Legal principle

Safeguard quantitative restrictions imposed under Section 9A of the FTDR Act, 1992 pursuant to a DGTR investigation under the Safeguard Measures (QR) Rules, 2012 stand on an independent footing and are not subject to the transitional ICLC protection in Clause 1.05 of the Foreign Trade Policy, even where letters of credit were opened before the restriction notification.

Court decision

The Delhi High Court (Justice Sachin Datta) dismissed all the petitions, holding that the impugned notification dated 26.12.2024 is predicated on the investigation carried out under Section 9A of the FTDR Act, 1992 read with the Safeguard Rules, 2012; that the references to Sections 3 and 5 of the FTDR Act in the notification were 'surplusage'; and that the Section 9A safeguard framework is not subject to the transitional provisions of Clause 1.05 of the FTP, so pre-notification ICLCs confer no right to import against the quantitative restrictions. The ruling was in favour of the Union of India.

Facts

The petitioners (JSW Steel, Amba River Coke, Sunflag Iron & Steel, and Trafigura India) opened Irrevocable Commercial Letters of Credit (ICLCs) before 26.12.2024 for import of Low Ash Metallurgical Coke (LAM Coke), which at that time was classified as 'free' under the prevailing import policy. On 26.12.2024, the Central Government issued Notification No. 44/2024-25 imposing country-wise quantitative restrictions on LAM Coke imports effective 01.01.2025 for six months, based on DGTR's final findings dated 29.04.2024 following a safeguard investigation under Rule 5 of the Safeguard Measures (Quantitative Restrictions) Rules, 2012. The petitioners applied for registration/operational listing of their ICLCs under Clause 1.05 of the Foreign Trade Policy 2023 within 15 days of the notification; the DGFT rejected the applications of JSW/ARCL and Trafigura, and Sunflag apprehended rejection of its application. The petitions sought a ruling that the notification should not affect imports of quantities covered by ICLCs opened prior to its issuance.

Key provisions

• Section 9A, The Foreign Trade (Development and Regulation) Act, 1992 — Power of Central Government to impose quantitative restrictions.
• Section 3, The Foreign Trade (Development and Regulation) Act, 1992 — Powers to make provisions relating to imports and exports.
• Section 5, The Foreign Trade (Development and Regulation) Act, 1992 — Foreign Trade Policy.