound by the terms of the MoU between India and Turkey, and any grievances regarding non-registration or alleged manipulation of contracts must be addressed in Turkey through appropriate legal channels. Furthermore, the Court emphasized that, in matters of policy and trade agreements, judicial intervention is warranted only in cases of manifest illegality, mala fide intent, or violation of fundamental rights, none of which were found in that case. This prec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their contracts for import of poppy seeds from Turkey. By way of the present Petition, the Petitioners inter-alia seek to quash the Impugned Public Notice dated 07th January 2022 and Guidelines dated 25th June, 2019 [ Impugned guidelines ] issued by Respondent No. 2 for Registration of Sales Contract for Import of Poppy Seeds from Turkey. The Petitioners have further sought a direction to modify/amend/streamline procedure for import of poppy seeds against the existing policy and a direction to amend the existing policy, in as much as, the allocation of quantity imported is done in the name of importer. BRIEF BACKGROUND: 2. Poppy seeds can be freely imported under Schedule I of the Imports Policy, ITC (HS), 2017 [ Imports Policy ], subject to certain conditions. On 29th July, 2016, Ministry of Commerce and Industry vide Notification No. 17/2015-20, by amending the Condition 3 of the Section II of Chapter-12 of Schedule-I of Imports Policy, empowered Department of Revenue (Respondent No. 1) to issue guidelines regarding the import of Poppy Seeds in the Country, which may inter-alia provide for fixing of country cap, quantitative restrictions, etc. The amended condition reads as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very year both parties may consider to set a quantity to be imported by any Indian Importer in a crop year. 5. The Central Bureau of Narcotics (CBN) will register the sales contract registered by TMO as per details accessed on the online system maintained by TMO in accordance with guidelines for registration laid down by Ministry of Finance, Government of India. The CBN shall upload the details of sales contract so registered by it on the online system. TMO shall allow the export in respect of only those contracts so registered by CBN. 6. The TMO shall provide a legal production certificate for the poppy seeds to exporters following the submission of sales contract and the completion of other necessary procedures. 2.2. On 25th June, 2019, the Ministry of Finance, Department of Revenue, issued the Impugned Guidelines for Registration of Sales Contract for Import of Poppy Seeds from Turkey. The Guidelines are meant to carry into effect the terms contained in the MoU entered into between the Government of Turkey and the Government of India, by laying down guidelines for the determination of the Country Cap; the process for registration of sales contract; the procedure to be followed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments listed in Annexure-B. Annexure-A is the application form for registration of import contract for import of poppy seed from turkey. It has undertaking signed by Indian importer: I/we undertake that information furnished above is true and correct to the best of knowledge/belief. If any stage, it is found to be false, misleading or fictitious, I/we shall be liable for action in terms of provision of law for the time being in force. 3.3. Respondent-1 framed guidelines dated 25th June, 2019 for the crop year 2019-2020 providing inter alia for the procedure for registration of sales contract. Though framed for the crop year 2019-2020, these guidelines continue to operate even for the crop year 2021-2022. These guidelines, inter alia, provide for a cap of 450 MT per applicant. 3.4. It is also mentioned in public notice that application for registration of sales contract would be entertained by respondent -2 only once such sale contract is registered with TMO. 3.5. Government of Turkey has then made a Sectoral Announcement providing for the following: a) 20% of the product price has to be paid in advance or is secured by an irrevocable letter of credit for each sales contract, to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llusion with Urun Tarim has stolen 243MTs allocated to the Petitioners as Balraj Vinod has been given registration for 378 MTS = 135(his quota)+243(Petitioners quota). 3.11. While the contention of Respondent 2 is that the theft has happened in Turkey, so the Indian Courts have no Jurisdiction, the theft of quota of poppy seed allocated to Petitioners has been done by Indian importer sitting in India under the Jurisdiction of this Court. Furthermore, the case of Devki Global Capital Pvt. Ltd. and Ors. v. Union of India and Ors 2021 (375) ELT 3 (Del.)., is not applicable in the present case as the policy therein was for crop year 2019-2020 where principle of allocation was first-come-first-serve basis, where allocation of quota was in doubt. The facts of this case are thus different. In present case, allocation of poppy seed quota has been done on proportional basis i.e., all the contracts where 20% of contract amount was sent to Turkey by the Indian importer before 20th January, 2022 has been allotted about 30% of the quantity applied for. So, all the contracts of Petitioners have been allocated at 30% of the quantity applied for. As mentioned, 450 MTs is the cap per applicant. So, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Policy 2015-2020, Poppy seeds are freely importable item and as such, do not require any license for the purpose of imports. 