Gujarat High Court
Messrs J And H Minerals Pvt. Ltd. Through ... vs Union Of India on 17 January, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/5753/2022 ORDER DATED: 17/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 5753 of 2022
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MESSRS J AND H MINERALS PVT. LTD. THROUGH DIRECTOR JAY
TARUNKUMAR SHAH & ANR.
Versus
UNION OF INDIA & ANR.
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Appearance:
MR PARESH M DAVE(260) for the Petitioner(s) No. 1,2
MR ANKIT SHAH(6371) for the Respondent(s) No. 1
MS HETVI H SANCHETI(5618) for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 17/01/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Paresh M. Dave for the petitioners, learned advocate Mr.Ankit Shah for the respondent No.1 and learned advocate Ms.Hetvi H. Sancheti for the respondent No.2.
2. By way of this petition under Articles 226 and 227 of the Constitution of India, the petitioners have prayed for the following reliefs :
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NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined "(A) That Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, direction or order holding that Notification No.26/2015-2020 dated 21st August, 2018 (Annexure-"F") is ultra vires Articles 14 and 19(1)(g) of the Constitution of India; and accordingly, this Notification may be struck down as such as regards restriction on export of Abrasives Grains-Natural Garnet classified under CTH 25132030;
(B) That Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, order or direction holding and declaring that Notification No.26/2015-2020 dated 21st August, 2018 (Annexure-"F") is applicable only to Abrasives Grains - Natural Garnet classified under CTH 25132030, procured and mined from beach sands and teri sands, and that the restriction on exports only through State Trading Enterprise, viz. IREL Page 2 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined imposed under this Notification No.26/2015-2020 is not applicable to Abrasives Grains/Natural Garnet procured and mined from desert areas of State of Rajasthan."
3. At the outset, learned advocate Mr.Paresh Dave for the petitioners, under instructions, submitted that the petitioners are not pressing prayer A but only press prayer B.
4. The brief facts of the case are as under :
4.1. The petitioner No.1 started the business of exporting Natural Garnet around the year 2014 and the petitioner No.2 from August, 2014.
4.2. The petitioners are regular exporters of Natural Garnet. The Natural Garnet is having been given the ITC (HC) Code 25132030 Page 3 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined in the Tariff Item HS Code i.e. classification of export and import items under Chapter 25 of the Custom Tariff Rates and Exemptions pursuant to the Foreign Trade Policy (FTP), 2015-2020.
4.3. It is the case of the petitioners that the Directorate of Mines and Geology, Government of Rajasthan has granted lease for mining Garnets in the State of Rajasthan where deposit of Natural Garnet is found and the petitioners procure and purchase Garnet from the traders for the export purpose.
4.4. It is the case of the petitioners that the petitioners have never purchased Garnet from any other person or agency but Garnet is always procured and purchased from the Rajasthan based traders who have purchased Natural Garnet from any of the persons or Page 4 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined agencies who are having the license to mine the Garnet in the State of Rajasthan.
4.5. The petitioners are aggrieved by the Notification No.26/2015-2020 dated 21st August, 2018 issued by the Director General of Foreign Trade, Ex-officio Additional Secretary, Government of India in exercise of the powers conferred by Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph Nos.1.02 and 2.01 of the Foreign Trade Policy (FTP), 2015-
2020 as amended from time to time amending the export policy of "Beach Sand Minerals" in Chapter 26 of Schedule 2 of ITC (HS) Classification of Exports and Import items. 4.6. As per the aforesaid Notification, the entries in the "Note" of Chapter 26 of Page 5 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined Schedule 2 of ITC (HS) Classifications of Exports and Imports Items, 2018 have been substituted as under :
"NOTE:
1. Export off Rare Earth compounds classified as Beach Sand Minerals (BSM) , namely [Ilmenite, Rutile, Leucoxene (Titanium bearing mineral), Zircon, Garnet, Sillimanite and Monazite (Uranium and Thorium)], shall be regulated in terms of SI. No. 98A of Chapter 26 Schedule 2 of ITC(HS) Classification.
2. Other minerals under code 2617 are freely exportable, except those which have been notified as prescribed substances and controlled under Atomic Energy Act, 1962".
