UNION OF INDIA AND ORS. versus M/S ASIAN FOOD INDUSTRIES

Citation: [2006] SUPP. 8 S.C.R. 485 · Decided: 07-11-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Disposed off

Judgment (excerpt)

UNION OF INDIA AND ORS. 
A 
v. 
M/S ASIAN FOOD INDUSTRIES 
NOVEMBER 7, 2006 
[S.B. SINHA AND MARKANDEY KA TJU, JJ.] 
B. 
Customs Act, 1962-Sections 11, 16, 39 and 51-Foreign Trade 
(Development and Regulation) Act, 1992-Sections 3 & 5-Notification 
issued by Central Government banning export of pulses-Subsequent C 
notification issued permitting export against irrevocable letter of credit prior 
to a certain date-Effect of goods cleared but not shipped-Customs 
authorities denying permission to allow shipment of such goods in view of 
notifications-Writ petition by exporter allowed by High Court-Correctness 
of-Held, notifications will have a prospective effect and cannot take away 
accrued or vested right. 
D 
Central Government issued a notification on 27th June, 2006 under 
section 5 of the Foreign Trade (Development and Regulation) Act, 1992 
banning export of pulses. The Customs authorities immediately directed Port 
Trust not to allow consignment of pulses to be shipped. The Central 
Government issued another notification on 4th July 2006 permitting export E 
against irrevocable letter of credit opened prior to 22nd June 2006. 
Respondent-exporter of pulses s.ought permission from the customs 
authorities to allow their consignment of pulses to be shipped in view of the 
latter notification since the customs authorities already issued Let Export 
orders to the Port Trust in favour of the respondents. When the authorities F 
refused permission, the respondents filed a Writ Petition before High Court 
which was allowed. 
1n another Civil Appeal, the respondent-exporter, who had an irrevocable 
letter of credit opened in his favour on 24th June 2006 challenged the latter 
notification of the Central Government dated 4th July 2006 by a Writ Petition G 
in High Court. The High Court allowed the Writ Petition. 
In appeals to this Court, Union oflndia contended that the expmt or 
pulses and grains are prohibited goods and not merely regulated or restricted 
485 
H 
486 
SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R. 
A and hence clause 1.5 of Chapter IA of the Foreign Trade Policy is not 
applicable; that the procedures laid down under sections 16 and 39 read with 
section 51 of the Customs Act, 1962 have not been complied with; and that 
the notification shall be effective even if a concluded contract had been arrived 
at for export of goods. 
B 
The respondents contended that the amendment in the Foreign Trade 
Policy prohibiting export of pulses through notification dated 27th June, 2006 
will be prospective in effect and not retrospective; that the notification does 
not apply to a case where the formalities contained in section 51 of the 
Customs Act, 1962 had been complied with; and that the retrospective effect 
C purported to have been given in terms of the notification dated 4th July, 2006 
is unconstitutional being hit by Article 14 of the Constitution oflndia. 
Disposing the appeals, the Court 
HELD: 1.1. The purport and object for which the Foreign Trade 
D (Development & Regulation) Act, 1992 was enacted was to make provision 
·for the development and regulation of foreign trade inter alia by augmenting 
exports from India. While laying down the policy, the Central Government is 
empowered to make provision for prohibiting, restricting or otherwise 
regulating !xport of goods. When an order is issued under section 3(3) of 
the 1992 Act, the export of goods would be deemed to be prohibited also under 
E section 11 of the Customs Act, 1962 and in relation thereto the provisions 
thereof shall also apply. The provisions of the 1992 Act, the Foreign Trade 
Policy and the procedures laid down thereunder provide for a composite 
scheme. In implementing the said provisions ofthe scheme, in the event an 
order of prohibition, restriction or regulation is passed, the provisions of the 
F 1962 Act mutatis mutandis would apply. [495-C, D, F) 
1.2 The scheme of the Foreign Trade Policy postulates that when the 
policy provisions are amended which are disadvantageous to the exporters, 
the modifications would not be attracted. Section 51 of the 1962 Act does not 
say that unless and until the shipment, crosses the international border, the 
G notification imposing prohibition shall be attracted. For interpretations of the 
provisions of the 1992 Act and the policy laid down and the procedures framed' 
thereunder vis-a-vis the provisions of the 1962 Act, the rate of customs duty 
has no relevance. What would be relevant f

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