Case Law Details
The Bombay high court last week quashed the office memorandum / press release dated November 11 and policy circular dated December 22 last year as they were not issued under the provisions of the Foreign Trade (Development and Regulation) Act, and, therefore, the restrictions contained in them were contrary to law.
The policy circular was issued by the Director General of Foreign Trade. The Central Government for the first time imposed restriction on export of cotton yarn by directing that the contracts for export of cotton yarn shall be registered with the Textile Commissioner prior to shipment and clearance for export of cotton yarn consignments shall be given by customs authorities after verifying that the contracts have been registered. Several textile exporters challenged the restrictions in the case, Eurotex Industries and Exporters Ltd vs Textile Commissioner. The high court ordered that those companies to whom Export Authorization and Restriction Certificate have not been granted are entitled to seek license for export of cotton yarn in respect of their contract with the foreign customers.
Eurotex Industries & Exports vs Union Of India, Through Ministry (Bombay High Court)
Order Dated:- 9 March, 2011
WRIT PETITION (L) NO. 2790 OF 2010
JUDGMENT
(Per J.P. Devadhar, J.)
1. Rule, returnable forthwith. By consent taken up for final hearing.
2. In all these writ petitions, validity of the office memorandum / press release dated 1122010, notification dated 22122010 issued under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (“1992 Act” for short) and validity of the policy circular dated 22/12/2010 issued by the Director General of Foreign Trade (“DGFT” for short) are challenged. Since the basic dispute in all these writ petitions is common, all these writ petitions are heard together and disposed off by this common judgment.
3. The petitioners are engaged in the manufacture / export of cotton yarn. In all the Foreign Trade Policy (“FTP” for short) announced by the Central Government from time to time, cotton yarn was freely exportable. For manufacture and export of cotton yarn, the petitioners have large establishments and have engaged thousands of workers.
4. Para 2.1 of the current policy i.e. FTP 20092014 announced by the Central Government provides that exports and imports shall be free, except where regulated by FTP or any other law in force. Thus, even under the current FTP 200914 cotton yarn was freely exportable.
5. By a notification dated 942010 issued under Section 5 of the FTP 20092014, the Central Government for the first time imposed restriction on export of cotton yarn by directing that the contracts for export of cotton yarn shall be registered with the Textile Commissioner prior to shipment and clearance for export of cotton yarn consignments shall be given by customs authorities after verifying that the contracts have been registered.
6. On 942010 itself, the Textile Commissioner by a memorandum, prescribed the procedure for obtaining Export Authorization Registration Certificate (“EARC” for short) for export of cotton yarn. As per that procedure, every cotton yarn exporter was required to apply for EARC by submitting application in the prescribed form inter alia with a copy of the export contract for which registration was sought. Accordingly, from 942010 the exporters have been exporting cotton yarn after obtaining EARC from the office of the Textile Commissioner.
7. By a office memorandum dated 23112010, the Office of the Textile Commissioner introduced the online registration for export of cotton yarn instead of receiving the application form physically. Thus, from 23112010 the EARC’s were issued by receiving applications under the on line registration system.
8. Suddenly, on 1122010, the online registration system was stopped as per office memorandum / press release dated 1122010 issued by the Under Secretary to the Government of India, Ministry of Textiles. In the press release dated 1122010, it was stated that the Cotton Yarn Advisory Board (“CYAB” for short) constituted by the Government in September 2010 for the purpose of formulating cotton yarn balance sheet on the basis of the cotton yarn production / consumption / export situation in the country, had opined that in view of the increased domestic demand / price volatility, the cotton yarn exports beyond 720 million kgs. should not be permitted for the year 201011 and accordingly the Government has decided that there shall be no further registration of the cotton yarn exports beyond 720 million kgs. The office memorandum dated 1122010 reads thus : “No.7/32/2010CTII
Government of India
Ministry of Textiles
…..
New Delhi
Date : 01122010
Office Memorandum
Government has decided that there shall be no further registration of cotton yarn exports beyond 720 million kg. All applications in pipeline above the export registration of 720 million kgs shall not be considered by the Textiles Commissioner, Mumbai.
You are advised to take necessary action in pursuance of the above decision. A press release to be issued in this regard is enclosed.
