Supreme Court upholds power of CG to impose quota restrictions on imports without adjudication procedure

The Apex Court in a recent decision involving importers of green and yellow peas, beans has upheld the power of the Central Government to impose quantitative restrictions on the import of goods without following the adjudication procedure.

The CG in its drive to protect the market of output of the chana producers had imposed the quota restrictions on the import of their perfect substitute ‘yellow peas’. The sanctioned quota for FY 2018-19 was limited to 1.5 lakh MT per year, based on authorizations, which was subsequently reduced to 75 thousand MT per year. The move however was challenged by importers before various High Courts and interim orders were passed allowing the import without quote and authorizations, which meant the import crossed beyond 8.5 lakhs MT in FY 2018-19 and beyond 6.5 lakhs MT in FY 2019-20.

The Supreme Court in a batch of petitions (lead respondent M/s Agricas LLP) has finally put the stamp on the action of the government acting through the DGFT, regulating agency for imports and exports of goods. The Court viewed that the Indian legislative system follows the dualism position when it comes to the application of international laws/ treaties in the Indian system, which means that the CG is not bound to follow the adjudication route mandated under the WTO’s GATT for imposing quota restrictions on import of goods. An adjudication procedure would have required the CG to initiate an investigation of the threat posed by imports to the domestic industry and after seeking representation from the parties concerned pass the suitable orders.

The decision has sent shock waves to the Indian importers, largely traders of the goods since there was a sense of expectation among them that mandate of international law would have rescued their case before the Court. Curiously, the Court also left the importers empty-handed on their prayers of bona fide with respect to excess imports already made by them based on High Courts’ interim orders. The rejection of omnibus prayer would allow the authorities to proceed against the importers for the imposition of penalties and confiscation fines leaving the importers in the cobweb of litigations.

The decision has essentially enabled the government to go free in imposing restrictions as it may prefer for the regulation of import and export of goods. The ruling leaves no other option for the importers but to seek permission from the DGFT for importing the goods within the permissible quota.

This decision seemingly also suppresses the objections by the industrial formations against the action of CG’s banning/ restricting exports of PPEs, lifesaving drugs, and their salts in the light of the COVID pandemic. With the government determined to use all measures possible to fight the national issues of farmers’ growth and India’s sovereignty, this decision comes as a bliss.

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May 2021