Holding

Notifications issued under the Foreign Trade (Development and Regulation) Act are prospective and cannot extinguish vested rights of exporters who have obtained customs clearance under Section 51 of the Customs Act, rendering the later prohibition ineffective retrospectively.

Summary

The Central Government issued a notification on 27 June 2006 banning the export of pulses and a subsequent notification on 4 July 2006 permitting export against irrevocable letters of credit opened before 22 June 2006. Exporters who had already obtained Let‑Export orders and complied with Section 51 of the Customs Act sought permission to ship their consignments, which customs authorities denied. The exporters filed writ petitions; the Gujarat High Court allowed the petition, while the Delhi High Court struck down the later notification. The Supreme Court examined whether the ban and the permissive notification had retrospective effect, whether Clause 1.5 of the Foreign Trade Policy applied to a total prohibition, and whether the exporters' vested rights under the Customs Act could be taken away. The Court held that notifications under the Foreign Trade (Development and Regulation) Act are prospective and cannot divest vested rights of exporters who have obtained clearance, so the later prohibition could not be applied retrospectively. Consequently, the Gujarat High Court judgment was upheld and the Delhi High Court judgment was set aside.

Issues considered

The ban on pulse exports under the 27 June 2006 notification – prospective or retrospective effect?
Whether Clause 1.5 of the Foreign Trade Policy applies when the export is prohibited rather than merely regulated.
Whether compliance with Sections 16, 39 and 51 of the Customs Act is a prerequisite for invoking the exporters' rights.
Validity of the 4 July 2006 notification permitting export against letters of credit opened before 22 June 2006.
Whether the retrospective application of the ban violates Article 14 of the Constitution.
Whether vested or accrued rights of exporters are protected against subsequent prohibitory orders.

Legislation cited

Customs Act, 1962s. 11, s. 16, s. 39, s. 51
Foreign Trade (Development and Regulation) Act, 1992s. 3, s. 5

Subjects

Export prohibitionForeign Trade PolicyProspective effectVested rightsCustoms clearanceSection 51Article 14Retrospective legislationPulses export ban

Judgment

UNION OF INDIA AND ORS. A
v.
M/S ASIAN FOOD INDUSTRIES

NOVEMBER 7, 2006

[S.B. SINHA AND MARKANDEY KA TJU, JJ.] B.

Customs Act, 1962-Sections 11, 16, 39 and 51-Foreign Trade
(Development and Regulation) Act, 1992-Sections 3 & 5-Notification
issued by Central Government banning export of pulses-Subsequent C
notification issued permitting export against irrevocable letter of credit prior
to a certain date-Effect of goods cleared but not shipped-Customs
authorities denying permission to allow shipment of such goods in view of
notifications-Writ petition by exporter allowed by High Court-Correctness
of-Held, notifications will have a prospective effect and cannot take away
accrued or vested right. D
Central Government issued a notification on 27th June, 2006 under
section 5 of the Foreign Trade (Development and Regulation) Act, 1992
banning export of pulses. The Customs authorities immediately directed Port
Trust not to allow consignment of pulses to be shipped. The Central
Government issued another notification on 4th July 2006 permitting export E
against irrevocable letter of credit opened prior to 22nd June 2006.
Respondent-exporter of pulses s.ought permission from the customs
authorities to allow their consignment of pulses to be shipped in view of the
latter notification since the customs authorities already issued Let Export
orders to the Port Trust in favour of the respondents. When the authorities F
refused permission, the respondents filed a Writ Petition before High Court
which was allowed.

1n another Civil Appeal, the respondent-exporter, who had an irrevocable
letter of credit opened in his favour on 24th June 2006 challenged the latter
notification of the Central Government dated 4th July 2006 by a Writ Petition G
in High Court. The High Court allowed the Writ Petition.

In appeals to this Court, Union oflndia contended that the expmt or
pulses and grains are prohibited goods and not merely regulated or restricted

485 H
486 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A and hence clause 1.5 of Chapter IA of the Foreign Trade Policy is not
applicable; that the procedures laid down under sections 16 and 39 read with
section 51 of the Customs Act, 1962 have not been complied with; and that
the notification shall be effective even if a concluded contract had been arrived
at for export of goods.