(Anita Puri)
Under Secretary to the Government of India
Tel. No. 23062256.”
Thus, with effect from 142010 the office of the Textile Commissioner abruptly and without any prior intimation stopped registration of cotton yarn exports, as a result whereof, the petitioners who had firm contracts could not export cotton yarn which were manufactured and kept ready for export.
9. Challenging the office memorandum / Press Note dated 1122010, writ petitions were filed in this Court. During the pendency of these writ petitions, the Central Government issued a notification on 22122010 under Section 5 of the 1992 Act. By the said notification, the earlier notification dated 942010 was amended to the effect that export of cotton yarn with effect from 1122010 would be permitted under license instead of permitting export under EARC. The notification dated 22122010 reads thus :
“Notification No. 14 (RE2010)/200914
New Delhi, dated 22nd December, 2010
Subject : Restriction on export of cotton yard regarding.
10. (E) In exercise of the powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992) read with Para 2.1 of the Foreign Trade Policy, 200914, the Central Government hereby makes the following amendments in respect of Sl. No. 161 B {ITC (HS) Classification} in the Notification No.38/200914 dated 942010.
The existing entries of Notification No.38/200914 dated 942010 are substituted as follows with effect from 1122010.
Sr. Tariff Unit Item of Export Nature of No. Item Description Policy Restriction Code
161B 5205 Cotton yarn (other than Restri Export sewing thread), cted permitted containing 85% or under more by weight of license. cotton not put up for retail sale.
5206 Cotton yarn (other than sewing thread), containing less than 85% by weight of cotton not put up for retail sale.
5207 Cotton yarn (other than sewing thread), put up for retail sale.
Transitional Arrangement :
(i) The Transitional Arrangements as available under para 1.4 and 1.5 of FTP. 200914 will not be applicable to the export of Cotton Yarn, under this notification.
(ii) However, Exporters who have obtained Registration Certificate from Textile Commissioner, Mumbai before 1st December 2010 would be permitted to export Cotton Yarn within the quality limit for which such registration certificate has been issued and within the validity of such registered contract.
(iii) If the validity of such registered contract has expired then the registered contract holder will have no right to export under such registered contract.
The effect of this notification :
The export of cotton yarn (Tariff Codes 5205, 5206 & 5207) was earlier subject to registration of export contracts with Textile Commissioner, Mumbai. Now, the export of Cotton yarn has been restricted and export will now be permitted under licence. Sd/
(Anup K. Pujari)
Director General of Foreign Trade
Email : dgft@nic.in”
10. Simultaneously, the Jt. DGFT with the approval of the DGFT issued a policy circular dated 22122010, which reads thus :
“Policy Circular No.07(RE2010)/200914 Dated : 22/12/2010
To,
All Regional Authorities
All Custom Authorities.
Sub. : Conditions and modalities for applications for grant of export licence for export of cotton Yard regarding.
1. It has been decided in the meeting of Group of Ministers (GoM) on 21122010 that for the present, 720 million kgs. of Cotton Yarn is to be allowed for export during the year 201011 (i.e. up to 31/03/2011).
2. Accordingly, Notification No. 14(RE2010)/200914 dated 22/12/2010 has been issued today, stipulating that henceforth export of cotton yarn will be restricted and will be allowed to be exported under license. However, Exporters who have obtained Registration Certificate from Textile Commissioner, Mumbai before 1st December, 2010 would be permitted to export Cotton Yarn within the quantity limit for which such registration certificate has been issued and within the validity of such registered contract. The data for the quantity that has already been exported in 201011 is being collected. The representations received to review the extent of exportable surplus are also being examined.
3. Exact modalities for submitting applications for grant of export licence would be notified once the quantity of exports already made has been ascertained and the extent of exportable surplus has been reassessed.
