Madras High Court
Tamil Nadu Cashew Processors & ... vs Union Of India on 6 January, 2021
W.P.No.12136/2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 06.01.2021
CORAM
THE HONOURABLE MRS. JUSTICE PUSHPA SATHYANARAYANA
W.P.No.12136 of 2020
and W.M.P.No.14878 of 2020
Tamil Nadu Cashew Processors & Exporters
Associated represented by its Secretary,
M.Ramakrishnan,
No.11, Siva Sakthi Nagar,
Near Taluk Office,
Old Kumbakonam Road,
Panruti-607 106. .. Petitioner
Vs.
1. Union of India,
Ministry of Commerce and Industry,
New Delhi-110 107
represented by its Secretary
2. The Directorate General of Foreign Trade,
Office of the Director General of Foreign Trade,
Udyog Bhavan, New Delhi-110 011.
3. The Deputy Director General of Foreign Trade,
Office of the Director General of Foreign Trade,
Udyog Bhavan, New Delhi-110 011. .. Respondents
***
Prayer : Writ Petitions filed under Article 226 of the Constitution of
India praying for a Writ of Certiorari and call for the records pertaining to
the impugned Trade Notice No.50/2019-20 dated 14.02.2020 issued by
the third with the approval of the second respondent in File
No.01/89/80/M-1898/AM03/PC-2[A]/P-16241) and quash the same.
***
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For Petitioner : Mr.Hariradhakrishnan
For Respondents : Mr.J.Madhanagopal Rao,
Central Government Standing Counsel
ORDER
The question that has to be decided in the instant writ petition is
whether a Trade Notification can be amended by a Trade Notice in terms
of Section 3 of the Foreign Trade (Development and Regulation) Act,
1992 (in short, "the FTDR Act").
2. The short facts relevant for the decision of this writ petition are
as follows :
2.1. The second respondent - the Director General of Foreign
Trade, had issued Notification No.8/2015-20, dated 12.06.2019
prohibiting the impart of broken cashew kernels and whole cashew
kernels, subject to a minimum import price of Rs.680/- per kg for broken
cashew kernels and Rs.720/- per kg for whole cashew kernels.
Subsequently, upon instructions of the second respondent, the third
respondent had issued Trade Notice No.50/2019-20, dated 14.02.2020,
wherein, the rigors introduced in Notification No.8/2015-20, dated
12.06.2019 are taken away.
2.2. It is the case of the petitioner that once a notification is issued
under Section 3 of the FTDR Act read with Foreign Trade Policy, a Trade
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Notice cannot be issued to amend the rigor of the same. It is stated that
originally there were no conditions prescribed for import of cashew
kernels either broken or whole and the import was free subject to
payment of customs duty alone. A Minimum Import Price (MIP) was
introduced on cashew in 2013 by the respondents fixing the rate of
Rs.288/- per kg and Rs.400/- per kg for broken and whole cashew
kernels respectively. The said MIP was also applicable to Special
Economic Zones (SEZs) and Export Oriented Units (EOUs) as well.
2.3. The African countries, where raw cashew is available in plenty,
provide subsidy and incentives to the tune of 50% and above on export
of their products and those countries started processing. As these
products did not have an international market, they found their way into
India through the channels and was exported to the international market
branding them as Indian products, as Indian cashew has value and
acceptability in the market. Thus, the dealers in import of cashew from
Africa enjoyed the subsidies given by the African Government, imported
the same into India and exported it using the Indian brand. India is the
only market for broken cashew kernel and no other country consumes
broken cashew kernels. This was an added advantage to import broken
cashew kernels from Africa, which would be separated in India and whole
cashew kernels are exported from India. This resulted in poor quality
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cashew kernels being pumped into India. Hence, to protect the Indian
market Notification No.8/2015-20, dated 12.06.2019 came to be issued.
2.4. It is further stated that under the pretext of job work, the
imported cashew kernel was diverted into local market in majority of the
cases and sold her in cheap prices. The re-exporters also enjoyed all the
export benefits that are available to the trade. This kind of imports of
broken cashew kernels led many of cashew units here to closure and
only to remove such anomalies, the notification dated 12.06.2019 was
issued in terms of Section 3 of FTDR Act and in terms of paragraph 1.02
and 2.01 of Foreign Trade Policy.
2.5. While so, the impugned Trade Notice No.50/2019-20, dated
14.02.2020 was issued clarifying that the MIP on cashew kernel is not
applicable for imports by 100% units EOUs and the SEZs. The said Trade
Notice is questioned in this writ petition on the ground that a Trade
Notice cannot amend a notification issued under Section 3 of the FTDR
Act and the same can be done only by issuance of another notification.
3. The writ petition was resisted by the respondents placing
reliance on Section 5 of the FTDR Act, which empowers the Government
of India to issue a Foreign Trade Policy. According to the respondents,
the Trade Notice dated 14.02.2020 only elaborated or clarified the
notification dated 12.06.2019 without adding or modifying the policy.