3. A new entry at Sl. No. 98A is inserted in Chapter 26 of Schedule 2 of ITC (HS) Classification of Export & Page 6 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined Import Items 2018 as follows:
S.No Tariff Unit Item Export Policy Policy Items HS Description Condition Code 98A 2508 5031 Kg Beach Sand STE (State Export 2508 5032 Minerals Trading through 2508 5039 [Ilmenite, Enterprise) Indian 2612 1000 Rutile,Leucoxe Rare 2612 2000 ne(Titanium Earths 2614 0010 bearing Limited 2614 0020 mineral), (IREL) 2614 0031 Zircon, 2614 0039 Garnet, 2614 0090 Sillimanite 2615 1000 and Monazite 2513 2030 (Uranium and Thorium)]
4. Effect of this Notification:
Export of Beach Sand Minerals have been brought under STE and shall be canalized through Indian Rare Earths Limited (IREL). Beach sand minerals, permitted anywhere in the export policy, will now be regulated in terms of policy under at SI. No. 98A of Chapter 26 of Scheduled 2 Export Page 7 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined Policy."
4.7. The said Notification further stipulates the effect of this Notification in paragraph No.4 thereof, whereby, it is stipulated that export of Beach Sand Minerals have been brought under STE and shall be canalized through Indian Rare Earths Limited (IREL). Beach Sand Minerals, permitted anywhere in the export policy are to be regulated as per the said Notification.
4.8. In view of the aforesaid Notification, the petitioners are now required to canalize the export through IREL. The main grievance of the petitioners are that the exports made by the petitioners of the Natural Garnet purchased by them from the traders from the State of Rajasthan cannot be considered as Beach Sand Minerals (BSM) and therefore, the said Notification would not be applicable so Page 8 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined far as the export of the Natural Garnet by the petitioners requiring the petitioners to canalize the exports through IREL. 5.1. Learned advocate Mr.Paresh M. Dave for the petitioners submitted that the Natural Garnet is classified in Chapter 25 of the ITC (HS) Code as 25132030 whereby, the standard rate of duty is prescribed at 10%. It was submitted that the Beach Sand Minerals i.e. BSM would not cover the Natural Garnet purchased by the petitioners from the traders of the State of Rajasthan. Reference was made to the World Book Encyclopedia which explains what is Garnet as under :
"Garnet is any of a group of hard, glassy minerals. This group of silicate minerals includes six major types: al-
mandine, andradite, grossularite, Page 9 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined pyrope, spessartite, and uvarovite.
Garnets are composed of silica and such elements as aluminum, calcium, iron, magnesium, and manganese. They range in color from red, brown, and - black to various shades of yellow and green.
Crystals of. garnet are found in all types of rock, but chiefly in metamorphic varieties (see Metamorphic rock). Some garnet crystals are used in making jewelry. One well-known gemlike type is the red pyrope, which is often sold as an imitation ruby. Most other garnets are used as abrasives for grinding and polishing. Garnets are found throughout the world. Those of gemlike quality are mined chiefly in central Europe, Russia, and South Africa."Page 10 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025
NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined 5.2. Referring to the above explanation, it was submitted that the Garnet is a silicate mineral which includes six major types i.e. almandine, andradite, grossularite, pyrope, spessartite, and uvarovite being composition of silica and such elements as aluminum, calcium, iron, magnesium, and manganese. It was submitted that the Natural Garnet purchased by the petitioners for export purpose from the traders of State of Rajasthan does not include any of the minerals which would be covered by the Atomic Minerals as per the Atomic Energy Act, 1962 and as per the Note No.1 to Chapter 26, prior to the substitution by the impugned Notification, rare earth compounds were freely exportable except such rare earth compounds which contain Uranium and Thorium which are prescribed substances and controlled as per the Page 11 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined provisions of the Atomic Energy Act, 1962. Reference was made to the definition of Beach Sand Minerals as per the Atomic Minerals Concession Rules, 2016 (for short 'the Rules, 2016') which defines 'Beach Sand Minerals' as under :
"(c) Beach Sand Minerals" means economic heavy minerals found in the teri or beach sands, which include ilmenite, rutile, leucoxene, garnet, monazite, zircon and sillimanite."