B The respondents contended that the amendment in the Foreign Trade
Policy prohibiting export of pulses through notification dated 27th June, 2006
will be prospective in effect and not retrospective; that the notification does
not apply to a case where the formalities contained in section 51 of the
Customs Act, 1962 had been complied with; and that the retrospective effect
C purported to have been given in terms of the notification dated 4th July, 2006
is unconstitutional being hit by Article 14 of the Constitution oflndia.

Disposing the appeals, the Court

HELD: 1.1. The purport and object for which the Foreign Trade
D (Development & Regulation) Act, 1992 was enacted was to make provision
·for the development and regulation of foreign trade inter alia by augmenting
exports from India. While laying down the policy, the Central Government is
empowered to make provision for prohibiting, restricting or otherwise
regulating !xport of goods. When an order is issued under section 3(3) of
the 1992 Act, the export of goods would be deemed to be prohibited also under
E section 11 of the Customs Act, 1962 and in relation thereto the provisions
thereof shall also apply. The provisions of the 1992 Act, the Foreign Trade
Policy and the procedures laid down thereunder provide for a composite
scheme. In implementing the said provisions ofthe scheme, in the event an
order of prohibition, restriction or regulation is passed, the provisions of the
F 1962 Act mutatis mutandis would apply. [495-C, D, F)

1.2 The scheme of the Foreign Trade Policy postulates that when the
policy provisions are amended which are disadvantageous to the exporters,
the modifications would not be attracted. Section 51 of the 1962 Act does not
say that unless and until the shipment, crosses the international border, the
G notification imposing prohibition shall be attracted. For interpretations of the
provisions of the 1992 Act and the policy laid down and the procedures framed'
thereunder vis-a-vis the provisions of the 1962 Act, the rate of customs duty
has no relevance. What would be relevant for the said purpose would be actual
permission of the proper officer granting clearance and loading of the goods
for exportation. As soon as such permission is granted, the procedures laid
H
U.0.1. v. ASIAN FOOD INDUSTRIES 487

down for export must be held to have been complied with. (496-B, D] A
1.3 In certain circumstances, regulation may amount to prohibition.
Ordinarily, the word 'regulate' would mean to control or to adjust by rule or
to subject to governing principles whereas the word 'prohibit' would mean to .
forbid by authority or command. The expressions 'regulate' and 'prohibit'
inhere in them elements of restriction but it varies in degree. The element of : B
restriction is inherent both in regulative measures as well as in prohibitive ,
or preventive measures. Section 3(2) of the 1992 Act uses prohibition,
restriction and regulation. They are thus meant to be applied differently.
Section 51 of the 1962 Act also speaks of prohibition. Thus, in terms of the
1992 Act as also the policy and the procedure laid down thereunder, the terms
are required to be applied in different situations wherefor different orders C
have to be made or different provisions in the same order are required therefor.
[498-D-E; 499-C]
1.4 The notification dated 4th July 2006 could not have been taken into
consideration on the basis of the purported publicity made in the proposed
. change in export policy in electronic or print media. Prohibition promulgated b
by a statutory order in terms of section 5 read with relevant provisions of the
policy decision in the light of sub section (2) of section 3 of the 1992 Act can
only have a prospective effect. By reason of a policy, a vested or accrued right
cannot be taken away. Such a right, therefore, cannot a fortiori be taken away
by an amendment thereof. [499-E-F)
E
1.5 In construing a prohibitory order, whereas the rule of strict
construction must be followed, the interpretation which subserves the intention
of the Central Government as laid down in the policy as well as in the
procedure should be given effect to. A statute as is weU known may have to be
construed in the light of the subordinate legislations framed thereunder.
When subordinate legislation has been framed by the same authority which F
exercises the power under the policy, the intention of such policy maker must
be found out from the words used therein albeit having regard to the rights of
the exporters which are sought to be protected thereby. [499-G-H)