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The relaxation given under the Trade Notice allowing the import of
cashew kernels to SEZs and EOUs subsequent to the notification dated
12.06.2019 is not to modify the policy or procedure and therefore, a
separate notification is not required. Hence, it is stated that the
impugned Trade Notice is not any amendment to the earlier notification
and accordingly, the petitioner cannot challenge the same.
4. Heard both sides.
5. Before delving into the powers of the respondents in issuing the
Notification or a Trade Notice, it would be useful to reproduce Section 3
of the FTDR Act, which provides for the power for making the provisions
to import and export, as hereunder :
"3. Powers to make provisions relating to imports and export—
(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 or services or technology :
Provided that the provisions of this sub-section shall be
applicable, in case of import or export of services or technology, only
when the service or technology provider is availing benefits under the
foreign trade policy or is dealing with specified services or specified
technologies.
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(3) All goods to which any Order under sub-section (2) applies
shall be deemed to be goods the import 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.
(4) Without prejudice to anything contained in any other law,
rule, regulation, notification or order, no permit or licence shall be
necessary for import or export of any goods, nor any goods shall be
prohibited for import or export except, as may be required under this
Act, or rules or orders made thereunder."
6. Section 5 of the FTDR Act is also relevant, which reads as
follows:
"5. Foreign Trade Policy — The Central Government may,
from time to time, formulate and announce, by notification in the
Official Gazette, the foreign trade policy and may also, in like
manner, amend that policy: Provided that the Central Government
may direct that, in respect of the Special Economic Zones, the foreign
trade policy shall apply to the goods, services and technology with
such exceptions, modifications and adaptations, as may be specified
by it by notification in the Official Gazette."
7. The contention of the learned counsel for the petitioner is that
the Trade Notice is not issued under any particular provisions of the FTDR
Act. There is no source of power for issuing a Trade Notice. As stated in
the counter-affidavit, a Trade Notice is procedurally issued for clarifying
certain doubts that may arise among the traders. The Notification
No.8/2015-20, dated 12.06.2019 is silent about the applicability of
restriction imposed on import of cashew kernels broken or whole to the
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units in SEZs and 100% EOUs. When such is the position, by placing
reliance on the Section 3 and 5 of the FTDR Act, it is stated that the
Trade Notice is issued stating that MIP on cashes is not applicable for
imports by 100% EOU and units in SEZs. A reading of the proviso to
Section 5 stipulates the issuance of a separate notification for the
applicability of the Trade Notification or in any exemption, modifications
and adaptations by a specific notification in the official Gazette.
8. As stated earlier, the import of cashew kernels both broken and
whole were allowed, without any condition, for import, excepting the
payment of Customs Duty till 2013. After the introduction of MIP, it was
made applicable to SEZs and EOUs as well. The African countries where,
the raw cashew is available in plenty, started processing and providing
subsidy and incentives for export of the said products. Hence, the
cashews were imported to India and were re-exported, which does not
involve much processing and also not involve job opportunity. The re-
exporters were enjoying all the export benefits that are available in the
trade and the genuine processors in India were unable to compete. In
fact, several of the cashew processing units were forced to be closed.
This, in turn, also resulted in lower returns of cashew farmers as low
priced cashew was otherwise available in the market.
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9. The learned counsel for the petitioner would submit that a Trade
Notice is one by which the Government informs the public at large and
the same cannot be issued to amend the Notification issued in terms of
Section 3 of the FTDR Act and therefore, the impugned Trade Notice has
to be quashed.
9.1. In support of his contention, learned counsel for the petitioner
relied on the following judgments :
9.2. In State of Bihar and Another V. J.A.C.Saldanha and
others, (1980) 1 SCC 554, it has been held as follows :
"17. ...... It was incidentally submitted that it is an undisputed
dictum of law that when a statute requires a thing to be done in a
certain manner it shall be done in that manner alone and the court
would not expect its being done in some other manner (see State of
Gujarat v. Shantilal Mangaldas, (1969) 1 SCC 509. Expounding the
submission it was stated that sub-section (8) of Section 173 clearly
indicates the power of further investigation after submission of a
report and that power is conferred on the officer in charge of a police
station only and, therefore, the State Government was incompetent
to direct further investigation. It was further contended that in view
of the provision contained in Section 173(8) it would not be open to
the court to so interpret the word “superintendence” in Section 3 of
the Police Act as to empower the State Government to direct
investigation being done by some one other than the statutory
authority envisaged by Section 173(8) because such an interpretation
would derogate from the principle that where a thing is required by a
statute to be done in a particular way it shall be deemed to have
prohibited that thing being done in any other way. In Ex parte
Stephen [(1876) 3 Ch D 659] the principle is stated that if a statute
directs a thing to be done in a certain way that thing shall not, even
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if there be no negative words, be done in any other way. Subba Rao,
J. in Patna Improvement Trust v. Smt Lakshmi Devi, AIR 1963 SC
1077 spelt out the combined effect of the aforementioned principles
thus:
“A general Act must yield to a special Act dealing with a
specific subject-matter and that if an Act directs a thing to be
done in a particular way, it shall be deemed to have prohibited
the doing of that thing in any other way.”