5.3. Reference was also made to part-B of the First Schedule of the Mines and Minerals (Development and Regulation) Act, 1957 (for short 'the Act, 1957') having the heading "Atomic Minerals" and item 12 thereof, which refers to the Beach Sand Minerals which is the same as per the aforesaid definition. It was Page 12 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined therefore submitted that the word "Teri" as per the aforesaid definition is required to be considered. Reliance was placed on the Journal of Minerals and Materials Characterization & Engineering, Volume 8, No.2, page Nos.149-159 wherein, the article "Recovery of Ilmenite and Other Heavy Minerals from Teri Sands (Red Sands) of Tamil Nadu, India" is placed on record. It was submitted that in the said Article, the Teri sand is explained as under :
"Inland red 'Teri' sands of southeast India have formed from weathering in situ of coastal dune sands. The term Teri, which means red, is derived from Tamil, a regional language in south India. Teri sands are very lean placer deposits for heavy mineral concentration. The beach and in land placer deposits exhibit a considerable variation in mineralogy and chemical composition depending on the location. The flowsheets for their beneficiation Page 13 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined are therefore variable in detail. The literature reveals that lot of research work carried out on Teri sands but most of the publications restricted to resource evaluation, geology, geochemistry, mineralogy etc. The general practice to recover Total Heavy Minerals from such a lean beach sand deposit containing 2-5% THMs is first concentrated to 20-30% THMs on cone concentrators. This product is then fed to spirals, which gave a concentrate of more than 80% THMs."
5.4. Reliance was placed on the description of Teri(geology) in Wikipedia wherein, Teri is explained as under :
"Teri or Teri dune complex is a coastal landscape peculiar to some parts of Tamil Nadu mainly in southeastern India. The landscape consists of sediments dating to the Quaternary Page 14 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined Period and made of marine deposits with aeolianite and characteristic red sand and silt dunes. These red soils are thought to have originated in the Pleistocene. Robert Bruce Foote hypothesized that these dunes were created by the action of winds (aeolian) lifting the fine silt fraction from further east. These dunes are oriented along the axis running parallel to the coast and between the latitudes of 8°00' to 9°30' N and longitudes 77°18' to 79°00' E. The soils also have calcium deposits replacing the old roots of vegetation.
The soil is rich in ilmenite and the red colour is derived from hematite originating from garnet."Page 15 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025
NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined 5.5. It was further submitted that the Beach Sand Minerals as per the definition in the Rules, 2016 refer to the minerals found in the Teri and the beach sand found on the beach near the seashore and not in the rocks in the dessert of the State of Rajasthan. It was therefore submitted that the impugned Notification No.26/2015-2020 will apply only to the minerals which are found in Teri and beach sand and not to the minerals which are found at any other place.
5.6. Learned advocate Mr.Paresh Dave submitted that the genesis of the impugned Notification is the litigation before the Hon'ble Madras High Court wherein, Public Interest Litigation being W.P. No. 1592 of 2015 was filed for illegal Beach Sand Minerals in the coastal Districts of Tamil Nadu Page 16 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined wherein, the Hon'ble Madras High Court has passed various orders. Reliance was placed on the order dated 21.01.2019 in the said PIL wherein, the Hon'ble Court has held that the said litigation covers not only "Monazite" but also all other Beach Sand Minerals with regard to the alleged illegal mining, transportation etc,.
5.7. Reference was also made to the affidavit-in-reply filed on behalf of the respondent wherein, it is stated that the Government by way of change in the Policy has amended the Mines and Minerals (Development and Regulation) Act, 1957 and the Atomic Minerals Concession Rules, 2016 was introduced in view of the aforesaid Public Interest Litigation by virtue of which, mining of the Beach Sand Minerals fell within the ambit of the Government Public Sector Undertakings. It Page 17 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined was submitted that the impugned Notification is therefore regularising the Beach Sand Minerals through State Trading Enterprise (IREL) and not the Natural Garnets exported by the petitioners purchased from the traders of the State of Rajasthan.