Gangadhar Narsingdas Agarwal v. P.S. Thrivikraman & Anr., (1972) 3
SCC 475 CB; Principal Appraiser (Exports), Collectarate of Customs and
G,
Central Excise & Ors. v. Esajee Tayabally Kaposi, Calicut, [1995] 6 SCC 536;
Union ofIndia & Ors. v. Mis C. Damani & Co. & Ors., [1980) Supp SCC 707;
State Trading Corporation ofIndia Ltd v. Union ofIndia & Ors., [1994) Supp
3 SCC 40; State of UP. & Ors. v. Mis Hindustan Aluminium Corpn. & Ors.,
H
488 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

·~·A AIR (1979) SC 1459; Talcher Municipality v. Talcher Regulated Market
Committee & Anr., [2004) 6 SCC 178 and K. Ramanathan v. State of Tamil
Nadu & Anr., AIR (1985) SC 660, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4695 of2006.

B From the Judgment and Final Order dated 1. 9 .2006 of the High Court of
Gujarat at Ahmedabad in S.C.A. No. 14642 of2006.

Vikas Singh, A.S.G., K. Swami, Tufail A. Khan and V.K. Verma for the
Appellants.

C Bharat Rao, Huzefa Ahmade, Joseph Kodinth, Ejaz Maqbool, Taruna
Singh, Punit Dutt Tyagi, Ajay Choudhary and Nimish Gupta for the
Respondents.

The Judgment of the Court was delivered by

D S.B. SINHA, J. Leave granted.

Both the appeals involving common question of law and fact were taken
up for hearing together and are being disposed of by this common judgment.

We would, however, notice the fact involved in both the matters
E separately.

FACT RE: MIS. ASIAN FOOD INDUSTRIES

Respondent herein is exporter of various kinds of pulses and grains. It
received orders for supply of 20331 MT of pulses from the Overseas Importers
F of Middle East wherefore several contracts were entered into. The said contracts
were executed between 22.4.2.006 and 2.05.2006. It received US $ 294942 being
approximately 20% of the contract amount by way of advance towards the
said supply from the importers on 9 .5 .2006 shipment of 20 containers out of
the 107 containers consisting of 415 MT took place during the period between
22.06.2006 and 24.06.2006. The remaining 87 containers were cleared and Let
G Export Orders dated 23.06.2006,24.06.2006 and 26.06.2006 were issued by the
custcm authorities at Kandla Port. Bills of lading were also issued therefor.

In the meanwhile, a purported decision was taken by the Central · ·
Government to ban export of pulses on 22.06.2006. The said decision is said
H to have been widely reported in the electronic media and print media, but the
U.0.1. v. ASIAN FOOD INDUSTRIES (S.B. SINHA, .J.] 489

notification banning the export of pulses was issued by the Central Government A
only on 27 .06.2006 in purported exercise of its power under Section 5 of the
Foreign Trade (Development and Regulation) Act, 1992 (for short 'the 1992
Act') wherein the Central Government prohibited export of various goods
mentioned therein for a period of six months from the said date, the relevant
portion whereof reads as under.
B
'S.O. {E) In exercise of the powers conferred by Section 5 of the
Foreign Trade (Development and Regulation) Act, 1992 (No. 22 of
1992) read with Para l.3 and Para 2.1 of the Foreign Trade Policy, 2004-
2009, the Central Government hereby makes the following amendments
in the ITC{HS) Classifications of the Export and Import items, 2004- C
2009 as amended from time to time.

2. With immediate effect the following new entry may be inserted after
entry at SI. No. 44 in Chapter 7 of Table B under Schedule 2 of ITC
(HS):
SI. Tariff HS Code Unit Item Description Export Nature of D
No Item Policy Restriction
44 A *** *** •••
07131000 Kg. Peas (Pisum Prohibited Not permitted to
Sativum) be exported
07132000 Kg. Chickpeas Prohibited Not permitted to
(garbanzos) Beans be exported E
(Vigna spp.,
Phaseolus spp.):
***
3. The above amendment shall remain in force for a period of six
months from the date of its issue and shall not apply to imports
already effected against Advance Licences I Authorisations issued F
prior to the date of issue of this notification.