9.3. This Court in M.S.D.Thenraja V. Executive Officer, 1997 (2)
CTC 507, has held as follows :
"24. The Cantonments Electoral Rules, 1945 Chapter VII, Rule
42 contemplates election petition and Rule 47 contemplates grounds
for declaring election void and sub-clause (a)(ii) of Rule 47 talks of
improper acceptance or refusal of nomination paper. Therefore, when
a statute contemplates a remedy to a person aggrieved of rejection
of nomination paper, it is settled law when the scheme of the Act and
the Rules prescribed thereunder contemplates that a specific act
should be done in a particular manner, it has to be done only in that
manner and in no other way. It is also settled in law, when the
disputed questions of facts require evidence and a remedy has been
provided, this court under Art. 226 should not venture to decide such
disputed questions of facts.
9.5. The Hon'ble Supreme Court in Babu Verghese and Others
V. Bar Council of Kerala, AIR 1999 SC 1281, has held thus :
"31. It is the basic principle of law long settled that if the
manner of doing a particular act is prescribed under any statute, the
act must be done in that manner or not at all. The origin of this rule
is traceable to the decision in Taylor v. Taylor [(1875) 1 Ch D 426 :
45 LJCh 373] which was followed by Lord Roche in Nazir Ahmad v.
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King Emperor [(1936) 63 IA 372 : AIR 1936 PC 253] who stated as
under:
“[W]here a power is given to do a certain thing in a certain way,
the thing must be done in that way or not at all.”
9.5. A reading of the above decisions only would go to show that if
statutorily a particular thing has to be done in a particular way, it shall be
deemed to have prohibited being done in any other way. Though the
Government is at liberty take a policy decision, it has to be done, as
mandated under the relevant Statute.
10. Similarly, in the case of hand also, Notification No.8/2015-20,
dated 12.06.2019, which was issued in exercise of power conferred by
Section 3 of the FTDR Act read with paragraph 1.02 and 2.01 of the FTP
2015-2020, which, in the considered opinion of this Court, is an
amendment in import policy conditions of cashew kernels both broken
and whole. This Court is also of the view that any further amendment or
clarification of this nature should also be made only as per Section 3 and
not by a mere notice, which is not in accordance with the Statute. A
reading of the Notification and subsequent Trade Notice makes it clear
that Notification No.8/2015-20, dated 12.06.2019, enhancing the MIP of
the broken and whole cashew kernels, wherein, the Trade Notice
No.50/2019-20, dated 14.02.2020 states that the same is not made
applicable to the EOUs and SEZs, which is certainly an amendment to the
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Trade Notification and it is cannot be stated that it is a mere elaboration,
information or clarification to the Regional Authorities of the Directorate,
as claimed by the respondents. Hence, the said clarification or
modification to the original Notification cannot be made in terms of a
mere notice without following the statutory procedure, in the given case.
11. At this juncture, it is to be stated that the Notification
No.8/2015-2020, dated 12.06.2019 is silent about the object, for which,
it was issued. So also, the Trade Notice. The Statute empowers the
Central Government to prohibit importation and exportation of goods for
various purposes, which includes (i) the maintenance of standards for the
classification, grading or marketing of goods in international trade ; and
also (ii) the prevention of serious injury to domestic production of goods
of any description. The allegation of the petitioner that the cashews
imported from African countries are exported to foreign countries
branding them as Indian cashews, which fact is not denied by the
respondents in the counter-affidavit, cannot be brushed aside lightly. It
is duty of the respondents to ensure maintenance of standards for the
classification, grading or marketing of Indian goods in international
grade, even from EOUs and SEZs and there should not be any space for
compromise for the Indian brand name for any short gain by the Traders.
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12. In view of the above factual matrix and also the decisions relied
on by the learned counsel for the petitioner, the impugned Trade Notice
is liable to be set aside. Accordingly, this writ petition is allowed and the
impugned Trade Notice No.50/2019-20, dated 14.02.2020 is set aside.
This will not preclude the respondents from issuing any further
amendment to Notification No.8/2015-2020 in the manner known to law.
There shall be no order as to costs. Consequently, connected
miscellaneous petition is closed.
06.01.2021
Index : Yes / No
Internet: Yes
gg
To
1. The Secretary,
Ministry of Commerce and Industry,
Union of India,
New Delhi-110 107.
2. The Directorate General of Foreign Trade,
Office of the Director General of Foreign Trade,
Udyog Bhavan, New Delhi-110 011.
3. The Deputy Director General of Foreign Trade,
Office of the Director General of Foreign Trade,
Udyog Bhavan, New Delhi-110 011.
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PUSHPA SATHYANARAYANA, J.
gg
W.P.No.12136 of 2020
06.01.2021
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