K. Amishkumar Trading Pvt. Ltd v. Union of India & Anr

JUDGMENT %

21.12.2018 For detailed order, see Vinayaga Marine Petro Limited versus Union ofIndia and Others, pronounced today. ^ ' (

SANJIV KHANNA, J.

CHANGER SHEKHAR, J. DECEMBER 21,2018 VKR * IN THE HIGH COURT OF DELHI AT NEW DELHI + WRIT PETITION (CIVIL) NO. 2489/2016 Reservedon: 26'^^ October,2018 Date of decision: 21®' December, 2018 VINAYAGA MARINE PETRO LTD. ..... Petitioner Through: Mr. Balbir Singh, Sr. Advocate with Mr. Rajesh Rawal, Advocate and Mr. Ashok Kumar, AR of the petitioner. versus UNION OF INDIA & ORS. - Respondents Through: Mr. Ravi Prakash, CGSC with Mr. Nitish Gupta, Advs. for R-1 & R-2. Mr. Sanjeev.Narula, Sr. Standing Counsel with Mr.,' Abhishek Ghai, Advocate for CBEC. ' WRIT PETITION (CTlVIL) NO. 2491/2016 VIRAJIMPEXPRIVATiELIMiTEp..:^ Petitioner ;|-ThrpuglKi9Mrf BalbirSingh, Sr. Advocate •'witteffl^J^^eSh Rawal, Advocate and Mr. ^ . AshokKiiniar,AR ofthe petitioner. versus UNION OF INDIA &.ORS. , Respondents Through: ' 'Mr. Ravi Prakash, CGSC with Mr. Nitish Gupta, Advs. for R-1 & R-2. Mr. Sanjeev Namla, Sr. Standing Counsel with Mr. Abhishek Ghai, Advocate for CBEC. WRIT PETITION (CIVIL) NO. 2502/2016 K. AMISHKUMARTRADINGPVT. LTD. Petitioner W'.P. (C) No.2489/2016+Connectedmatters ^ r Through; Mr. Balbir Singh, Sr. Advocate with Mr. Rajesh Rawal, Advocate and Mr. Ashok Kumar, AR of the petitioner. Versus UNION OF INDIA & ORS. Respondents Through; Ms. Shreya Mathur and Mr. Atul Batra, Advs. for UOI in W.P.(C) 2502/2016. Mr. Sanjeev Narula, Sr. Standing Counsel with Mr. Abhishek Ghai, Advocate for CBEC. WRIT PETITION (CIVIL) NO. 2795/2016 RKB GLOBAL PVT. LTD. ' , / , Petitioner Through-s;''Mr; Balbir Singh, Sr. Advocate with Mr.^/RajeshRawal, Advocate and Mr. Ashok Kumar, AR of the petitioner. Versus (tf' \ UNIONOF INDIA&ORS.AV' H, V ,r, Respondents ^•ThrciugiKiv.vMr. Anurag Ahluwalia, Advocate'for UOI. Mr. Sanjeev Narula, Sr. Standing Counsel ' , with Mr. Abhishek Ghai, Advocate for •"".CBEC;; • CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE CHANDER SHEKHAR

SANJIV KHANNA, J. The afore-captionedwrit petitionsraise similarissues and, therefore, are being disposedof by this common order and judgment.The petitioners ty.P. (C)No.2489/2016+ Connectedmatters herein Vinayaga Marine Petro Limited, Viraj Impex Private Limited, K. AmishKumarTradingPrivateLimitedand RKB GlobalPrivateLimitedare private limited companies incorporatedunder the Companies Act, 1956 engagedin importand tradingofvariousitems includingmild steelvarieties like Hot Rolled Coils, Cold Rolled Coils, Hot Rolled Steel Plates, Pre Painted Steel Coils etc.

¶2"Mild Steel Items" fall under Chapter-72 of the Indian Trade Clarification(HarmonizedSystem)('ITC-HS',for short)-2012,Schedule-Iof the ForeignTradePolicy,2015-20. Theseitemswere freelyimportable.

¶3On 5"^ February, 2016, NotificationNo.38/2015-2020('Notification No. 38/2105-2020',for short) was issued;bythe Ministry of Commerceand Industry, Governmentof India, Directorate"General of Foreign Trade by way of trade notice fixing MinimuniIniportPrice ('MIP', for short) as per the annexureby amending Import Policy Conditionsagainst Codes under Chapter-72of the ITC (HS)-2pi2,._Schedule-L-NotificationNo. 38/2015-2020 (dated 5^'' February,2016),\^as':s^^^ publishedvide SO No. 391(E) in the Gazette of In(!ia''^"Jlfe-FeSruary,2016. Notificationas publishedin the OfficialGazettereads:- "Ministry of Commerce and Industry (Department of Commerce) (DIRECTORATEGENERALOF FOREIGNTRADE) Notification New Delhi,the S'*" February, 2016 No. 38/2015-2020 Subject: Minimuni Import Price (MIP) on Iron and Steelunder Chapter 72 ofITC (HS), 2012 - Schedule-1 (Import Policy): amendment in import Policy Conditions. W.P. (C) No.2489/2016+Connectedmatters ^ S.O. 391(E).-: In exerciseof powersconferredby Section 3 of FT (D&R) Act, 1992 read with paragraph 1.02 and

2.01 of the ForeignTrade Policy, 2015-2020,as amended from time to time, the Central Government hereby amends the ImportPoUcy Conditionsagainst 173 HS Codes under Chapter 72 of ITC (HS), 2012 - Schedule -1 (Import Policy) as per the Annex subject to the following conditions: a) Imports under Advance Authorisation Scheme are exempted from Minimum Import Price (MIP) under this Notification; b) MIP is also exempted for all API grade steel conforming to X-52 .and;; higher API grades for manufacturing pipes used for pipeline transportation systemsin the petroleumand natuMgas industries;and c) MIP conditionslaid down iii this Notificationare valid for six months from the date of the notification or until it , further orders, whichever is earlier; ' ..