4. This issues in Public Interest."

Superintendent (Customs) on or about 28.6.2006 directed the Kandla
Port Trust that no further consignment be allowed to be shipped which has G
passed out of the charge of the customs. However, the Assistant Traffic
manager in a communication made to Mis. lntermark Shipping Agency Pvt.
Ltd. dated 29.06.2006 informed that even if goods have been cleared by
issuance of Let Export Orders, the same should not be loaded on the shipping
vessels in view of the said prohibition.
490 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A Another notification was issued by the Central Government on 4.07.2006
purported to be under Section 5 of the 1992 Act permitting export of pulses
against irrevocable letter of credit opened prior to 22.06.2006, the relevant
portion whereof reads as under:

"S.O. (E) In exercise of the power conferred by Section 5 of the
B Foreign Trade (Development & Regulation) Act, 1992 (No. 22of1992)
read with Para 1.3 and Para 2.1 of the Foreign Trade Policy, 2004-2009,
the Central Government hereby makes the amendment in para 3 of
Notification No 15 dated 27th June 2006, to include the following
sentence, at the end of the said para:

C Further the transitional arrangements notified under para 1.5 of the
Foreign Trade Policy, 2006 shall not be applicable for export of pulses
against irrevocable Letters of Credit opened on or after 22.6.2006 as
the decision of the Government prohibiting the export of pulses was
announced and got widely publicised on 22.6.2006 in the electronic
D and print media.

2. This issues in Public Interest.'

The respondents, however, addressed· various corresp.ondences with
the authorities to grant permission to shift the 87 containers of vessels in
E view of the notification dated 4.07.2006 but the same was refused. A writ
petition questioning the said action on the part of the authorities filed by
them in the Gujarat High Court has been allowed by reason of the impugned
judgment.

FACT RE: MIS. AGRI TRADE IND/A SERVICES P.LTD.
F Mis. Agri Trade India Services P. Ltd. Respondent No. 1 herein was
awarded a contract by Trade Corporation of Pakistan for supply of 3000 MT
of chick peas. An irrevocable letter of credit was opened in favour of the
respondent on 24.06.2006. On 27.06.2006, the respondent filed shipping invoices
and bill with customs authorities for export of chick peas. In view of notification
G dated 27.06.2006, the Kandla Port Trust issued instructions that loading of
chick peas would not be permitted. Thereafter, a notification dated 4.7.2006
was also issued purported to be under Section 5 of the 1992 Act permitting
export of pulses against irrevocable letter of credit opened prior to 22.06.2006.

Inter a/ia questioning the validity of notification dated 4.07 .2006. the
H respondents filed a writ petition before the Delhi High Court which was
U.0.1. v. ASIAN FOOD INDUSTRIES [S.B. SINHA, J.] 491

marked as W.P. (C) No. 11691-11692 of 2006. By reason of the impugned A
judgment dated 18.08.2006, the said writ petition has been allowed.

STATUTORY PROVISIONS

Before adverting to the question raised in these appeals, we may notice
the statutory provisions operating in the field. ·B

The Parliament enacted the Customs Act, 1962 (for short "the 1962
Act") to consolidate and amend the law relating to customs. Section 11 of the
1962 Act empowers the Central Government to prohobit importation and
exportation of goods. ~ection 16 provides for date for determination of rate
of duty and tariff valuation of export goods in the following terms: C
"16. Date for determination of rate of duty and tariff valuation of
export goods :-

(1) The rate of duty and tariff valuation, if any, applicable to any
export goods, shall be the rate and valuation in force, D
(a) in the case of goods entered for export under section 50, on the
date on which the proper officer makes an order permitting clearance
and loading of the goods for exportation under section 5 t :

(b) in the case of any other goods on the date of payment of duty. E
(2) The provisions of this section shall not apply to baggage and
goods exported by post."

Section 39 of the 1962 Act prohibits the master ofa vessel not to permit
loading of any export goods other than baggage and mail bags, until an order
has been given by the proper officer granting entry-outwards to such vessel. F
Chapter VII of the 1962 Act inter alia provides for the procedures for
clearance of export of goods. Section 50 postulates that the exporter of any
goods shall make entry thereof by presenting to the proper officer in the case
of goods to be exported in a vessel or aircraft, a shipping bill and, while G
presenting, shall at the foot thereof make and subscribe to declaration as to
the truth of its contents. Section 51 provides for clearance of goods for
exportation in the following terms:

"51. Clearance of goods for exportation. - Where the proper officer is
satisfied that any goods entered for export are not prohibited goods H
492 SUPREME COURT REPORTS "[2006] SUPP. 8 S.C.R.