4. This issue with the approval of Director General of Foreign Trade.
Sd/
(Hardeep Singh)
Joint Director General of Foreign Trade)
Email : hardeep.singh@nic.in”
Thus, notification dated 22122010 was issued to permit export under licence with retrospective effect from 1122010 and the policy circular dated 22122010 was issued to implement the policy decision taken in the meeting of Group of Ministers on 21122010, imposing restriction on the export of cotton yarn during the year 201011 (upto 31032011) at 720 million kgs. The policy circular further provides that henceforth export of cotton yarn will be restricted and will be allowed to be exported under a license. By a corrigendum notification dated 29122010, the phrase “before 1st December 2010” in the notification dated 22/12/2010 has been substituted by the phrase “on or before 1st December 2010” so that exporters who have obtained Registration Certificates from the Textile Commissioner on or before 1/12/2010 could export cotton yarn within the quantity limit for which such registration certificate has been issued. Writ Petitions have been amended to challenge the notification dated 22/12/2010 as also the policy circular dated 22/12/2010.
11. Mr. Jagtiani, learned Senior Advocate appearing on behalf of some of the petitioners, submitted that :
(a) Neither the press release nor the office memorandum dated 1122010 constitute an order or notification under Section 3 or Section 5 of the 1992 Act and hence do not have legal force. Therefore, the press release / office memorandum dated 1122010 which seek to restrict the export of cotton yarn in excess of 720 million kgs. are illegal and bad in law. In support of the above contention, reliance is placed on the decision of the Apex Court in the case of Atul Commodities Private Limited V/s. Commissioner of Customs reported in 2009 (235) ELT 385 (SC), decision of this Court in the case of Parag Milk & Milk Products Limited V/s. Union of India reported in 2007 (5) Bom. C.R. 544, Narendra Udeshi V/s. Union of India reported in 2003 (1) Bom. C.R. 500 and a decision of the Delhi High Court in the case of Agri Trade India Services Private Limited V/s. Union of India reported in 2006 (204) ELT 161 (Del.).
(b) Notification dated 22122010 which seeks to restrict export of cotton yarn subject to obtaining licence cannot be applied retrospectively because on 1122010 when the exporters applied for online registration, the licensing system was not in existence and, therefore, the vested right of the exporters to export cotton yarn by obtaining EARC that existed on 1122010 cannot be taken away by issuing a notification on 22122010 with retrospective effect from 1122010. (c) As held by the Delhi High Court in the case of Agri Trade (supra) which is approved by the Apex Court in the case of Union of India V/s. Asian Food Industries reported in (2006) 13 SCC 542, the notification dated 22122010 issued under Section 5 of the 1992 Act cannot have retrospective effect.
(d) Assuming that the notification under Section 5 of the 1992 Act could be issued by the Central Government retrospectively, the notification dated 22122010 has been issued by Shri Anup K. Pujari in his capacity as DGFT and not on behalf of the Central Government and, therefore, bad in law.
(e) As there were no quantity restrictions for export of cotton yarn under the FTP and the only restriction was to obtain EARC, the exporters as on 1122010 had entered in to firm contracts with their foreign customers for export of cotton yarn and had exposed themselves to commercial liability. The raw cotton procured by the petitioners were all meant for executing export orders and it would be impossible for them to dispose off such quantities in the domestic market. Petitioners have employed large task force and if they are not allowed to execute the export orders, the same will entail unaffordable expenses of labor cost. Moreover, the petitioners have hedged their foreign currency risks by making commitments with their bankers. Sudden imposition of ceiling on export of cotton yarn without giving any opportunity to the exporters to execute the contracts already entered into is wholly arbitrary and illegal.
(f) The policy circular issued by the Jt. DGFT / DGFT on 22122010 fixing a ceiling on export of cotton yarn at 720 million kgs. is beyond the scope of the powers vested in them. The restriction on export of cotton yarn can be imposed by the Central Government and not by the Jt. DGFT / DGFT. Moreover, the Central Government can impose such restrictions only in public interest. No material is produced to show that the ceiling fixed is in public interest.
(g) The corrigendum issued on 29122010 provides that the EARC’s obtained on 1122010 are valid and eligible for export as contemplated in paragraph 3(ii) of the notification dated 22102010. Since the petitioners had applied for registration on or before 1122010 and their applications were complete and valid in all respects, the petitioners be treated as EARC holders in respect of the contracts for which registration was sought and must be allowed to export cotton yarn under those contracts.