¶2Further, imports/^shipiiients\uhder Letter of Credit already entered into bfefore lh'^^^^ this notification shall be exempted froni the "Minimum Import Price conditionsubjectto Para 1.05 (b) of ForeignTradePolicy, 2015-20. ^

¶3Effect of this Notification : Minimum Import Price

(MIP) is introducedagainst 173 HS Codes under Chapter 72 of ITC (HS), 2012 - Schedule-1 (Import Policy) as detailed in the Annex. [F. No. 01/89/180/Moni-5852/AM-03A^ol.-VI/PC-2

(A)] Anup Wadhawan,DirectorGeneralofForeignTrade" fV.P. (Q No.2489/2016 + Connected matters

¶4Contentionofthe petitionersisthatas per the mandateof Section3 of the Foreign Trade (Developmentand Regulation)Act, 1992, (TT Act' for short)the Notificationwouldbe effectivefrom the date ofpublicationin the Gazette of India and not from the date when public notice or trade notice was issued. The trade notice dated February, 2016 on the website of the Second Respondent-DirectorateGeneral of Foreign Trade had stated that this noticewas "to be publishedin the Gazetteof India: Extraordinary[Part-II]". Petitioners'have challengedthe stipulationat paragraphno.2 of the Notification to the effect that import/shipments under Letter of Credit ^ ('LoC,for short) alreadyenteredinto beforethe date ofthe notificationi.e. S"' February, 2016 shall be exempted-fromMIP condition subject to paragraph 1.05 (b) of the Foreign Trade.Policy, 2015-2020. As per the petitioners,the date ofnotificationshouldread as ll'^ February,2016, i.e. the date on which the Notification"No.38/2015-2020 was published in the OfficialGazetteand not 5"' February,2046, i.e., the date on which the trade notice was published.In suppoitofthe;saii^^^ it is submittedthat the respondents could noi;/haye^V^Jtripq^ duties and restrictions ^ retrospectivelyby way of suboirdiriatelegislation. Further,the Directorate Generalof ForeignTrade ('DGFT',for short) is not authorizedto issue any notification,as this power under the',FT ;Act vests exclusivelywith the Central Government.

¶5The petitionersproclaim that they had entered into contracts with exportersfrom China and South Korea prior to 5^^ February,2016. These contracts for import of different items were as per the prevailing international rates. They have relied upon the data of London Metal Exchange ('LME') for the same. For the purpose of record, we have fV.P. (C) No.2489/2016+Connectedmatters ^ K extracted details of the contracts entered into by the petitioners for importof mild steel items in the table below:- Petitioner Exporter's name Country of Export Date Rate CIF Mumbai Basis Total Amount Port of loading Port of destinatio n Vinayaga Marine Petro Ltd. GS Globa! Corp. South Korea 04/02/2016 $325/ MT $1,170,000/- Any South Korean , Port Mumbai Port Viraj Impex Pvt. Ltd. Future Materials Industry (Hong Kong^ Co. Ltd. China 03/02/2006 $451/ MT $455/ MT, 5906,000/- (451,000/- + 455,000/-) Tainjin/ Shanghai Port Mumbai Port (Lot No. 1) and Kandia Port (Lot no. 2) K. Amishkumar Trading Pvt. Ltd. GS Globa! Corp. South Korea 04/02/2016 ,$3f5/MT $335/MT $325/MT ' f 5948,000/- Any South Korean Port Mumbai Port RKB Global Pvt Ltd M/s. Hyundai Corporation Korea South Korea 29/0172016 V i $ 300/ ' • MT ; '$ 325/' ]/ MTl'. 5901,061.28/- Any port in Korea Mumbai Port RKB Global Pvt Ltd Win faith Trading Limited. China 04'/02/20L6. 4;.. 1^. ••$290/:-,.,;' -;mjv.:Vv • $,a3d/'MT'. 5215,000/- Any port in China Mumbai Port

¶6The respondentshave stated that NotificationNo.38/2015-2020was issued after carryingout due diligencein thie interestof the domesticsteel industry.The exercisewas aimed at correctingthe markettrend and to stop deceptivepractices.IncreaseinMIP was a restrictiveshort-term measureto support domestic industryfrom import of low value steel. Paragraph2 of NotificationNo.38/2015-2020exemptsimports/shipmentsunderirrevocable LoCs already entered into before 5"" February, 2016 and not thereafter. Reference was made to paragraph 1.05 (b) of the Foreign Trade Policy, 2015-2020, paragraphs 2.17 and 9.11 of Handbook of Procedure, 2015-fV.P. (C) No.2489/2016+Connectedmatters ^ ^ (aP 2020. By Trade Notice No.17/2016 dated 10* February, 2016, the respondentshad point-wise clarified six queries raised by the importers, includingthe requirementof registrationof the irrevocableLoC with the jurisdictionalregionalauthorityagainstcomputerizedreceiptwithin fifteen days of impositionof restriction/regulation.However, by another Trade NoticeNo. 03/2016dated ll"" April, 2016 timelinefor importersto register irrevocableLoCs withjurisdictionalregionalauthoritywas extendedtill 30"' April, 2016. However,it is not disputedthat NotificationNo.38/2015-2020 thoughdated 5* February,2016 and put up on the web-siteon 5* February, 2016 was publishedin the OfficialGazetteon 11'''February,2016.

¶7Sub-sections(1) and(2) of Section3 of the FT Act read asunder:- "3. Powers to make provisions relating to imports and exports. —

(1) The CentralGovernmentmay, by Order publishedin the Official Gazette, make provision for the development and regulationof foreigntrade by facilitatingimportsand increasing exports.