A and the exporter has paid the duty, if any, assessed thereon and any
charges payable under this Act in respect of the same, the proper
officer may make an order permitting clearance and loading of the
goods for exportation."

The Parliament also enacted the 1992 Act to provide for the development
B and regulation of foreign trade by facilitating imports into and augmenting
exports from India and for matters connected therewith or incidental thereto.

"Export" has been defined to mean taking out of India any goods by
land, sea or air. Section 3 of the 1992 Act empowers the Central Government
to make provisions by order published in the Official Gazette for the
C development and regulation of foreign trade by facilitating imports and
increasing exports. Sub-section (2) of Section 3 thereof empowers the Central
Government to make provisions for prohibiting, restricting or otherwise
regulating in all cases or in specified classes of cases and subject to such
exceptions, if any, as may be made by or under the order, the import or export
D of goods. Sub-section (3) of Section 3 provides that all goods to which an
order under. Sub-section (2) applies would be deemed to be the goods of
import or export of which has been prohibited under Section 11 of the 1962
Act and· all the provisions of that Act shall have effect accordingly.

Section 5 of the 1992 Act provides that the Central Government may
E from time to time formulate and announce, by notification in the Official
Gazette, the export and import policy and in the like manner amend that policy.

POLICY

The Central Government announced its Foreign Trade Policy in exercise
F of its power conferred upon it under Section 5 of the 1992 Act by a notification
dated 7th April, 2006. The said policy was issued in public interest.

Chapter IA of the said policy also provides for legal framework. Clause
l .5 thereof reads as under:

G "1.5 In case an export or import that is permitted freely under this
Policy is subsequently subjected to any restriction or regulation, such
export or import will ordinarily be permitted notwithstanding such
restriction or regulation, unless otherwise stipulated, provided that
the shipment of the export or import is made within the original
validity of an irrevocable letter of credit established before the date
H
U.0.1. v. ASIAN FOOD INDUSTRIES [S.B. SINHA, J.] 493
of imposition of such restriction." A
Clause 2.4 of the policy empowers the Director General of Foreign Trade·
to specify the procedures required to be followed by an exporter in any case
or class of cases for the purpose of implementing the provisions of the l 992
Act, the Rules and the Orders made thereunder and the said policy. Such
procedures were to be included in the Handbook which would be published ~
by means of a public notice and such proceJures may in the like manner be
amended from time to time. It was stated:

"The Handbook (Vol.I) is a supplement to tht Foreign Trade Policy
and contains relevant procedures and other details. The procedures
of availing benefits under various schemes of the Policy are given in C
the handbook (Vol. I)"

The Handbook of Procedures which inter alia supplements the Foreign
Trade Policy was also issued on 7th April, 2006 upon giving a public notice
therefor. It contains nine chapters. Chapter 9 comprises of miscellaneous D
matters. Paragraph 9.12 lays down the manner in which date of shipment I
dispatch of exports would be reckoned. It inter a/ia provides:

"However, wherever the Policy provision have been modified to the
disadvantage of the exporters, the same shall not be applicable to the
consignments already handed over to the Customs for examination E
and subsequent exports upto the date of the Public Notice.

Similarly, in such cases where the goods are handed over to the
customs authorities before the expiry of the export obligation period
but actual Exports take place after expiry of the. export obligation
period, such exports shall be considered within the export obligation F
period and taken towards fulfillment of export obligation."

HIGH COURT JUDGMENTS

Whereas the Gujarat High Court invoking Paragraph 9.12 of the Handbook
and having regard to the fact that the customs authorities cleared and permitted G
the loading of the goods and moreover the bill of lading had also been filed,
opined that the respondents were entitled to export the goods in terms of the
policy decision despite the said notification dated 27.06.2006, the Delhi High
Court declared the notification dated 4.07.2006 as ultra vires.