12. Mr. Nankani, learned counsel appearing on behalf of some of the petitioners while adopting the arguments of Mr. Jagtiani submitted that neither the office memorandum / press release dated 1122010 nor the notification dated 22122010 nor the policy circular dated 22/12/2010 are valid, because, the above memorandum / notification / circular have not been issued under Section 3 of the 1992 Act. He submitted that an item can be restricted for export only by an order issued by the Central Government under Section 3 of the 1992 Act. Therefore, the impugned memorandum / notification / circular which are not issued under Section 3 of the 1992 Act are liable to be declared illegal and contrary to law.
13. Mr. Nankani further submitted that an order under Section 3 of the 1992 Act cannot be equated with the notification issued by the Central Government under Section 5 of the 1992 Act. Although both Section 3 and Section 5 of the 1992 Act confer power on the Central Government, there is a vital difference between the two. He submitted that Section 3 specifically contains the power to restrict export of any goods or class of goods. Section 5 provides for formulation and announcement of the Export and Import Policy. Order under Section 3 has to be laid before the House of Parliament in terms of Section 19(3) of the 1992 Act and thus subject to scrutiny by the Parliament. Notification under Section 5 is not required to be laid before the Parliament. Relying on a decision of the Apex Court in the case Bhavnagar University V/s. Palitana Sugar Mills Private Limited reported in (2003) 2 SCC 111, Mr. Nankani submitted that when the statute requires an act to be done in a particular manner, the same must be done in that manner or not at all. Accordingly, he submitted that what cannot be done directly, cannot be done indirectly. Accordingly, he submitted that the impugned memorandum / notification / circular which are not passed under Section 3 of the 1992 Act are legally unsustainable.
14. Mr. Nankani further submitted that the quantity restriction or ceiling on export of cotton yarn cannot be imposed by way of a policy circular. Such a circular which is administrative in nature has no statutory force. He submitted that the policy circular cannot add any condition or restriction to the notification dated 22122010 and as such the ceiling or quantity limit contained in the policy circular dated 22122010 would have effect of amending the impugned notification which is not permissible in law.
15. Mr.Nankani further submitted that Section 9(1) and (2) of the 1992 Act provides for grant of licence subject to the conditions as may be prescribed. As per Section 2(i) of the 1992 Act, the expression “prescribed” means prescribed by Rules made under the 1992 Act. Rule 7 of the Foreign Trade (Regulation) Rules, 1993 prescribes the grounds on which licence can be refused. The ceiling or the quantity limit has not been “prescribed” by the Rules prescribed under the 1992 Act and, therefore, the restriction sought to be imposed by way of policy circular dated 22122010 is illegal and unauthorized.
16. Mr. Nevagi, learned counsel appearing on behalf of Nagreeka Export Limited, while adopting the argument of Mr. Jagtiani and Mr. Nankani submitted that the object of the 1992 Act is to provide a level playing field for all domestic exporters and importers and not meant to restrict the exports. If the Government wishes to restrict export of a particular item, it can do so only under the Essential Commodities Act or Section 3 of the 1992 Act or under Section 11 of the Customs Act, 1962. The notification dated 22122010 is not issued under any of the aforesaid provisions and, therefore, the restrictions imposed cannot be said to be legally tenable. He further submitted that the purpose for which the notification dated 22122010 was issued does not fall within the scheme of Section 11(2) of the Customs Act, 1961 and, therefore, the DGFT has exceeded its power under the 1992 Act read with the Customs Act, 1962.
17. Mr.Rana, learned senior Advocate appearing on behalf of the respondents, on the other hand, submitted that the decision to ban export of cotton yarn beyond 720 million kgs. during 20102011 (upto 3132011) is a policy decision taken by the Central Government based on CYAB report. The CYAB arrived at the above conclusion after considering the total production, domestic requirement of cotton yarn and after hearing representatives from all sections connected with Textile Industry including representatives who are engaged in the manufacture and export of cotton yarn.
18. Mr. Rana submitted that once the Central Government has taken a policy decision in public interest based on the recommendations of the Advisory Board constituted by the Central Government, it is not open to the Courts to go into the sufficiency of the materials so as to hold that the decision taken is not in public interest. Strong reliance was placed on an unreported decision of the Delhi High Court in the case of Gujarat Ambuja Exports Limited V/s. Union of India (Writ Petition No.8406 of 2010) decided on 1722011 by the learned counsel for the Revenue wherein the policy decision of the Central Government to ban export of cotton yarn in excess of 720 million kgs. has been upheld.