4.2. By virtue of poppy seeds being a freely importable item under the existing policy, any advance remittance made in lieu of imports, will not attract the penal provisions of either FEMA Guidelines or any of the Master Directions issued by the RBI. 4.3. It is submitted that Clause 19.3.11 of the FEMA Guidelines specifically states that Authorised dealers should not open letter of credit or allow remittance for import of goods included in the negative list requiring licence for imports. Further, Clause B.3 of Master Direction No. 17/2016-17 issued by the RBI allows opening of letters of credit and remittance for imports except for goods included in the negative list. Therefore, it is submitted that poppy seeds being freely importable under the existing policy, any advance remittance will not attract Penalties under Section 13 of FEMA. 4.4. The Impugned Guidelines framed by the Respondent for registration of sales contract for import of Poppy seeds from turkey are well-reasoned and non-discriminatory. 4.5. In order to understand the role of Respondent No. 2 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners allege that Turkish exporters are selectively lodging contracts on the TMO portal, leading to unfair distribution. Further, according to the Petitioners, the Government of Turkey imposed a cap, limiting each contract to approximately 30% of the initially agreed quantity. They assert that, post-allocation by the Turkish Ministry of Commerce, revised contracts reflecting the 30% allocation are prepared in India, signed, and sent back to Turkish exporters, who then upload them onto the Turkish Grain Board s (TMO) online system. However, some of the Indian importers, in collusion with Turkish exporters, inflate these revised contracts beyond the stipulated 30%, thereby securing registrations for quantities in excess of the allotted cap. 6. To substantiate these claims, the Petitioners rely on mere assertions of fraudulent practices without providing tangible documentary evidence from the Turkish Ministry of Commerce or the TMO to support the existence of the alleged 30% cap. The Petitioners have not placed on record any official communication or directive from Turkish authorities establishing such a limit. In the absence of substantial evidence, the allegations remain specula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights, none of which were found in that case. This precedent, therefore, directly negates the Petitioners plea for judicial intervention in the present matter. 10. Furthermore, the Petitioners contentions rest on their assumption that allocation processes employed by the Turkish authorities can be controlled or questioned by Indian authorities including this Court. However, it is essential to recognize that Turkey, being a sovereign nation, administers its own trade policies. The TMO s actions, including the registration of contracts and allocation of quotas, are governed by Turkish law and cannot be subjected to review by Indian courts. As noted in Devki Global, this Court cannot examine or direct the procedures followed by the TMO, nor can it adjudicate on how the cap or allocation is managed by the Turkish government. 11. The Petitioners concern regarding the potential loss of the 20% advance payment made in foreign exchange stems from a private contractual arrangement between the Indian importers and the Turkish exporters. The guidelines framed under the MoU and the foreign trade policy require that advance payments be verified as part of the contract registration process. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with national policies. The Petitioners have not demonstrated any manifest arbitrariness or discrimination inherent in the guidelines. Therefore, the Petitioners claims must fail, as the import regulations in question are squarely within the Government s policy prerogatives 13. Moreover, the Petitioners argue that it is the responsibility of the Indian authorities to ensure that the country cap of 17,500 MT is distributed fairly among all participating importers. While the regulatory framework does ensure fair and transparent allocation within the country cap, the Petitioners overlook the critical fact that this framework operates within the confines of the MoU and the guidelines. The guidelines were designed to facilitate a regulated import mechanism while acknowledging Turkey s sovereign right to administer its export processes. The Court in Chailbihari Trading upheld the legality of these guidelines, noting that they seek to prevent cartelization and ensure that only bona fide importers participate. Therefore, the Petitioners demand for imposing quantitative restrictions on contracts not shown on the TMO portal, based on allegations of collusion and fraud, is untenable. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court of India has consistently held that while the Courts have the power to review the constitutionality of policy decisions, it does not possess the authority to substitute its own views on economic policies unless there is a manifest violation of constitutional principles or a palpable lack of fairness and reasonableness. In Balco Employees Union (Regd.) v. Union of India 2001 AIR SCW 5135, the Supreme Court held that matters concerning economic policy fall squarely within the domain of the executive, and judicial interference should be exercised with extreme caution. It has also been emphasised that it is neither within the domain of the Courts nor the scope of the 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 should the Courts be inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical. Therefore, in the sphere of economic policy or reform, the courts cannot sit in judgment over the wisdom of the executive. It is only in exceptional cases wher ..... X X X X Extracts X X X X X X X X Extracts X X X X
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