(2) The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specifiedclasses of cases and subjectto such exceptions,if any, as may be made by or underthe Order, the [import or export of goods or services or technology]: Provided that the provisionsof this sub-sectionshall be applicable, in case of import or export of services or technology,onlywhenthe serviceor technologyprovider is availing benefits under the foreign trade policy or is dealingwith specifiedservicesorspecifiedtechnologies." W.P. (C) No.2489/2016+ Connectedmatters Pog" 7<>f^^ Sub-section(1) ofSection3 ofthe.FTact statesthatthe CentralGovernment may by an order publishedin the OfficialGazettemake provisionsfor the developmentand regulationof foreign trade for the purposeof facilitating importsand increasingexports.Mandateofpublicationofthe ordermade by the Central Government in the Official Gazette is a condition prescribed to operationalizeand make the ordereffective.Sub-section(2) ofSection3 of the FT Act states that the Central Government can also publish an order in the Official Gazette for prohibiting,restrictingor otherwiseregulatingthe importand exportofgoods, servicesortechnologyin all or specifiedcases T" subject to exception as was specified. Sub-section (2) also requires publicationoftheorderintheOfficialGazette. ' •' • f' -' .

¶8Counsel for the respondents had.drawn our attention to the word ' 'v "also"usedin Sub-section(2) of Section3 of the FT Act to faintlyurge that publicationinthe OfficialGazettewsis only an additionalor anotherand not the only mode to operationalizeand enforcean order issuedby the Central Government. It is not possible,to accfei^tthis,contentionfor the word "also" as used in Sub-section(2) to'^^ctiongjof:the Act is with referenceto Sub-section(1) of Section3 ofthe FT Act. Sub-section(2) to Section3 of the FT Act carves out category.ofcases, which^ould possiblybe covered undersub-section(1) to Section3' ofthe FTAct itself An orderunderSub section(1) or (2) to Section3ofthe FT Act wouldbe an orderin exerciseof statutorypowers conferredunderthe FT Act and would be in the nature of subordinatelegislation. In both situationspublicationin the OfficialGazette is mandatedand requiredby Section3(1) and (2) of the FTAct.

¶9Whenevera legislationis publishedor made, ithas to be publicisedas was emphasized by the Supreme Court in B.K Snnivasan and Others W.P. (C) No.2489/2016 + Connected matters •P I n versusState ofKarnatakaand Others, (1987) 1 SCC 658 in the following words "15. There can be no doubt about the proposition that where a law, whether parliamentary or subordinate, demands compliance,those that are governed must be notified directly and rehably of the law and all changes and additions made to it by various processes. Whether law is viewed from the standpoint of the "conscientious good man" seeking to abide by the law or from the standpoint of Justice Holmes's "unconscientiousbad man" seekingto avoid the law, law must be known, that is to say, it must be so made that it can be known. We know that delegated or subordinate legislation is all-pervasive and that there is hardly any field of activity where governanceby delegatedor subordinatelegislative powers is not as importantif not more important,than governance by parliamentary legislation. But unlike parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusivelyin the chambers of a Minister, a Secretary to the Government or other official dignitary. It is, therefore,necessarythat subordinatelegislation,in order to take effect,must be publishedor promulgatedin some suitable manner, whether such publication or promulgationis prescribedby the parentstatuteor not. It ^ will then take effectfrom the date of such publicationor ^ promulgation.Where the parent statute prescribes the mode of publicationor promulgationthat mode must be followed. Wliere the parent statute is silent, but the subordinate legislationitself prescribes the manner of publication,suchamodeofpublicationmay be sufficient, if reasonable. If the subordinate legislation does not prescribethe mode of publicationor if the subordinate legislation prescribes a plainly unreasonable mode of publication,it will take effect only when it is published through the customarily recognised official channel, namely, the Official Gazette or some other reasonable mode of publication. There may be subordinate legislationwhich is concernedwith a few individualsor Paaa 9 of27 fV.P.(C)No.2489/20I6 +Connected matters is confined to small local areas. In such cases publication or promulgation by other means may be sufficient [NamyanaReddyv. StateofA.P., 1969 (1) Andh WR 77 The aforesaidquotationstipulatesthe propositionthat everylegislation,be it parliamentaryor subordinatelegislation,must be notified and this act of notificationmust be by means of publicationor promulgationin a suitable and reliablemanner. It is only from the date of publicationorpromulgation that the statute becomes effective and to be followed. Where the parent statute is silent, the subordinatelegislationitself may prescribe the manner of publication, which it considers as reasonable. In the absence of stipulation,both in the parent statute and in the subordinatelegislation,it { will be effective only when it is published through the customarily recognizedofficial channel i.e. Official-Gazetteor some other reasonable mode of publication. However,'in c^sbs.where subordinate legislation concerns with a few individuals and cqnfined to small local areas, other means ofpublicationmay be |uffieient;'Referencewas made to Narayana ReddyversusState ofA.P., 1969 (1)AndhWR 77.

¶10Referencein this regard can be also made to the judgmentof a Full Bench of Kerala High Court in R.K.V. Motors & Timbers (P) Ltd. and OthersversusRegionalTransportOfficerandAnother,AIR 1982 Ker 156 in which Sukumaran J. had highlighted the modes of publication after referringto the jurisprudenceon the said subjectand earlierdecisionsofthe Supreme Court including decision in the case of Harla versus State of Rajasthan, AIR 1951 SC 467.

¶11The Supreme Court in Union of India & Anr. versus Ganesh Das Bhojraj, (2000) 9 SCC 461, decided the reference to resolve conflict of IKP. (C) No.2489/2016 + Connected matters T ratios in PankajJain Agenciesversus Union ofIndiaandothers,1994 (5) see 198 and CCE versus New Tobacco Company, (1998) 8 SCC 282 on the question whether publication in the Official Gazette also mandates notification,being made known and available to the public. We are not concernedwith the said controversyin the presentcase for the issue raised in the presentwritpetitionsis not whetherpublicationin the OfficialGazette was sufficient or the notification should have been made available to the public. The issue in the presentcases is somewhatdifferent.The contention of the petitioners is that the NotificationNo.38/2015-2020though made public on 5^'' February,2016was pubHshedin the OfficialGazette only on ll"' Febmary,2016, and thereforeprior notice in the fonn of trade notice, was not material and relevant. Judgment in Ganesh Das Bhojraj (supra) does emphasison thepublicationin the OfficialGazette.