19. Mr. Rana further submitted that the right to export is not a fundamental right and it is open to the Central Government to impose such restrictions as are deemed fit in public interest. In the present case the policy decision taken by the Textile Ministry on 1122011 to ban export of cotton yarn has been further approved by the Group of Ministers in their meeting held on 21122010 and accordingly notification and policy circular to implement the policy decision of the Government have been issued. Assuming that the office memorandum / press release dated 1122010 has no legal sanctity, in view of the notification / policy circular issued on 22122010, export of cotton yarn beyond 720 million kgs. cannot be permitted.
20. Relying on a decision of the Apex Court in the case of Union of India V/s. C. Damani & Company reported in 1980 (Supp) SCC 707, Mr. Rana submitted that the policy decision of the Government should not be interfered by Courts unless compelled by glaring unconstitutionality.
21. Relying on the decision of the Apex Court in the case of Asian Food Industries (supra), counsel for the Revenue submitted that the policy decision of the Central Government notified on 22122010 to ban export of cotton yarn in excess of 720 million kgs. does not take away the vested right of the exporters, because the notification dated 22122010 as well as the corrigendum issued on 29122010 make it abundantly clear that the exporters to whom EARC’s have been granted on or before 1122010 would be entitled to export cotton yarn within the period specified therein. The fact that the exporters had applied for EARC’s on or before 1122010 under the online registration system and the fact that the said applications were complete in all respects does not make them EARC holder’s and, therefore, the exporters who have not been granted EARC’s are not entitled to export cotton yarn. Counsel submits that since some of the EARC holders within the overall limit of 720 million kgs. have failed to export cotton yarn within the stipulated period, the exporters who have entered into contracts with foreign purchases can apply for license as per the policy of the Government and the same would be considered and licenses would be issued in accordance with law.
22. Relying on the decision of the Apex Court in the case of Darshan Oils Private Limited V/s. Union of India reported in 1995 (75) ELT 32 (S.C.), counsel for the Revenue submitted that the fact that the petitioners have entered into firm contracts with the foreign purchasers and the ban imposed under the Government policy would render the exporters to civil and penal liability cannot be a ground to set aside the policy decision of the Government which is taken in public interest. As per the policy, the exporters to whom EARC’s have been granted are allowed to export and the exporters to whom EARC’s have not been granted can apply for license and the same would be granted to the extent of shortfall in the export of 720 million kgs. of cotton yarn up to 31/3/2010.
23. Mr. Chatterjee, learned counsel appearing on behalf of the Revenue in one of the matter before us, on instructions, submitted that the policy decision of the Government to restrict export of cotton yarn during the year 2010- 2011 (upto 3132011) is not required to be published in the Government Gazette either by issuing a notification or by issuing an order under the 1992 Act. He submitted that the policy decision of the Government has been widely published by way of press release / office memorandum / policy circular and, therefore, the exporters who are admittedly aware of the ban imposed by the Central Government cannot challenge the ban which is imposed in public interest. Accordingly, he submits that there is no merit in these writ petitions and are liable to be dismissed in limine.
24. We have carefully considered the submissions advanced by the counsel on both sides.
25. The basic question raised in these writ petitions is, firstly, whether the Central Government is justified in taking a policy decision to impose ban on export of cotton yarn beyond 720 million kgs. during the year 2010- 2011 (up to 31032011); and Secondly, whether the said policy decision to ban export has been imposed in the manner provided under the 1992 Act ?
26. As held by the Apex Court in the case of Asian Food Industries (supra), a citizen of India has a fundamental right to carry on the business of export, subject, of course to the reasonable restrictions which may be imposed by law. Such a reasonable restriction is imposed in terms of the 1992 Act. The said Act empowers the Central Government to frame FTP and further empowers the Central Government to amend the policy as also to make provision to prohibit, restrict or otherwise regulate the export of goods as provided under Section 5 and Section 3 of the 1992 Act respectively.