5.8. It was further submitted that by Notification dated 20th February, 2019, the Central Government has amended the Sections and Rules which earlier allowed the private companies to mine rare earth minerals found in the sand of the coast and all cases of Beach Sand Minerals and other placer deposits in association with monazites were notified irrespective of the monazite grade. It was submitted that in the said Notification, rare earth minerals were depicted as mixture on the coasts of Tamil Nadu, Andhra Pradesh, Kerala Page 18 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined and Odisha which include Ilmenite, Rutile, Leucoxene, Zircon, Garnet, Sillimanite and Monazite which are Atomic Minerals which can be processed to yield Thorium in nuclear fuel which can further be enriched to Uranium, a component to nuclear warheads. 5.9. It was submitted that Natural Garnet obtained from the traders of the State of Rajasthan for export purpose has nothing to do with Beach Sand Minerals which may include the Garnet, but the Natural Garnet to be exported by the petitioners till the date of such Notification could not have been brought within the regulation to be canalized through State Trading Expertise IREL. 5.10. Learned advocate Mr.Paresh Dave also placed reliance upon the Test Certificate issued by the Central Glass & Ceramic Research Page 19 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined Institute in respect of the products being Abrasive Grains/Natural Garnet exported by the petitioners and the Beach Sand to show the difference between the components thereof. Reference was also made to the letter dated 26.11.2019 of IREL wherein, the reply was given under the Right to Information Act relying on the Notification dated 11.07.2016 wherein, Ministry of Mines has defined Beach Sand Minerals to be economic heavy minerals to be found in the teri or beach sands which include ilmenite, rutile, leucoxene, garnet, monazite, zircon and sillimanite. It was further stated in the said reply that at present Beach Sand Minerals are winned in the State of Odisha, Kerala and Tamil Nadu. It was therefore submitted that Beach Sand Minerals referred to in the impugned Notification should only refer to the Beach Sand Minerals Page 20 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined found in the State of Odisha, Kerala and Tamil Nadu.
5.11. Learned advocate Mr.Paresh Dave referred to the ITC (HS) Classification of Export and Imports Items contained in Chapters 25 and 26 read with Chapters 25 and 26 of the Schedule 2 of the Export Policy to submit that by the impugned Notification, Serial No.98A has been introduced in Chapter 26 of Schedule 2 of ITC (HS) Classification which includes the entries ITC (HS) Code from Chapter 25 and Chapter 26 both, having item description Beach Sand Minerals which includes Ilmenite, Rutile, Leucoxene (Titanium bearing mineral), Zircon, Garnet, Sillimanite and Monazite (Uranium and Thorium).
5.12. It was therefore submitted that the Page 21 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined item description in the impugned Notification in Serial No.98A pertains to the items of the various ITC (HS) Code which are part of the Beach Sand Minerals only. It was therefore submitted that the Natural Garnet being exported by the petitioners shall not be covered within the scope of Beach Sand Minerals which may contain various ITC (HS) Codes as stated in the impugned Notification from Chapter 25 and Chapter 26. It was submitted that the Beach Sand Minerals include Garnet, the ITC (HS) Code 25132030 is also mentioned in the Notification but as the goods exported by the petitioners being Natural Garnet and not being Beach Sand Minerals, such inclusion of the Code in the impugned Notification would not cover the goods exported by the petitioners.
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NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined 6.1. On the other hand, learned advocate Mr.Ankit Shah for the respondent-Authority submitted that the impugned Notification is a policy decision of the Central Government whereby, separate Entry No.98A is introduced for the purpose of regulation of the exports of the Beach Sand Minerals being canalized through State Trading Enterprise IREL. It was submitted that the impugned Notification is issued in exercise of the powers conferred as per the provisions of Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph Nos.1.02 and 2.01 of the Foreign Trade Policy (FTP), 2015-2020 as amended from time to time. It was submitted that Chapter 26 of Schedule 2 of the ITC (HS) Classification of Export and Import Items has been amended by substituting the Note of the said Chapter. It was submitted that the Note Page 23 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined No.1 was substituted regarding the export of rare earth compounds which are now classified as Beach Sand Minerals to be regulated in terms of Serial No.98A of Chapter 26 Schedule 2 of the ITC (HS) Classification which includes Teriff Item HS Code 25132030 which covers the goods exported by the petitioners. It was therefore submitted that the export of the Natural Garnet is not prohibited but it is now regulated to be canalized through State Trading Enterprise IREL.
6.2. Reference was also made to paragraph No.4 of the said Notification which stipulates the effect of the Notification for canalizing of the export of the rare earth compounds which includes Ilmenite, Rutile, Leucoxene (Titanium bearing mineral), Zircon, Garnet, Sillimanite and Monazite (Uranium and Thorium) Page 24 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined now termed as Beach Sand Minerals. It was therefore submitted that irrespective of the place of origin of the items which are now described as Beach Sand Minerals in the aforesaid Notification, export of such items shall be regulated by canalizing through IREL. It was therefore submitted that the definition of the Beach Sand Minerals given in the Rules, 2016 or in the Schedule II, Part B of the Act, 1957 will have to be considered from the point of view of the classification which is made by the impugned Notification which includes all the minerals which are included in the item description having Tariff Item HS code to be classified as "Beach Sand Minerals".
