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Central Govt. Has Authority To Impose 'Quantitative Restrictions' On Import U/Sec. 3(2) FTDR Act: SC [Read Judgment]

Ashok Kini
26 Aug 2020 11:15 AM GMT
Central Govt. Has Authority To Impose Quantitative Restrictions On Import U/Sec. 3(2) FTDR Act: SC [Read Judgment]
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"Section 9A of the FTDR Act does not elide or negate the power of the Central Government to impose restrictions on imports."
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The Supreme Court has observed that the Central Government has the authority to impose quantitative restrictions by an order under Section 3(2) of the Foreign Trade (Development and Regulation) Act, 1992.
Section 9A of the FTDR Act does not elide or negate the power of the Central Government to impose restrictions on imports under sub-section (2) to Section 3 of the FTDR Act, the bench comprising Justices AM Khanwilkar, Dinesh Maheshwari and Sanjiv Khanna observed.
The Court was considering writ petitions filed by various importers challenging the validity of the notifications issued by the Union of India [S.O. Numbers. 1478-E,1479-E, 1480-E and 1481-E] . Before the Apex Court, it was contended that the impugned notifications were in the nature of 'quantitative restrictions' under Section 9A of the FTDR Act, which could be only imposed by the Central Government after conducting such enquiry, as is deemed fit, and on being satisfied that the "goods are imported into India in such quantities and under such conditions as to cause or threatens to cause serious injury to domestic industry."  
Section 3 deals with the powers of the Central Government to make provisions relating to imports and exports while Section 9A deals with the powers to make provisions relating to imports and exports. The contention raised by the importers was that the Section 9A is a special provision dealing with 'quantitative restrictions', whereas Section 3 is a general provision. 
The court, referring to these provisions observed that for quantitative restrictions to be imposed under Section 9A of the FTDR Act, following conditions must be cumulatively satisfied, namely, (a) increased quantities of imports (b) that have caused (c) serious injury or threaten to cause serious injury to domestic industries. Further, as per the procedure prescribed by the Rules, the Appropriate Authority has to initiate proceedings, investigate, hear parties and adjudicate on the satisfaction of the conditions. The court also noted that Sub-section (2) to Section 3,  authorities the Central Government to, by an Order published in the Official Gazette, make provisions restricting the imports or exports. Imposition of quantitative restrictions on imports or exports would clearly fall within sub-section (2) to Section 3 of the FTDR Act, the bench noted. The court finally observed:
"Consequently, Section 9A for the FTDR Act, is to be understood an enabling provision empowering imposition of 'quantitative restrictions' after following the procedure in the situations referred to therein. However it does not limit and restrict the expans and power of the Central Government to prohibit, regulate or restrict imports of goods in terms of Section 3(2) of the FTDR Act. As a sequitur, it has to be held that notwithstanding Section 9A, the Central Government continues and has authority to impose quantitative restrictions by an order under Section 3(2) of the FTDR Act. Principle of Lex specialis derogat legi generali, therefore, is not applicable to the case in hand"

The bench further observed that Section 9A is not a provision which incorporates or transposes paragraph (1) of Article XI into the domestic law either expressly or by necessary implication. 

"Section 9A has to be interpreted as an escape provision when the Central Government i.e. the Union of India may escape the rigours of paragraph (1) of Article XIX of GATT-1994. Section 9A is not a provision which incorporates or transposes paragraph (1) of Article XI into the domestic law either expressly or by necessary implication. To hold to the contrary, we would be holding that the Central Government has no right and power to impose 'quantitative restrictions' except under Section 9A of the FTDR Act. This would be contrary to the legislative intent and objective. Section 9A of the FTDR Act does not elide or negate the power of the Central Government to impose restrictions on imports under sub-section (2) to Section 3 of the FTDR Act."

Holding thus, the bench dismissed the writ petition while upholding the impugned notifications.

Case details
Case name: UNION OF INDIA vs. AGRICAS LLP  
Case no: TRANSFER PETITION (CIVIL) NOS. 496-509 OF 2020 
Coram: Justices AM Khanwilkar, Dinesh Maheshwari and Sanjiv Khanna


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