¶12The Supreme Court in Union of India versus Param Industries Limited, (2016) 16 SCC 692 had dealtrwith,and examined the issue of customs notificationunder Section; ^ Customs Act, 1962 (the 'CustomsAct', for short) and'haLS:-hblia% conditionof publicationof notification in the Official Gazette is mandatory.

¶13Recently,the Supreme.Court in DirectorGeneralof Foreign Trade and AnotherversusKanak Exportsand Another, (2016) 2 SCC 226 had held that subordinate legislation could only be prospective and not retrospectiveunlessthe rule makingauthoritywas vestedwith the powerto make retrospectivesubordinatelegislationunder the statute. Section 5 of the FT Act does not give such power to the CentralGovernmentto modify the policy retrospectively. W.P. (C) Nn.2489/2016 + Connected matters

¶14Therefore,in tenns of the decisionswe have no difficultyin holding that the NotificationNo.38/2015-2020though made public by way of trade notice on 5'^ February, 2016 fixing MIP against 173 HS Codes under Chapter-72 of the ITC (HS)-2012, Schedule-I (Import Policy) would be effectiveand applicablefrom ll"^ February,2016. However,this does not imply that the writ petitionswould succeedand have to be allowedfor the 'imports'into Indiawere made on or after 11"^ February,2016, i.e., the date on which the Notification has been published in the Official Gazette. Notificationis not being given retrospectiveeffect to make it effectiveto 'imports' made from a date prior to publicationin the Official Gazette. Notification was effective from ,the date when it was published in the OfficialGazetteand accordingly,wouldiapplyto 'imports' made on or after f il^''February,2016. •.

¶15The questionis somewhatdifferent,-'it is; whether'import'made after 11"" February,2016 wouldbe exemptifthe import/shipmentwere underthe LoCs which were opened prior,tp ..11'^ 2016. Petitionershave challengedparagraph2 of the'Notificiajtion^ on the ground that it restrictsbenefitto LoC openedprior to 5'^ February,2016 on which date NotificationNo.38/2015-20was publishedas a trade noticebut had not beenpublishedin the OfficialGazette."Accordingto the petitionersthe date ofpublicationin the OfficialGazetteshouldalso be the date in paragraph2 which relates to LoCs.

¶16Decisionof the SupremeCourt in Union ofIndia and Othersversus Asian Food Industries, (2006) 13 SCC 542 is illustrativeand makes an interestingreadingfor it had decidedtwo appeals,one preferredagainstthe decision of the Delhi High Court in the case of M/s Agri Trade India W.P. (C) NO.24S9/2016+ Connected matters Services (P) Ltd. and the other against the decisionof the High Court of Gujaratin the case ofM/s Asian FoodIndustrieswith contradictoryfinal results. Decisionof the Delhi High Courtwas set aside but decisionof the Gujarat High Court was upheld though subject matter of litigationwas a legaleffectofthe decisiontakenby the CentralGovernmentto ban exportof pulses on 22"'' June,2006,which decisionwas widelyreportedin print and electronicmedia,albeitthe notificationissuedbanningexportof pulsesfor a periodofsix monthsin exerciseofpowerunderSection5 ofthe FT Act was publishedin the OfficialGazetteon 27*'' June,2006.By anotherNotification on 4'^ July, 2006 published under Section 5 of the FT Act the Central Governmenthad permittedexportofpulsesagainstirrevocableLoCs opened prior to 22"'' June, 2006. In the SLP arising out of the Delhi High Court judgment in the case of M/s Agri Trade India Services (P) Limited, irrevocableLoC for export of pulses in favour of the Indian exporterwas opened on 24"^ June, 2006, i.e., between22"'' June, 2006 when the Central Government'sdecisionto ban export of pulses,was reported in electronic and printmedia and 27"" Jun42004,tM;date,when the Notificationbanning exportofpulseswas publishedin the OfficialGazetteunderSection5ofthe FT Act. In the case of, M/s Asian Food Industries arising from the judgment of the Gujarat High Court'coiitracts for export of pulses were executed between 22"'' April, 2006 and 2"'' May, 2006 and advance of approximately20% of the contractvalue was receivedby the Indianparty from the importerson 9^^ May, 2006. 20 containersout of 107 containers were shipped during the period 22"'' June, 2006 and 24"^ June, 2006. Remaining87 containerswere also clearedvide Let exportordersdated23"' June, 2006, 24"' June, 2006 and 26"' June, 2006. The judgmentspecifically records that the bill of lading were also issued. fV.P. (C) No.2489/2016 + Connected matters 0-