27. The Apex Court in the case of Asian Food Industries (supra) has further held (see para 29 of the judgment), that the powers conferred on the Central Government under Section 3 and Section 5 of the 1992 Act has to be exercised in the manner set out therein. Section 3 and Section 5 of the 1992 Act read thus :
“3. Powers to make provisions relating to imports and exports. (1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and 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 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. (3) All goods to which any Order under subsection (2) applies shall be deemed to be goods and imports or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly.”
“5. Export and import policy. The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the export and import policy and may also, in like manner, amend that policy.”
28. From the aforesaid provisions, it is clear that the Central Government under Section 5 of the 1992 Act can amend the FTP by way of a notification in the Official Gazette. Similarly, the Central Government under Section 3(2) of the 1992 Act by order published in the Official Gazette, prohibit, restrict or otherwise regulate export of any particular class of goods.
29. In the present case, by a office memorandum / press release dated 1122010 the general public including the exporters were informed that the Central Government has taken a policy decision to ban export of cotton yarn beyond 720 million kgs. during the year 20102011 (upto 3132011). The said decision was based on the report of the CYAB. The CYAB was constituted by the Central Government in September 2010. The members of CYAB are Government Officials as well as Textile Associations. The object of constituting the CYAB was to monitor the domestic and international prices of cotton yarn and suggest measures for increasing the availability of cotton yarn at reasonable prices for domestic consumption.
30. The members of the CYAB met from time to time and in the meeting held on 29102010 prepared cotton yarn balance sheet. Following particulars emerge from the said balance sheet : During Estimated 20/09/10 during
Item (million kgs) 2010-11 (as 2010-11 (as on 01/10/10) on 291010)
(million kgs) (million kgs)
Cotton yarn (total supply) 3168.35 3390 3460 Consumption by mills & other 288 300 300 industrial yarn
Consumption by power loom 816 913 913 Consumption by Hosiery Yarn 921 973 973 Consumption by Hanks 470 470 470 (Hand loom)
Export 589.02 644 720 Closing Stock 84.23 90 84 Thus, as against export of 589.02 million kgs. during 20092010, the estimated export during 20102011 (as on 1102010) was 644 million kgs. However, looking to the sudden spurt in export, the CYAB suggested cap of 720 million kgs. during 20/10/2011.
31. The question, therefore, to be considered is, whether the Central Government was justified in accepting the recommendation of the CYAB and take a policy decision to ban export of cotton yarn beyond 720 million kgs. during 20102011 (upto 31032011).
32. The fact that there was sudden spurt in export is evident from the online registration of contracts sought during September, October and November 2010. Whatever may be the reason for sudden spurt in export of cotton yarn, the target of 720 million kgs. expected to be achieved by 31/03/2011 was achieved by the end of November 2010. It is the case of the Revenue that unless export of cotton yarn was banned, the domestic industry as also the public interest would have been in serious jeopardy. In these circumstances, the Central Government accepted the recommendation of the CYAB in banning the export of cotton yarn beyond 720 million kgs. during the year 20102011 (upto 31/3/2011) as against the 589.02 million kgs. of cotton yarn exported during the year 2009-10.
33. The argument of the petitioners that the Central Government could not have imposed ban suddenly on 1122010, thereby depriving their right to export under the contracts already entered into on or before 1122010 cannot be accepted because, if the situation demands, the Central Government can legally impose ban with immediate effect. As held by the Apex Court in the case of Darshan Oils Private Limited (supra), public interest must outweigh individual interest. Therefore, in the facts of the present case, the policy decision of the Central Government to ban export of cotton yarn beyond 720 million kgs. during 20102011 (up to 3132011) cannot be faulted.
34. The question then to be considered is, whether the policy decision to ban export of cotton yarn beyond 720 million kgs. has been imposed in the manner specified under the 1992 Act ?
35. Under the 1992 Act, the Central Government can impose restriction on exports by an order published in the Official Gazette under Section 3(2) of the 1992 Act. Similarly, the Central Government has power to amend the FTP by a notification in the Official Gazette under Section 5 of the 1992 Act.
36. In the present case, the office memorandum / press release dated 1122010 states that the Central Government has taken a policy decision to ban export of cotton yarn beyond 720 million kgs. during the year 201011. Admittedly, the said office memorandum / press release dated 1122010 is neither an order under Section 3(2) nor a notification under Section 5 of the 1992 Act and the same has not been published in the Official Gazette. Therefore, the office memorandum / press release dated 1122010 being not in consonance with the provisions of the law contained in the 1992 Act would have no legal force and the ban imposed there under cannot be said to be in accordance with law.