6.3. It was further submitted that Tariff Item HS Code stated in the impugned Page 25 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined Notification are from Chapters 25 and 26 of the ITC HS Classification of Export and Import Items. It was submitted that Chapter 25 pertains to Salt, Sulphur, Earths, Stone, Plastering Material, Lime and Cement whereas, Chapter 26 pertains to Ores, Slag and Ash and items mentioned in the impugned Notification refers to the various items which are forming part of the Atomic Minerals to be classified as Beach Sand Minerals.
6.4. It was further submitted that as per the objective stated in the Journal for export of goods, the Central Government is empowered to regulate the exports through State Trading Enterprises as laid down in the Indian Trade Classification (Harmonized System) i.e. ITC HS of exports and imports. In view of the aforesaid impugned Notification, such ITC HS Page 26 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined is now amended by inserting SI No.98A which is a policy decision and would govern all the types of minerals covered by the ITC HS Code to be exported through State Trading Enterprise IREL.
6.5. In support of his submissions, reliance was placed on the decision of the Hon'ble Apex Court in case of M/s Jain Exports Private Limited and Another Versus Union of India and Others reported in (1988) 3 SCC 579 to submit that irrespective of the source of the procurement of the minerals which are covered by the ITC HS Code in the impugned Notification, the same would be classified as Beach Sand Minerals as in the said case, the Hon'ble Apex Court has held that whether the Coconut Oil specified in paragraph 5 of Appendix 9 would cover both Page 27 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined edible and non-edible and merely because the petitioner of the said case imported the Coconut Oil for industrial purpose being non- edible Coconut oil, would not make any difference as the imports of the Coconut Oil was to be canalized through State Trading Enterprise. It was therefore submitted that in the facts of the present case also whether the Natural Garnet is obtained from the beach of the Tamil Nadu, Odisha or any other coast line or from State of Rajasthan would not make any difference for the export to be canalized through State Trading Enterprise as such export shall be classified as Beach Sand Minerals only.
6.6. It was therefore submitted that the definition given in the Rules, 2016 or in the Schedule II, Part B of the Act, 1957 would not Page 28 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined make any difference for the purpose of implementing the impugned Notification qua the items covered by the ITC HS Codes as per the impugned Notification to be exported through IREL only.
7. Having heard the learned advocates for the respective parties and considered the submissions made, it would be germane to refer to the impugned Notification which is the central point of the controversy as to whether the Natural Garnet exported prior to the said Notification by the petitioners would be covered by it or not:
"Notification No 26/2015-2020 New Delhi, Dated: 21 August, 2018 Subject: Export policy of Beach Sand Minerals (BSM) in Chapter 26 of Schedule 2 of ITC(HS) Classification of Page 29 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined Export and Import Items 2018 - regarding.
S.O.(E) In exercise of the powers conferred by Section 3 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992), read with paragraph 1.02 and 2.01 of the Foreign Trade Policy (TP), 2015-2020, as amended from time to time, the Central Government hereby, with immediate effect, makes amendment in export policy of 'Beach Sand Minerals' in Chapter 26 of Schedule 2 of ITC(HS) Classification of Export and Import Items.
2. The existing entries in the 'Note' of Chapter 26 of Schedule 2 of ITC(HS) Classification of Export and Import Items 2018 are substituted as under:
"NOTE:
1. Export off Rare Earth compounds classified as Beach Sand Minerals (BSM) , namely [Ilmenite, Rutile, Page 30 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined Leucoxene (Titanium bearing mineral), Zircon, Garnet, Sillimanite and Monazite (Uranium and Thorium)], shall be regulated in terms of SI. No. 98A of Chapter 26 Schedule 2 of ITC(HS) Classification.
2. Other minerals under code 2617 are freely exportable, except those which have been notified as prescribed substances and controlled under Atomic Energy Act, 1962".
