Non-Compliance Of Notification Conditions For Export Of Banned Non-Basmati White Rice; Delhi High Court Dismisses Exporter’s Appeal

By Maria Paliwala

The Delhi High Court while dismissing the rice exporter’s appeal, upheld the decision of the single bench holding that the exporter cannot be permitted to export 11,000 MT of banned non- basmati white rice, due to the non-fulfilment of the conditions entitling it to an exemption from the ban on export imposed by Notification bearing no. 20/2023 dated 20th July, 2023 issued by the Department of Commerce, Government of India.

The bench of the Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that keeping in view the objective of the Central Government in imposing the ban with immediate effect was to avert a food crisis in the country, a strict compliance of the exemption conditions would further the intent of the Notification.

The appellant/assessee is an exporter of rice and other agricultural products. The Appellant received an order from its overseas buyer for purchase of 40,000 MT of rice, which was to be exported from Kandla Port in Gujarat. The Appellant herein purchased 28,000 MT of rice and made an application before the port authority at Kandla seeking permission to store 28,000 MT of rice. However, due to lack of space at the port, the authority granted permission for storage only to the extent of 11,000 MT of rice. The remaining quantity of rice was stored at various private warehouses at Kandla itself.

The Department of Commerce, Government of India, issued its Notification dated 20th July, 2023 and prohibited the export of non-basmati white rice with immediate effect, i.e. 21:57:01 hours on 20th July, 2023. However, with a view to permit the exports which were in progress, conditional exemptions were granted and this formed four distinct categories.

The appellant aggrieved by the non-grant of permission to export the remaining 11,000 MT of rice, filed a writ petition. The appellant pleaded that he had taken all steps within its control before the cut-off date and, therefore, invoking the doctrine of substantial compliance with the exemption conditions, had sought permission to export the said consignment. The prayer was declined and the writ petition has been dismissed by the Single Judge.

The appellant contended that despite doing everything within its power and control to comply with the exemption conditions set out in the Notification dated 20th July, 2023, as amended by Notification dated 29th August 2023, the Appellant was not allowed to export 11,000 MT of rice.

The department contended that in 2022, due to a sudden spike in the global prices of rice, there was an increase in the export of rice out of India, resulting in a concern for the food security of India. The Notifications were issued to manage domestic availability of rice and to avoid and avert any possible food crisis. However, certain exemptions were granted in the Notification(s) for export of non-basmati white rice. As clarified by the Directorate General of Foreign Trade (DGFT), the exemption conditions are independent of each other and the export is to be allowed in case of fulfilment of any of the one such conditions. The Appellant failed to fulfil any one of the said conditions and thus, was not permitted to carry out the export of 11,000 MT. He stated that the Appellant cannot rely upon the doctrine of substantial compliance, since the intention behind issuing the Notification was to put an immediate ban on the export of non-basmati rice, given the sudden increase in the export of rice and concern for food security in India. The intent behind imposing the ban with immediate effect was the only effective means of achieving price control.

The department contended that the Appellant has not challenged the vires of the Notification. There has been no infringement of the fundamental rights of the Appellant and, therefore, the writ petition is not maintainable.

The issue raised was whether the Appellant ought to be allowed to export 11,000 MT quantity of rice which is lying at private warehouses near the customs port at Kandla, Gujarat, on the test of substantial compliance of the conditions of exemption.

The court observed that the Appellant initially in the writ petition and in the present appeal pleaded that despite best efforts it was unable to comply with condition no. (v) of Paragraph 2 with respect to payment of export duty on ten shipping bills for 10,000 MT, despite filing the same on to the Portal (ICEGATE) of the Respondent. The Appellant’s averment itself is vague.

The department contended that the Appellant has not challenged the vires of the Notification. There has been no infringement of the fundamental rights of the Appellant and, therefore, the writ petition is not maintainable. The issue raised was whether the Appellant ought to be allowed to export 11,000 MT quantity of rice which is lying at private warehouses near the customs port at Kandla, Gujarat, on the test of substantial compliance of the conditions of exemption.

The court observed that the Appellant initially in the writ petition and in the present appeal pleaded that despite best efforts it was unable to comply with condition no. (v) of Paragraph 2 with respect to payment of export duty on ten shipping bills for 10,000 MT, despite filing the same on to the Portal (ICEGATE) of the Respondent. The Appellant’s averment itself is vague. The court held that the appellant has not satisfied the exemption conditions of the Notification(s).

This article has been republished from The livelaw.