¶17The reasonfor allowingthe appealof the Revenuein the case of M/s Agri TradeIndiaServices(P) Limitedand dismissingthe appeal in Asian Food Industries were the statutoryprovisionsof the CustomsAct which it observed was enacted to consolidate and amend the law relating to Customs. Section 11 of the Customs Act it was held empowered Central Government to prohibitimportationand exportationofgoods and Section16 providesfor the date for determination of rate of duty and tariff valuation of export goods. AfterreproducingSection16 and referringto Sections39, 50 and 51 of the Customs Act and Sections 3 and 5 of the FT Act it was held that the charge or due date for determinationofrate of duty and tariffvaluationfor export of goods would be eitherthe date of paymentof duty or in case of goods enteredfor exportunder Section'50 of the Customs Act-thedate on which the properofficermade an orderpermittingclearanceand loadingof goods for exportationunder Section51 of^theCustomsAct. The provisions of the Customs Act and the FT Act were read hannoniously for the latter statutestands enactedto providefor developmentand regulationof foreign tradeby facilitatingimportsirij|ndia.-and:alig^^ exportsfrom Indiaand for matters connected therewith or incidental thereto. Former statute was the substantiveenactmentdealing with levy, incidenceof charge and payment of customsduty. For the FT Act, the CentralGovernmentwas empowered to publish their order vide notification in the Official Gazette for development and regulation of foreign trade and make provisions for prohibiting, restricting or otherwise regulating in all cases or specified classesof cases and subjectto such exceptionsas may be made byorunder orderofexportand importofgoods. Wliere an orderhas been made under sub-section(2) to Section3 vide sub-section(3) to Section3 ofthe FT Act, it wouldbe deemedto be applicableto importand exportof whichhas been W.P. (C) No.2489/2016 + Connected mutters prohibitedunder Section 11 of the Customs Act. All provisionsof the Customs Act would have effect accordingly. On analysisof Section 11 of the Customs Act and the Notificationdated 27"" June, 2006 in exerciseof powerunder Section3 ofthe FT Act and publishedin the mannerprovided under Section 5 of the FT Act it was held that export of pulses was permissibletill 27"' June, 2006 and not thereafter. For decidingthe date of export,Section11 read with Section50 ofthe CustomsAct enjoineda duty uponthe exporterto make entrybypresentingthe shippingbill to the proper officerand thereuponthe properofficerwas to arriveat a satisfaction(i) that the exportofgoodwas not prohibitedand (ii) thatthe exportershad paidthe duty assessedthereonand the charges'payablethere under. Thereupon,the Customs Officers would make an order .for clearance and loading of the goods for export. Reference was made, to the foreign trade policy, that whenever policy provisions as amende,d were disadvantageous to the exportersor importers,the same would?notbe apphcableto consignments alreadyhandedover to the Customs;for examinationand subsequentexport upto the date ofpublic notice.',:./Refere:n^^^ also made to paragraph9.12 of the policy. On the factual matrix in the case of M/s Agri Trade India Services(P) Limited,it was observedthat the requirementsof Section51 of the CustomsAct had been compliedwith in the said case, albeitin the case ofM/sAgri TradeIndiaServices(P) Limitedthey were not compliedwith. Referringto the decisionof the Delhi High Court inM/s Agri TradeIndia Services (P) Limited, it was observed:- "48.The Delhi High Court, however, in our view correctly opined that the Notification dated 4-7-2006 could not have been taken into consideration on the basis ofthe purportedpublicitymade in the proposedchangein the exportpolicyin electronicor print media. Prohibition yV.P. (C) No.2489/2016 + Connected matters \ a promulgatedby a statutoryorder in terms of Section 5 read with the relevant provisions of the.policy decision in the light of sub-section(2) of Section3 of the 1992 Act can only have a prospectiveeffect.By reasonof a policy, a vested or accrued right cannot be taken away. Such a right, therefore, cannota fortiorihQ taken away by an amendment thereof"

¶18The aforesaidreasoningand ratio statesthatthe notificationpublished on 27"' June, 2006 banning 'export' of pulses did not have retrospective effect,and would applyto the 'exports'made on or after 27"^June, 2006 in terms of Sections16, 50 and 51 of the CustomsAct. Date of 'export' would be determinedby referenceto the date of 'export' as per the CustomsAct. Thus, notwithstandingthat an irrevocableLoC was opened on 24"' June, 2006 the decisionof Delhi High Court Was reversedthe 'export' was post 26"' June, 2006 i.e. after the Notificationdated 22"" June, 2006 had been publishedin the Official Gazette. However, in the case of Asian Food i Industries,the appealpreferredbythe Revenuewas dismissedwith costs as the 'export' had taken place in terihs-Qf;3ections 16, 50 and 51 of the Customs Act before publicatiqnofl;tlife,Ga^ Notificationon 27"' June, 2006. Exemptiongrantedon the basis of the date of issue or openingofthe LoCs couldbe differentand such exemptioncouldbe restrictedto the LoCs openedpriorto 22""June,2006. • .•'

¶19We would now refer to decision of the Supreme Court in Mangalore Refineryand PetrochemicalsLimited versus Commissionerof Customs, Mangalore, (2016) 14 SCC 709, which had examined the expression 'import'in the CustomsAct aftermakinga referenceto sub-sections22, 23 and 25 of Section 2 of the Customs Act which defines 'goods', 'import', 'imported goods'. Section 12 dealing with dutiable goods, Section 13 IV.P. (C) No.2489/2016 + Connected matters dealing with duty on pilferedgoods, Section23 dealing with remissionof duty on lost, destroyed and abandoned goods. Section 47 dealing with clearanceof goods for home consumption and Rules 2(1)(f) and 4(1) ofthe Customs Valuation (Determinationof Price of Imported Goods) Rules, 1988, to observe as under:- "9. On a reading of the aforesaidprovisions, it is clear that the levy of customsduty under Section 12 is only on goods importedinto India. Goods are said to be imported into India when they are brought into India from a place outside India. Unless such goods are brought into India, f-" the act of importation which triggers the levy does not take place. If the goods are pilfered after they are unloaded or lost or destroyed at any time before clearance for home consumption or deposit in a warehouse, the importer is not liable to pay the duty leviable on such goods.This is for thereasonthat the importof goods does not take placeuntil they becomepart of the land mass of India and until the act of importation is complete which under Sections 13 and 23 happens only after an order for clearance for home consumption is made and/or an order permittingthe depositof goods in a warehouseis made. Under Section 23(2) the owner of the imported goods ^ may also at any time before such ordershave been made ^ relinquishhis title to the goods and shallnot be liableto pay any duty thereon. In short, he may abandon the said goods even after they have physically landed at any port in India but before any of the aforesaid orders have been made. This again is for the good reason that the act of importationis only completewhen goods are in the hands of the importer after they have been cleared either for home consumptionor for depositin a warehouse.Further, as per Section47 of the CustomsAct, the importerhas to pay importduty only on goods that are enteredfor home consumption.Obviously,the quantityof goods imported will be the quantityof goods at the time they are entered for home consumption. IKP. (C) No.2489/2016+Cnnnectedmatters ''"Se17of27 r

¶10Even under Section 14 of the Customs Act, when goods are to be valued for the purpose of assessment, such valuationis only when the goods are ordinarilysold or offered for sale for delivery at the time and place of importationin the courseof internationaltrade. It is thus seen that under the Customs Act, the levy of import duty cannot take place until goods are imported, that is, broughtinto India. Obviously,therefore,it is the quantity of goods broughtinto India alone that attractsthe levy of import duty. xxxxx

