In a recent case, the Andhra Pradesh High Court has held that the trade notification issued by the Directorate General of Foreign Trade ( DGFT ) prohibiting the export of non-basmati white rice cannot have a retrospective effect.
Sree Murali Mohana Boiled & Raw Rice Mill Pvt. Ltd, the petitioners are engaged in the business of procurement and export of rice. They entered into supply contracts with their foreign buyers on different dates for export of the non-Basmati India white rice for the quantities mentioned in the respective contracts and agreements. The petitioners are required to supply the agreed quantities as per the schedule mentioned in the agreements and contracts.
On 20.07.2023, the department issued Notification No. 20 of 2023 prohibiting export of non-Basmati white rice (semi-milled or wholly-milled rice, whether or not polished or glazed) with immediate effect. Subsequently, the department issued Trade Notice No. 23 of 2023, dated 18.08.2023, clarifying certain conditions in Para No. 2 of the Notification dated 20.07.2023.
The petitioners challenged the action of the department respondent in issuing Notification No. 20 of 2023 dated 20.07.2023 and the clarification in Trade Notice No. 23/2023 dated 18.08.2023.
The question was Whether the policy can be given retrospective effect and allowed to take away the vested rights. The petitioner contended that the notification is not in conformity with the Foreign Trade Policy-2023. Acting on the policy, which was in force, the petitioners have entered into contracts/agreements with the foreign buyers, secured Letters of Credit, and placed orders/procured the non-basmati white rice from the local dealers. The vested rights accrued to the petitioners by virtue of the policy that was in existence prior to the issuance of the notification cannot be taken away under the guise of a change in the policy, that too without any notice or opportunity to the petitioners.
It was observed that the existing policy with regard to the export of non-Basmati white rice is changed in “public interest, and the export of the same is prohibited by carving out certain exceptions. Therefore, the notification cannot be held to be contrary to the foreign trade policy.
A single bench of Justice Ninala Jayasurya has observed that the Foreign Trade (Development and Regulation) Act-1992 does not confer any right to the authorities/department or enable them to issue any notification that has the effect of imposing prohibition with retrospective effect or take away the vested rights accrued to the petitioners by virtue of the Foreign Trade Policy, 2023, prior to the issuance of the notification.
While rejecting the petitioner’s contention, the court held that the petitioners are still at the stage of procurement of the non-Basmati white rice and they cannot be equated with those of exporters who made all arrangements for shipment.
The court disposed of the Writ Petitions holding that the Notification shall have prospective effect only and it shall not impede the petitioners’ exports of non-Basmati white rice in fulfillment of their contractual obligations with the foreign buyers.
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