3. A new entry at Sl. No. 98A is inserted in Chapter 26 of Schedule 2 of ITC (HS) Classification of Export & Import Items 2018 as follows:
S.No Tariff Unit Item Export Policy Items HS Description Policy Condition Code 98A 2508 5031 Kg Beach Sand STE Export 2508 5032 Minerals (State through 2508 5039 [Ilmenite, Trading Indian 2612 1000 Rutile,Leuco Enterpr Rare 2612 2000 xene(Titaniu ise) Earths Page 31 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined 2614 0010 m bearing Limited 2614 0020 mineral), (IREL) 2614 0031 Zircon, 2614 0039 Garnet, 2614 0090 Sillimanite 2615 1000 and Monazite 2513 2030 (Uranium and Thorium)]
4. Effect of this Notification:
Export of Beach Sand Minerals have been brought under STE and shall be canalized through Indian Rare Earths Limited (IREL). Beach sand minerals, permitted anywhere in the export policy, will now be regulated in terms of policy under at SI. No. 98A of Chapter 26 of Schedule 2 Export Policy."
8. On perusal of the above Notification, it appears that the Notification has inserted entry SI. No.98A in Chapter 26 of Schedule 2 of ITC (HS) Classification of Export and Pmport Items, 2018. Tariff Items HS Codes mentioned in this include all the items which Page 32 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined are now classified as Beach Sand Minerals including the Garnet as per the Tariff Item HS Code 25132030 which is applicable to the Natural Garnets which were exported by the petitioners prior to the impugned Notification. The Note No.1 prior to the aforesaid impugned Notification reads as under:
"1. Rare Earth compounds are freely exportable, but rare earth phosphates, which contain uranium and thorium are prescribed substances and are controlled as per provisions of Atomic Energy Act, 1962."
9. By the aforesaid Notification, the Note No.1 in Chapter 26 is now substituted to read as under:
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1. Export off Rare Earth compounds classified as Beach Sand Minerals (BSM) , namely [Ilmenite, Rutile, Leucoxene (Titanium bearing mineral), Zircon, Garnet, Sillimanite and Monazite (Uranium and Thorium)], shall be regulated in terms of SI. No. 98A of Chapter 26 Schedule 2 of ITC(HS) Classification.
10. The Note No.2 which existed earlier continued as it is, and provides that the other minerals under code 2617 are freely exportable, except those which have been notified as prescribed substances and controlled under Atomic Energy Act, 1962.
11. Note No.3 has inserted a new entry at SI. No.98A containing the Tariff Item HS Codes as under :
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NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined 25085031 Lumps 25085032 Fines (including sand) 25085039 Other 25132030 Natural garnet 26121000 Uranium ores and concentrates 26122000 Thorium ores and concentrates 26140010 Ilmenite, unprocessed 26140020 Ilmenite, upgraded (beneficiated ilmenite including ilmenite ground) 26140031 Rare earth oxides including rutile sand 26140039 Other 26140090 Other 26151000 Zirconium ores and concentrates
12. It appears from the above description of Tariff Item HS Codes that the Rare Earth Compounds are now being classified as "Beach Sand Minerals" by the impugned Notification. Page 35 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025
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13. It would be therefore necessary to refer to the Rules, 2016 read with provisions of the Atomic Energy Act, 1962. The Rules, 2016 have been come into existence in exercise of powers conferred by Section 11-B of the Act, 1957 and Rule 2(c) defines Beach Sand Minerals as under:
"(c) Beach Sand Minerals" means economic heavy minerals found in the teri or beach sands, which include ilmenite, rutile, leucoxene, garnet, monazite, zircon and sillimanite."
14. The same definition of Beach Sand Minerals is incorporated in Part B of the First Schedule to the Act, 1957 at Serial No.12 being part of the Atomic Minerals. Thus, on conjoint reading of Rules, 2016 read with Part B of the First Schedule of the Act, 1957, it Page 36 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined appears that the same defines Atomic Minerals including Beach Sand Minerals being economic heavy minerals found in the teri or beach sands which include ilmenite, rutile, leucoxene, garnet, monazite, zircon and sillimanite.