¶14We are afraid that each one of the reasons given by the Tribunal is incorrect in law. The Tribunal has lost sight of the following first principleswhen it arrived at the aforesaid conclusion. First, it has lost sight of the fact that a levy in the context of import duty can only be on importedgoods,that is, on goods broughtinto Indiafrom a place outside of India. Till that is done, there is no charge to tax. This Court in Garden Silk Mills Ltd. V. Union ofIndia [GardenSilkMillsLtd. v. Union of India, (1999) 8 SCC 744] , statedthat this takes place, as follows: (SCC p. 752, paras 17-18) "7 7. It was further submitted that in Apar (P) Ltd. [Union ofIndia w. Apar (P) Ltd., (1999) 6 SCC 117] this Courtwas concernedwith Sections14 and 15 but here we have to construe the word "imported" occurringin Section12 and this can only mean that the momentgoods have enteredthe territorialwaters the import is complete. We do not agree with the submission. This Court in its opinion in Sea Customs Act, 1878, S 20(2), In re [Sea CustomsAct, 1878, S 20(2),In re, AIR 1963 SC 1760 : (1964)3 SCR 787] SCR at p. 823 observed as follows: (AIR p. 1776, para 26) '2(5. ... Truly speaking, the imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be broughtinside the customs barriers i.e. before they formpartofthe mass of goodswithinthe country.' W.P. (C) No.2489/2016 + Connected matters Page 18 of27

¶18It would appearto us that the importof goods into India would commence when the same cross into the territorial waters but continues and is completedwhen the goods become part of the mass of goods withinthe country;the taxableeventbeing reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed."

¶15Secondly,the taxableeventin the caseof imported goods, as has been statedearlier,is "import".The taxable event in the case of a purchase tax is the purchase of goods. The quantity of goods stated in a bill of lading would perhaps reflect the quantity of goods in the purchasetransactionbetween the parties,but would not reflect the quantity of goods at the time and place of importation.A bill of ladingquantitythereforecouldonly be validly looked at in the case of a purchase tax but not in the case of an import duty. Thirdly, Sections 13 and 23 of the Customs Act have been wholly lost sight of Where goods which are importedare lost, pilferedor destroyed, no import duty is leviablethereon until they are out of customs and come into the hands of the importer. It is clear therefore that it is only at this stage that the quantity of the goods importedis to be looked at for the purposes ^ of valuation.Fourthly,the basis of the judgmentof the T Tribunalis on acompletemisreadingof Section14 ofthe Customs Act. First and foremost, the said section is a section which affords the measure for the levy of customs duty which is to be found in Section 12 of the said Act. Even when the measure talks of value of imported goods, it does so at the time and place of importation, which againis lost sightof by the Tribunal.And lastbut notthe least, "transaction value" which occurs in the Customs Valuation Rules has to be read under Rules 4 and 9 as reflectingthe aforesaid statutory position, namely, that valuationof importedgoods is only at the time and place of importation." W.P. (C) No.2489/2016 + Connected matters

¶20Paragraph of Mangalore Refinery and Petrochemicals //w/re<supra)quoted above refers to an earlierjudgmentof the Supreme Court in Garden Silk Mills Limited versus Union of India, (1999) 8 SCC 744, which holds that the importof goods into Indiawouldcommencefrom the date the goods cross into the territorialwatersbut continuedtill the duty was paid when the goods become part of the mass of goods within the country. The taxableevent was reachedwhen the goods reach the customs barriers and bill of entry of home consumptionwas filed. In the facts of MangaloreRefineryandPetrochemicalsLimited(Supra),it was observed that no importduty was leviablewhen the goods shippedwere lost,pilfered or destroyedbefore the 'import' i.e. beforethe goods were out of customs and came into the hands of the importer.,The.quantityof goods stated in the bill of ladingwouldreflectthe quantity.ofgoods in the purchasetransaction betweenthe parties and not the,'quantitypf goods at the time and place of f 'import'. ' if'.,, ,

¶21The aforesaid ratio iri.^both/'i/i^ Industries and M/s MangaloreRefineryand PetrochemicdlsLimited(supra) is apt and would apply to the presentwrit petitions.NotificationNo.38/2015-2020dated 5"^ February,2016 publishedin the OfficialGazetteon ll"' February,2016 was in force onthe date of 'import'of goods'by the petitionersasthe 'import'was post publicationin the OfficialGazetteon ll"^ Febmaiy,2016. We would notbegivingretrospectiveeffectto NotificationNo.38/2015-2020,when we hold that it would apply to all 'import'on or after ll"^ February,2016. In fact, we wouldbe followingthe ratio and mandateinAsianFoodIndustries (supra) and Mangalore Refinery and PetrochemicalsLimited (supra). Consequently,the argumentthat the respondentshave given retrospective W.P. (C) NO.24S9/2016+Connectedmatters ''"S"^0 of27 •f" \ effect to the Notification No.38/2015-2020, which can be only prospective, falters and is rejected.

¶22On the said aspect,we wouldlike to referto paragraphs2.17 and 9.11 of the Handbook of Procedureand Appendices& Aayat Niryat Forms of FTP 2015-2020, which read as under:- "2.17 Date of reckoning of import is decided with reference to date of shipment/dispatch of goods from supplyingcountryas given in Paragraph9.11 of Handbook of Procedures and not the date of arrival of goods at an Indian port." "9.11 Date of shipment/dispatch for imports will be reckoned as under:- S.No Mode oif Transportation < Date of Shipment/Dispatch

(i) By Sea The date affixed on the Bill of Lading

(ii) By Air ' Datei'of relevant Airway Bill provided this,representsdate on which goods left •last ai^ort in the country from which •the import is';effected.

(ii) From land-Locked.•- Countries •Date'ibfdispatch of goods by rail, road or other recognized mode of transport to consigneein India tliroughconsignment basis.