37. The next contention of the Revenue is that a Group of Ministers on 21122010 decided that export of cotton yarn beyond 720 million kgs. should not be allowed during 20102011 (upto 31032011). If, policy decision to ban export of cotton yarn beyond 720 million kgs. was already taken on or before 1122010, what the necessity to take a decision again on 21122010 is not explained by the Revenue.
38. In any event, the Group of Ministers in their meeting held on 21122010 took two policy decisions. They are (one) export of cotton yarn would henceforth be permitted under a licence instead of export under EARC; and (two) there would be quantity restriction on export of cotton yarn upto 720 million kgs. during the year 20102011 (up to 31/3/2011). These policy decisions were required to be published in the Official Gazette as an order under Section 3(2) or as a notification under Section 5 of the 1992 Act.
39. However, in the notification issued under Section 5 of the 1992 Act and published in the Official Gazette on 22122010, it is merely stated that the export of cotton yarn would henceforth be under a license effective from 1122010. The said notification does not refer to the policy decision of the Central Government to ban export of cotton yarn beyond 720 million kgs. Till date, no notification or order has been issued as contemplated under the 1992 Act to implement the policy decision of the Government to ban export of cotton yarn. Therefore, it is evident that the Central Government has not given effect to the policy decision in banning the export of cotton yarn beyond 720 million kgs. during the year 20102011 (up to 31032011) in the manner contemplated under the 1992 Act.
40. The argument of the Revenue that the policy decision of the Government to ban export of cotton yarn need not be published in the Official Gazette is contrary to the express provisions contained in the 1992 Act. The said argument is also and contrary to the law laid down by the Apex Court in the case of Asian Food Industries (supra). In the case of Asian Food Industries (supra), the Apex Court has held that any restriction on import / export has to be in the manner specified under the 1992 Act. Moreover, the argument of the Revenue that the policy restriction to ban export need not be published in the Gazette cannot be accepted, because, the petitioners have brought on record various notifications issued under Section 5 of the 1992 Act, which are published in the Official Gazette so as to impose restrictions on import / export. For example, policy decision fixing minimum export price of onions has been published in the Official Gazette under Section 5 of the 1992 Act by way of notification No.29/2010 dated 132011. Similarly, quantity restriction on export of edible oil in branded consumer packs has been published in the Official Gazette by way of notification No.9/10 dated 1112010 issued under Section 5 of the 1992 Act. There are several other notifications published in the Official Gazette, whereby restrictions on import / export have been imposed as per the provisions of the 1992 Act. Therefore, the argument of the Revenue that the policy restriction on export of cotton yarn need not be published in the Official Gazette cannot be accepted.
41. The policy circular dated 22122010 issued by the Jt. DGFT / DGFT cannot be said to be an order / notification issued by the Central Government under the 1992 Act. Wherever the order / notification is issued by the DGFT for and on behalf of the Central Government, it would be an order / notification issued by the Central Government. In the present case, the policy circular dated 22122010 is issued by the Jt. DGFT with the approval of the DGFT. Jt. DGFT is not empowered to issue notification for and on behalf of the Central Government. Moreover, the policy circular dated 22122010 has not been published in the Official Gazette. Therefore, quantity restriction of 720 million kgs. set out in the policy circular dated 22122010 as per the Government policy, cannot be said to be a restriction imposed under the 1992 Act. Consequently, the policy circular dated 22122010 would not have any force of law.
42. Thus, irrespective of the policy decision taken by the Central Government to permit export under license and up to the limit of 720 million kgs. till 31032010, in view of notification dated 22/12/2010 which only refers to the restricting of permitting export under license, it must be held that the Central Government has chosen to implement its decision only in relation to export under license and has chosen not to implement its decision to restrict export of cotton yarn beyond 720 million kgs. Since the Central Government has not published in the Official Gazette its policy decision to restrict export of cotton yarn up to 720 million kgs. during 2010- 11 (up to 31/3/2011) in the manner provided under the 1992 Act, the Jt. DGFT could not have issued the impugned policy circular. Therefore, the policy circular dated 22/12/2010 must be held to be contrary to law.