15. It is pertinent to note that in the impugned Notification, export of rare earth compounds are classified as Beach Sand Minerals which includes various Tariff Items HS Codes pertaining to the minerals found in the teri or beach sand to be considered as Atomic Minerals, however, the impugned Notification does not refer to either teri or beach sand but only refers to the Beach Sand Minerals or Rare Earth Compounds as per the Tariff Items HS Codes mentioned in the new entry at SI. No.98A inserted in Chapter 26 of Page 37 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined Schedule 2 of ITC (HS) Classification of Export and Import Items, 2018. As per the Tariff Items HS Codes, all types of minerals mentioned as above for the purpose of exports are now classified as 'Beach Sand Minerals' without reference to either teri or beach sand. The contention of the petitioners is that the item description even in the impugned Notification is of paramount importance as it refers to "Beach Sand Minerals" which is defined in the Rules, 2016 as well as in the part B of the First Schedule of the Act, 1957.
16. Reference was made to the Public Interest Litigation before the Hon'ble Madras High Court for being the basis of issuance of the impugned Notification. It appears that on the basis of the aforesaid Notification it was contended that the item description in the Page 38 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined impugned Notification has to be strictly construed to include only the minerals which are found only in teri or beach sand and not in any other part of India for the purpose of regulation of export through State Trading Enterprise.
17. The Hon'ble Apex Court in case of M/s.Jain Exports Private Limited (Supra) in case of import of coconut oil other than the prescribed method of import canalised through State Trading Enterprise as per the relevant Import Policy, held that the import was of non-edible coconut oil and therefore, the said Policy would not cover the import of the non- edible coconut oil. The Hon'ble Apex Court while considering the purport of paragraph No.5 of Appendix 9 of the Import Policy which contains only 'Coconut Oil' whether edible or Page 39 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined not to be canalised item and not the item under the open general items in the export policy of 1980-81, came to the conclusion that as per the terms of the Import Policy of 1980- 81, "Coconut Oil" in paragraph No.5 of the Appendix 9 would include both edible and non- edible oil and therefore, the same is to be imported through State Trading Corporation of India only on the basis of the foreign exchange released by the Government and not under the open general license.
18. The Hon'ble Apex Court in paragraph No.7 of the said decision has discarded the contention of the appellant to apply the change in the Import Policy for the classification in 1981-82 for specifying edible and non-edible coconut oil and held that "if 'Coconut Oil' takes within its fold Page 40 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined all varieties of it, it must follow that in 1980-81, all varieties of coconut oil were included in paragraph 5 of Appendix 9. It is, in our opinion, unnecessary referred to the authorities and presidents to support such and obvious conclusion".
19. In the facts of the present case, the impugned Notification contains ITC HS Codes which would be relevant for the purpose of applying the policy decision of the respondent
-Central Government for regulation of the exports to be canalised through State Trading Enterprise and merely, such Tariff Item HS Codes are classified as 'Beach Sand Minerals' without reference to teri or beach sand, the same would not make any difference and accordingly, the contention raised on behalf of the petitioners that the Natural Garnet Page 41 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined exported by the petitioners prior to the impugned Notification cannot be covered by the impugned Notification is without any basis as the purport of the policy decision of the Central Government is to regulate the exports which are forming part of the Atomic Minerals so as to restrict the export of Minerals which can lead to production of either Thorium or Uranium used for various atomic warheads.
20. In case of Akshay N. Patel versus Reserve Bank of India and Another reported in (2022) 3 SCC 694, the Hon'ble Apex Court while interfering with the policy decision of the Reserve Bank of India has held as under :
"64. Regulating the economy is reflective of the compromise between the interests of private commercial actors and the democratic State that represents and protects the interests of the Page 42 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined collective. Scholars across the world have warned against the judiciary constitutionalising an unregulated marketplace61. This Court must be bound by a similar obligation, in order to preserve its fidelity to the Constitution. With the transformation in the economy, the Courts must also be alive to the socio-economic milieu. The right to equality and the freedom to carry on one's trade cannot inhere a right to evade or avoid regulation. In liberalized economies, regulatory mechanisms represent democratic interests of setting the terms of operation for private economic actors. This Court does not espouse shunning of judicial review when actions of regulatory bodies are questioned. Rather, it implores intelligent care in probing the bona fides of such action and nuanced deference to their expertise in formulating regulations. A casual invalidation of regulatory action in the garb of upholding fundamental rights and freedoms, without a careful evaluation Page 43 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined of its objective of social and economic control, would harm the general interests of the public.