(iv) By Post Parcel. Date stamp of office of dispatch on the packet or dispatch note

(v) By Registered Courier Service Date affixed on Courier Receipt/Waybill

(vi) Multimodal Transport Date of handing over goods to first carrier in a combined transport Bill of Lading

¶23We would now examine the argument of the petitionersrelatingto the paragraph2ofthe NotificationNo.38/2015-2020grantingexemptionof imports/shipmentsmade under the irrevocableLoCs opened prior to 5 fV.P. (C) NO.24S9/20I6+ Connected matters February,2016 relyingupon paragraph1.05(b)of the ForeignTradePolicy, 2015-2020, which reads as under:- "In case an exportor importthatis permittedfreelyunder FTP is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted,notwithstandingsuch restrictionor regulation, unless otherwise stipulated. This is subject to the condition that the shipment of export or import is made within the original validity period of any irrevocable commercial letter of credit, established before the date of impositionof such restrictionand it shall be restrictedto the balance value and quantity available and time period of such irrevocable letter of credit. For operationalising such irrevocable letter of credit, the applicant shall have • to register the Letter of Credit with jurisdictional Regional Authority (RA) against computerizedreceipt, within 15 days of the impositionof any such restrictionor regulation."

¶24Foreign Trade Policy, 2015-2020 U in the form of delegated or subordinatelegislation. Object\ahd;purpo,se,of'the ForeignTradePolicywas examinedinAsian Food//i</M5^n^5'-,(swpra).* A'carefiilreadingofparagraph

1.05(b)shows that the clause statestliafwhere importor export was freely permittedis subjectedto any restrictionor regulation,such restrictionwould not be given retrospectiveeffectunless otherwisestipulated. This general principleis subjectto the conditionthat the shipmentof export or import should be made within the original validity period of any irrevocable commercialLoC, that was estabhshedbeforethe date of impositionof such restriction. Exemptionshall be restrictedto the balancevalue and quantity availableand time period for operationalizationof such irrevocableLoCs and the applicant shall have to register the LoC with the jurisdictional revisionalauthority. Respondentsin the present case by trade notice No. iV.P. (C)No.2489/2016+ Connectedmutters 3/2016 dated 21'' April, 2016 had extendedthe date of registrationtill 30"' April, 2016. The petitionersstate that they had applied for registrationof the LoCs withinthe stipulatedperiod,but the registrationwas notgrantedon the ground that the LoCs had not been issued prior to the date of public notice, i.e., 5"' February, 2016, notwithstandingthe fact that Notification No.38/2015-2020was pubhshedin the Official Gazette on ll"' February, 2016.

¶25The aforesaid submission, according to us, does not have any merit for the Notification No. 38/2015-2020 published in the Official Gazette on ll"' February,2016 in paragraph,2 specificallystates that import/shipment under the LoCs entered into before the date of notification shall be exempt from the MIP, subject to the satisfaction of the conditions stated in paragraph 1.05 of the Foreign Trade' Policy 2015-2020. Notification No.38/2015-2020even if it was publishedin the Official Gazette on ll"" February, 2016 had specific,,e:^empdon ,in restricting the same to import/shipmentsunder LoCs,opened;iirio^;,^^^^ date of Notification,i.e., 5"" February,2016. Paragraph2offc No.38/2015-2020refers to the 'date of the Notification' and not the date on which it was published in the OfficialGazette.In the presentcase, the LoCs'wereopenedbetween5"" February,2016 till 11'*^ February,2016,when the NotificationNo. 38/2015-2020 was uploadedon the web-siteofthe Respondentson 5"" Februray,2016 and was publishedin the OfficialGazetteon 11'*^ February,2016. No doubt, paragraph2refersto paragraph1.05 ofthe ForeignTradePolicy2015-2020, butinthe contextthatthe importerswouldcomplywiththe conditionsstated therein,i.e., the conditionfor registration.Conditionsregardingopeningof LOCs before5th February,2016 wouldover-rideand prevailoverparagraph

1.05(b)ofthe ForeignTradePolicy2015-2020,as providedand statedin the YV.P. (C) No.2489/2016 + Connectetl matters clauseitself.Expression" unless othei-wisestipulated"in paragraph1.05(b) would apply as paragraph2 of the NotificationNo.38/2015-2020stipulates to the contrary. The factualpositionin the presentwrit petitionsis identical in facts in the case ofM/sAgri TradeIndia Services(P) Ltd. decidedbythe Supreme Court in M/s Asian Food Industries (supra), in faVour of the Revenue.

¶26In lightof the aforesaiddiscussion,ourconclusionsare as under:-

(i) That NotificationNo.38/2015-2020dated 5"' February, 2016 would be effective and applicable to 'imports' made on or after 11'^ February,2016,.i.e.', the date on which it was published in the Official Gazette. It wbuld not apply to any 'imports' as made on 10"'Februaryorbefore. ;

(ii) Interms ofparagi"aph'2ofthe NotificationNo.38/2015-2020 dated5"' February,'20-16Effectivefrom date ofpublicationin the Official Gazette-^^^^JF^bmaiy,2016, an exemptionhas been granted for impb,^shipjn the irrevocableLoCs enteredinto beforethe date of the Notification,i.e., 5"^ February, 2016. For the, purpose of paragraph 2 of the Notification No.38/2015-2020dafed ^'-Februaiy, 2016, the date of pubhcation in the OfficialGazette is not prescribedand is not relevant. The date 5'*^ February, 2016 is a valid date in respect of shipments/importsmade under the irrevocableLoCs for this was the date on which the decision of the Central Government to impose MIP was put on the web-siteand made known to public, though it was not gazetted. fV.P. (C) No.2489/2016 + Connected matters T

¶27The contention that the Gazette Notification quoted above is invahd as it was not an order of the Central Government under Section 3 read with Section 5 of the FT Act is erroneous and should be rejected. Notification in the heading states; publishedby the Ministryof Commerce and Industry, Departmentof Commerce, Director General of Foreign Trade. The first paragraph of the Notificationrecords "the Central Government hereby amends the import policy conditionsagainst173 HS CodesunderChapter72 andhad imposedthe conditionsas per annexure". Clearly,this is a Notificationby the CentralGovernmentand not an act of delegatedlegislationexercisedby the director General of Foreign Trade under sub-section(3) to Section6 bf the FT Act. Section6 (3) of the Act states that the Central Government may by an order published in the Official Gazette authorise the" Director General or such other officers ,1- ' subordinateto him to exercise any powbrbnder the Act, except powers under Sections 3, 5, 15, 16 exercise of powers under Sections3, 5, 15, 16 and 19 o||heFTi|pt'cam^^ delegated. Notification No.38/2015-2020has not been issue'drbyGeneral of Foreign Tradeunderapowerdelegatedtohim bythe CentralGovernment.