43. It is relevant to note that the notification dated 22/10/2010 issued under Section 5 of the 1992 Act permitting export of cotton yarn under license has been made effective from 1102010. As held by the Apex Court in the case of Asian Food Industries (supra), order / notification issued under the 1992 Act cannot be brought into force retrospectively so as to take away the vested right accrued to the exporters. That is why, the notification dated 22122010 as amended by corrigendum permits exporters who have obtained EARC’s on or before 1122010 to export cotton yarn within the quantity limit prescribed under the EARC’s and within the time prescribed therein. The notification dated 22122010, thus does not seek to disturb the vested rights accrued to the exporters. The petitioners who have sought on line registration on or before 1122010 cannot claim to be EARC holders, because admittedly EARC’s have not been granted to the petitioners. Admittedly, the DGFT who issued notification on 22/12/2010 is authorized to issue notification for and on behalf of the Central Government. Even if it is held that the notification dated 22122010 could not be issued retrospectively and it is held that the notification would operate prospectively, in view of the fact that no EARC’s have been issued from 1122010, the question of directing the respondents to issue EARC’s till 22/12/2010 does not arise at all. In other words, the exporters who have applied for registration but EARC’s have not been granted till 22122010 are entitled to apply for license and we are informed that the petitioners have applied for license and the same would be considered and granted in accordance with law.
44. We see no merit in the argument of the petitioners that the restriction to permit export under license or quantity restriction on export cannot be imposed by a notification under Section 5 of the 1992 Act and such restriction has to be imposed by an order published under Section 3(2) of the 1992 Act. In our opinion, the power of the Central Government under Section 5 of the 1992 Act is wide enough to amend policy and if the policy itself can contain restrictions relating to import / export, there is no reason as to why the Central Government in exercise of its power under Section 5 of the 1992 Act cannot enhance the restriction or lift the restriction imposed on import / export. In our opinion, the power of the Central Government to impose restriction under Section 3(2) of the 1992 Act does not take away the power of the Central Government to impose such restriction in exercise of its power under Section 5 of the 1992 Act. Therefore, in the facts of the present case restriction imposed on permitting export under licence by a notification issued under Section 5 of the 1992 Act on 22/10/2010 cannot be faulted.
45. Strong reliance was placed by the counsel for the Revenue on the unreported judgment of the Delhi High Court in the case of Gujarat Ambuja Exports Limited (supra). In our opinion, the learned Judge of the Delhi High Court in the aforesaid case proceeded on an erroneous assumption that the notification issued under Section 5 of the 1992 Act on 22/12/2010 imposes a restriction that the export of cotton yarn had to be within the overall limit of 720 million kgs. The learned counsel for the Revenue fairly stated that the aforesaid findings recorded by the learned Single Judge of the Delhi High Court in para 49 of the judgment is erroneous and contrary to the facts on record. In other words, it is admitted that the notification issued under Section 5 of the 1992 Act on 22122010 merely provides that the export of cotton yarn would now be under license instead of EARC and the said notification does not refer to the policy decision of the Central Government to restrict export of cotton yarn up to 720 million kgs. during the year 201011 (up to 3132011). In these circumstances, we find it difficult to agree with the decision of the Delhi High Court insofar as it holds that the notification dated 22/12/2010 seeks to restrict export of cotton yarn up to 720 million kgs.
46. For all the aforesaid reasons, we hold that the office memorandum / press release dated 1122010 and the policy circular dated 22/12/2010 are not orders / notifications issued under the provisions of the 1992 Act and, therefore, the restrictions contained under those office memorandum / policy circular being contrary to law are quashed and set aside. Notification No.14 dated 22/12/2010 issued under Section 5 of the 1992 Act is valid and the petitioners to whom EARC’s have not been granted are entitled to seek license for export of cotton yarn in respect of their contract with the foreign customers. Rule is made absolute in the above terms with no order as to costs.
47. At this stage, Mr.Rana, learned Senior Advocate seeks stay of the operation of this order. We see no reason to entertain the application. Accordingly, the application is rejected.
(Mrs.Mridula Bhatkar, J.) (J.P. Devadhar, J.)