65. In the instant case, the RBI has demonstrated a rational nexus in the prohibition of MTTs in respect of PPE products and the public health of Indian citizens. The critical links between FTP and MTTs have been established by the respondents. Facilitating MTTs in PPE products between two distinct nations may prima facie appear as having no bearing on the availability of domestic stocks. However, the RBI has carefully established the connection between the use of Indian foreign exchange reserves, MTTs and the availability of domestic stocks (as noted in Sections C.2 and C.3). As a developing country with a sizeable population, RBI's policy to align MTT permissibility with the FTP restrictions on import and export of PPE products cannot be questioned. Thus, this Court is constrained to defer to the regulations imposed by RBI and the Page 44 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined UOI, in the interests of preserving public health in a pandemic. This deference is by no means uncritical. In fact, one of us (Justice D Y Chandrachud), in a three-judge Bench of this Court in Gujarat Mazdoor Sabha v. State of Gujarat had decried the State's tenuous claim of a public health emergency to dilute welfare conditions in labour laws. This Court had stressed that balancing individual rights against measures adopted to combat the public health crisis must continue to satisfy the test of proportionality. Justice D Y Chandrachud noted:
"30. Even if we were to accept the respondent's argument at its highest, that the pandemic has resulted in an internal disturbance, we find that the economic slowdown created by the Covid-19 Pandemic does not qualify as an internal disturbance threatening the security of the State. The pandemic has put a severe burden on existing, Page 45 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined particularly public health, infrastructure and has led to a sharp decline in economic activities. The Union Government has taken recourse to the provisions of the Disaster Management Act, 2005. However, it has not affected the security of India, or of a part of its territory in a manner that disturbs the peace and integrity of the country. The economic hardships caused by Covid-19 certainly pose unprecedented challenges to governance. However, such challenges are to be resolved by the State Governments within the domain of their functioning under the law, in coordination with the Central Government. Unless the threshold of an economic hardship is so extreme that it leads to disruption of public order and threatens the security of India or of a part of its territory, recourse cannot be taken to such emergency powers which are to be used sparingly under the Page 46 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined law. Recourse can be taken to them only when the conditions requisite for a valid exercise of statutory power exist under Section 5. That is absent in the present case.
40. The need for protecting labour welfare on one hand and combating a public health crisis occasioned by the pandemic on the other may require careful balances. But these balances must accord with the rule of law. A statutory provision which conditions the grant of an exemption on stipulated conditions must be scrupulously observed. It cannot be interpreted to provide a free reign for the State to eliminate provisions promoting dignity and equity in the workplace in the face of novel challenges to the State administration, unless they bear an immediate nexus to ensuring the security of the State against the gravest of threats."Page 47 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025
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66. Thus, it is not this Court's stance that judicial review is stowed in cold storage until a public health crisis tides over. This Court retains its role as the constitutional watchdog to protect against State excesses. It continues to exercise its role in determining the proportionality of a State measure, with adequate consideration of the nature and purpose of the extraordinary measures that are implemented to manage the pandemic. Democratic interests that secure the well-being of the masses cannot be judicially aborted to preserve the unfettered freedom to conduct business, of the few.
67. Therefore, we find that the judgment dated 8 October 2020 of the Madhya Pradesh High Court was correct in holding that Clause 2(iii) of the 2020 MTT Guidelines was a proportionate measure in ensuring the availability of sufficient domestic stock of PPE products. The measure was validly Page 48 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined enacted, in pursuance of legitimate state interest and did not disproportionately impact the fundamental rights of the appellant. Hence, Clause 2(iii) passes muster under Articles 14, 19(1)(g) and 21. For the reasons noted in this judgment, we see no need to interfere."
21. We are therefore, of the opinion that the impugned Notification is a proportionate means in regulating the export of Atomic Minerals which includes Garnet whether found from teri or anywhere else in pursuance of the legitimate State interest and did not disproportionately impact the fundamental rights of the petitioners.
22. In view of the foregoing reasons, we do not find any substance to the challenge in the impugned Notification and petition is Page 49 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025 NEUTRAL CITATION C/SCA/5753/2022 ORDER DATED: 17/01/2025 undefined accordingly dismissed with no orders as to cost. Notice is discharged.
(BHARGAV D. KARIA, J) (D.N.RAY,J) PALAK Page 50 of 50 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Jan 30 2025 Downloaded on : Sat Feb 01 01:35:15 IST 2025