¶28The Notificationin questionis issuedby the CentralGovernmentand would be in terms of Article 77 of the Constitution of India. We would elaboratethis aspecta littlefurther,but first noticethat the DirectorGeneral ofForeignTrade is appointedby the CentralGovernmentundersub-section

(1) to Section6 ofthe FT Act. DirectorGeneral is to advise the Central Governmentin formulationof ForeignTrade Policy and is responsiblefor carryingout the policy. As noted above, on plain reading ofNotification No.38/2015-2020,it is apparent that the Notificationwas issued by the IV.P. (C) No.2489/2016 + Connected matters Central Government, for the Notification states that Central Government hereby amends the importpolicy. The decisiontaken to amend and issue the Notification was of the Central Government.

¶29Referringto the constitutionalprovisions,the SupremeCourtin Delhi International Airport Limited versus International Lease Finance Corporationand Others, (2015) 8 SCC 446 had referredto Articles77 and 163 of the Constitution and held that in respect of former Article, the Constitutionstipulatesthat wheneverexecutiveactionis takenbyway ofan order or instrumentit shall be expressed to be taken in the name of the Presidentin whom the executivepowerof the Union is vested. Under sub section(3) to Article77, the Presidentis to.makeRules for more convenient transaction of business and allocation ofi same amongst Ministers. The Article does not provide for delegation;of any power. Under the Government of India (Transaction of, .Business) Rules, 1961, the Governmentbusiness is divided amongst Mm and specific functions are allocatedto differentMinistries:; dilate furtheron Article 77 exceptnotice that clause ^-to^^rSclf'#^providesthat validityof an order or instrument made or executed in the name of the President, authenticatedin the manner,specifiedin the Rules made by the President, shall not be called in questionoh the'groundthat it is not an order or an instrument made or executed by the President.

¶30The website of the Ministryof Commerceand Industry,Department of Commerce,states that DirectorGeneralofForeignTrade is an agent of the Central Government and attached office to it.

¶31The NotificationNo.38/2015-2020is a Notificationof the Central Governmentunder Section3 read with Section5 of the FT Act as statedin fV.P. (C)No.2489/2016+ Cnnnectedmatters JO theNotificationitself.It is notaNotificationpublishedby DirectorGeneral ofForeignTrade as adelegateeofthe CentralGovernmentperformingany act traceableto delegationundersub-section(3) to Section6ofthe FT Act. MerelybecauseDirectorGeneralofForeignTradehad puWishedthe order on behalfofthe CentralGovernment/GovernmentofIndiawouldnot affect its legalityand make the Notificationinvalid. Suchnotificationshave been issuedsincelongand we have come across,in fact, an orderissuedas early as on 31" December,1993. The respondentshave also pointedout thatthe DirectorGeneralof ForeignTrade is ex offlcioAdditionalSecretaryin the GovernmentofIndia. This beingthe position,the secondcontentionofthe petitionersisrejected. ' V - ' r": ' •v;, •. '

¶32For the aforesaidreasons'^ writpetitionsare dismissed. However, in the factsofthe case,therewouldbe no orderas to costs. f I '(SANJIVKHANNA) " , i '?') JUDGE V- " r • i (CHANDERSHEKHAR) JUDGE DECEMBER 21^ 2018 VKR/ssn W.P. (C) NO.24S9/2016+Connectedmatters Page 27 of27

V IN THE HIGH COURT OF DELHI AT NEW DELHI WttTT PFTTTTON (CIVILE NO. 2491/2016 Reserved on: 26^^ October, 2018 VIRAJIMPEXPRIVATELIMITED Petitioner Through: Mr. BalbirSingh, Sr. Advocate with Mr. Rajesh Rawal, Advocate and Mr. Ashok Kumar, AR of the petitioner. versus UNIONOF INDIA& ORS. Respondents Through: Mr. Ravi Prakash, CGSC with Mr. Nitish Gupta, Advs. for R-1 & R-2. Mr. Sanjeev Naruia, Sr. Standing Counsel with Mr. Abhishek Ghai, Advocate for CBEC. WRIT PETITION (CIVILE NO. 2502/2016 K. AMISHKUMAR TRADING PVT. LTD. Petitioner Through: Mr. Balbir Singh, Sr. Advocate with Mr. Rajesh Rawal, Advocate and Mr. Ashok Kumar, AR of the petitioner. Versus UNION OF INDIA & ORS. Respondents Through: Ms. Shreya Mathur and Mr. Atul Batra, Advs. for UOI in W.P.(C) 2502/2016. Mr. Sanjeev Naruia, Sr. Standing Counsel with Mr. Abhishek Ghai, Advocate for CBEC. WRIT PETITION fCIVILI NO. 2795/2016 RKB GLOBAL PVT. LTD. Petitioner Through: Mr. Balbir Singh, Sr. Advocate with Mr. Rajesh Rawal, Advocate and Mr. Ashok Kumar, AR of the petitioner. Versus UNION OF INDIA & ORS. Respondents Through: Mr. Anurag Ahluwalia, Advocate for UOI. Mr. SanjeevNarula, Sr. Standing Counselwith Mr. Abhishek Ghai, Advocate for CBEC. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE CHANDER SHEKHAR