In a recent ruling, the Karnataka High Court held that only the Central Government can make provision for prohibiting, restricting, or regulating the import or export of goods or services, or technology and not the Director General of Foreign Trade ( DGFT ) in relation to the Foreign Trade Policy ( FTP ), thereby granting relief to M/s Patanjali Foods Limited, the petitioner.
The petitioner is engaged in the business of solvent extraction, refining of oils, manufacture of soya food products, and import, export, and trading of agricultural commodities. The petitioner had entered into a contract with its foreign supplier viz. Aston Agro-industrial SA, Switzerland for import of Crude Sunflower Seed Oil of Edible Grade in Bulk. The foreign supplier supplied 6000 MTs of the subject goods. The subject goods were shipped with a port of discharge Mangalore Port, India.
The DGFT, in the exercise of his powers under paragraphs 1.03 and 2.04 of the FTP, issued a Public Notice dated 24.05.2022, by which Tariff Rate Quota (TRQ) was allocated for the financial years 2022-23 and 2023-24. The Public Notice later amended paragraphs 2.60 and 2.61 of the Handbook of Procedures by laying down procedural conditions for Crude Soya-bean oil, whether or not degummed and Crude Sunflower seed oil.
The Counsel for the petitioner contended that the FTP is framed by the Central Government under the FTDR Act and it provides for the DGFT to issue a Handbook of Procedure by way of a Public Notice and also amend/vary/alter the Handbook of Procedure by way of a Public Notice. The DGFT is empowered or authorized only to issue a public notice as aforesaid to regulate the procedure and not change/alter/modify the FTP which can be done only by the Central Government.
The Department contended that the DGFT is an authority constituted under the FTDR Act and is entitled to issue public notices prescribing the procedure.
The Bench of Justice SR Krishna Kumar observed that “Only the Central Government can formulate and announce the Foreign Trade Policy by ‘Notification’ in the Official Gazette and may also, in like manner, amend that policy. The power of the Central Government to formulate and amend the Foreign Trade Policy cannot be exercised by DGFT.”
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