Kerala High Court
Global Industries vs Union Of India on 2 November, 2010
Author: Antony Dominic
Bench: Antony Dominic
IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 6747 of 2009(K)
1. GLOBAL INDUSTRIES
... Petitioner
Vs
1. UNION OF INDIA
... Respondent
For Petitioner :SRI.C.K.KARUNAKARAN
For Respondent :SRI.JOHN VARGHESE,SC,CEN.BOARD OF EXCIS
The Hon'ble MR. Justice ANTONY DOMINIC
Dated :02/11/2010
O R D E R
ANTONY DOMINIC, J.
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W.P.(C) Nos.6747, 5135, 5481, 5822, 5990, 8479, 29465,
31806, 243, 257, 1065/2009 & 20318, 23273, 26671,
34054, 36296, 36302/2008 and 32270, 34282, 9624,
35133, 37012/2007, 7379, 7380, 9176, 9626, 10324,
29039, 33417/2008 & 2275, 26359/2010
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Dated this the 2nd day of November, 2010
J U D G M E N T
W.P.(C) Nos.6747, 5135, 5481, 5822, 5990, 8479, 29465, 31806, 243, 257, 1065/2009 & 20318, 23273, 26671, 34054, 36296, 36302/2008 These writ petitions have been filed by importers of betel nuts, challenging notification No.15(RE-2008)/2004- 2009 dated 04-06-2008 issued by the Director General of Foreign Trade in the purported exercise of powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Foreign Trade Policy - 2004-2009, amending Schedule -1(Imports) of the Import Trade Control(HS) Classifications of Export and Import Items, 2004-2009, incorporating the condition that import of betel nuts, whole, split, ground and others, will be permitted freely provided the CIF value is Rs.35/- per W.P.(C) Nos.6747/2009 & connected cases : 2 : Kilogram and above. Among others, it is contended by the learned counsel for the petitioners that the Director General of Foreign Trade had no jurisdiction, either under the FTDR Act, 1992 or the Foreign Trade Policy, to have issued the notification and, therefore, the notification is illegal and unconstitutional.
2. A counter affidavit has been filed by respondents 1 and 2. In paragraph 6 of the counter affidavit, it has been stated thus:-
"6. It is denied that Ext.P1 notification is arbitrary, discriminatory, issued with oblique motive and not in public interest. The Ext.P1 notification has been issued to protect the interests of the domestic cultivators. It has been issued by the DGFT in public interest in exercise of powers conferred under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Foreign Trade Policy 2004-2009 according to which the Central Government is empowered to W.P.(C) Nos.6747/2009 & connected cases : 3 : make amendment in Schedule I(Imports) of ITC(HS) Classification of Export and Import Items 2004-2009. The issuance of the above notification is a policy decision of the Central Government in exercise of the powers conferred under the above Act."
3. The averments in paragraph 6 have been reiterated in paragraph 10 of the counter affidavit also.
4. Thus, it is obvious that even according to respondents 1 and 2, Ext.P1 notification has been issued by the Director General of Foreign Trade and the question is whether he had the jurisdiction to have issued the same. Answer to this question is available in the FTDR Act, 1992 itself. Section 3 of the Act provides that 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. Sub Section 2 authorises the Central Government to issue order published in the official gazette providing for prohibiting, W.P.(C) Nos.6747/2009 & connected cases : 4 : restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, the import or export of goods.
5. Sections 5 and 6 of the Act being relevant are extracted below:-
" 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 the like manner, amend that policy.
6. Appointment of Director General and his functions - (1) The Central Government may appoint any person to be the Director General of Foreign Trade for the purposes of this Act.
(2) The Director General shall advise the Central Government in the formulation of the export and import policy and shall be responsible for carrying out that policy.
(3) The Central Government may, by Order published in the Official Gazette, direct W.P.(C) Nos.6747/2009 & connected cases : 5 : that any power exercisable by it under this Act (other than the powers under Sections 3, 5, 15, 16 and 19) may also be exercised, in such cases and subject to such conditions, by the Director General or such other officer subordinate to the Director General, as may be specified in the Order."
6. Reading of these Sections shows that it is only the Central Government which can formulate export and import policy and amend the said policy. It also is evident that the power conferred on the Central Government under Section 5 cannot be delegated to the Director General of Foreign Trade appointed under Section 6 of the Act. If this be the position, and as admittedly the notification has been issued by the Director General of Foreign Trade, it has to be concluded that the notification is issued without jurisdiction.
7. Learned counsel for the petitioners has also made available before me judgment of the Madras High Court in S.Mira Commodities Pvt. Ltd. Vs. Union of India [2009 (235) ELT 423], wherein the Madras High Court has quashed W.P.(C) Nos.6747/2009 & connected cases : 6 : Ext.P1 notification on the very ground itself.
8. Therefore, in view of the statutory provision referred above and in the light of the judgment of the Madras High Court, the notification dated 04-06-2008 issued by the Director General of Foreign Trade is illegal and is to be set aside and I do so.
9. Counsel for the third respondent submits that since goods imported by the petitioners have been cleared under the interim orders passed in these writ petitions, respondents should be permitted to proceed under the provisions of the Customs Act. Now that the notification has been set aside, as a necessary consequence, respondents shall be free to proceed against the petitioners in terms of the provisions of the Customs Act, 1962 and it is so clarified.
Subject to the above, writ petitions will stand allowed. W.P.(C) Nos.32270, 34282, 9624, 35133, 37012/2007, 7379, 7380, 9176, 9626, 10324, 29039, 33417/2008 & 2275, 26359/2010 In these writ petitions also, notifications issued by W.P.(C) Nos.6747/2009 & connected cases : 7 : the Director General of Foreign Trade dated 20-02-2007, 10- 07-2007, 29-08-2007 and 04-06-2008 are under challenge. These notifications also suffer the very same invalidity on the basis of which, W.P.(C) No.6747/2009 and connected cases were allowed by this Court by judgment rendered today.
Therefore, for the very same reasons, these writ petitions will also stand allowed setting aside the notifications.
Now that the notifications have been set aside, it is clarified that the respondents shall have the freedom to proceed against the petitioners under the Customs Act, if they deem so necessary.
Sd/-
(ANTONY DOMINIC, JUDGE) aks // True Copy // P.A. To Judge