Transitional Clause vs. Safeguard Measures in Trade Policy: Delhi HC Upholds LAM Coke Import Restrictions, Denies ICLC-Based Relief [Read Order]

JSW Steel Limited, Sunflag Iron and Steel Co. Ltd., and Trafigura India Pvt. Ltd. filed writ petitions challenging a government notification dated 26 December 2024, which imposed country-wise quantitative restrictions on the import of Low Ash Metallurgical (LAM) Coke with effect from 1 January 2025.

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The notification was issued by the Central Government based on the final findings of the Directorate General of Trade Remedies (DGTR) under the Safeguard Measures (Quantitative Restrictions) Rules, 2012, after a detailed investigation into the harm caused to domestic industry.

The petitioners had entered into contracts and opened Irrevocable Commercial Letters of Credit (ICLCs) prior to the notification. They argued that under paragraph 1.05(b) of the Foreign Trade Policy, 2023, their imports should be permitted despite the change in policy from “free” to “restricted,” since their commitments were made in advance and registered within the prescribed 15-day period.

The government’s counsel argued that paragraph 1.05(b) of the FTP applies only to general policy changes made under Section 3 of the FTDR Act, and not to safeguard measures under Section 9A of the Foreign Trade (Development and Regulation) Act, 1992.

They also argued that allowing the petitioners’ imports, which were far above the allotted quota for certain countries, would defeat the purpose of the restriction and harm the domestic industry. The counsel pointed out that the safeguard action followed an extensive investigation and that all stakeholders, including importers, were aware of the pending restrictions.

The single-judge bench comprising Justice Sachin Datta observed that Section 9A and Section 3 of the FTDR Act serve different purposes. Section 3 allows for policy-level changes where transitional protection may apply and Section 9A specifically provides for emergency safeguard measures to prevent or remedy serious injury to domestic industry.

The court explained that the transitional clause under paragraph 1.05(b) was intended for cases under Section 3 and cannot be extended to notifications issued under Section 9A. The court pointed out that the safeguard notification was based on a structured investigation under the 2012 Rules, and that once such a notification is published, it takes immediate effect.

The court also observed that the FTP itself does not provide transitional relief for safeguard actions, and that importing quantities beyond the permitted quota would undermine the purpose of the restrictions.

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The court held that the petitioners were not entitled to the benefit of the transitional clause under the FTP and that the DGFT acted within its authority in rejecting their applications for ICLC registration. The writ petitions were dismissed.