H
494 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A SUBMISSION

• Mr. Vikas Singh, learned Additional Solicitor General for Union if India,
has raised the following contentions:

(i) Clause 1.5 of the Foreign Trade Policy would not apply to a case
B where the export of goods are totally being prohibited and not
merely regulated or restricted.
(iI) Having regard to the definition of export and in particular the
provision of Section 51 of the 1962 Act, the procedures laid down
thereunder as envisaged under Sections 16 and 39 must be
c complied and they having not been complied with, the impugned
.judgment of Gujarat High Court cannot be sustained.

(fu) Although the notification dated 4.07.2006 was wrongly worded
but as thereby benefit was sought to be conferred on those who
were not aware of the ban before 22.06.2006 and had opened
letters of credit prior thereto were exempted from operation of the
D
said notification, the order of prohibition shall be effective even
if a concluded contract had been arrived at for export of gods.
The learned counsel for the respondents, on the other hand,
submitted:
E (i) In view of the Foreign Trade Policy issued by the Central
Government under Section 5 of the 1992 Act, the amendments
carried out therein shall only have a prospective effect and not
a retrospective effect.
(ii) As the Handbook of Procedures lays down supplemental
F provisions to the Foreign Trade Policy issued by the Director
General of Foreign Trade in exercise of its power under the 1992
Act, the purported prohibition issued under the notification dated
27.06.2006 would not apply to a case ·where the formalities
contained in Section 51 of the 1962 Act had been complied with.
G (iii) Clause 1.5 of the Foreign Trade Policy having provided for
protection to those who were holders of _letter of credit, the
retrospective effect purported to have been given in terms of the
notification dated 4.07.2006 was unconstitutional being hit by
Article 14 of the Constitution of India.

H
U.0.1. v. ASIAN FOOD INDUSTRIES [S.B. SINHA, J.] 495
ANALYSIS A
Would the tenns 'restriction' and 'regulation' used in Clause l.5 of the
Foreign Trade Policy include prohibition also, is one of the principal questions
involved herein.

A citizen of India has a fundamental right to carry out the business of B
export, subjfct, of course to the reasonable which may be imposed by law.
Such a reasonable restriction was imposed in tenns of the 1992 Act.

The purport and object for which the 1992 Act was enacted was to make
provision for the development and regulation of foreign trade inter alia by
augmenting exports from India. While laying down a policy therefore, the C
Central Government, however, had been empowered to make provision for
prohibiting, restricting or otherwise regulating export of goods.

Section 11 of the 1962 Act also provides for prohibition. When an order
is issued under Sub-section (3) of Section 3 of the 1992 Act, the export of D
goods would be deemed to be prohibited also under Section 11 of the 1962
Act and in relation thereto the provisions thereof shall also apply.

Indisputably, the power under Section 3 of the 1992 Act is required to
be exercised in the manner provided for under Section 5 of the 1992 Act. The
Central Government in exercise of the said power announced its Foreign E
Trade Policy for the years 2004-2009. It also exercised its power of amendment
by issuing the notification dated 27.06.2006. Export of all commodities which
were not earlier prohibited, therefore, was permissible till the said date.

The implementation of the said policy was to be made in terms of the
procedures laid down in the Handbook. The provisions of the 1992 Act, the F.
Foreign Trade Policy and the procedures laid down thereunder, thus, provide
for a composite scheme. In implementing the said provision of the scheme,
in the event an order of prohibition, restriction or regulation is passed, the
provisions of the 1962 Act mutates mutandis would apply.

Section 50 of the 1962 Act provides for entry of goods for exportation. G
It enjoins a duty upon an exporter to make entry thereof by presenting a
shipping bill to the proper officer in a vessel or aircraft. On receipt of the
shipping bill, the proper officer has to arrive at its satisfaction that (i) the
export of goods is not prohibited; (ii) the exporter has paid the duty assessed
thereon and charges payable thereunder in respect of the said goods.
H
496 SUPREME COURT REPORTS (2006) SUPP. 8 S.C.R.

A Once he arrives at the said satisfaction, he will make an order permitting
clearance and loading of the goods for exportation.

The scheme of the Foreign Trade Policy postulates that when the policy
provision are amended which are disadvantageous to the exporters, the
modification would not be attracted.
B
It furthermore lays down that although actual export had not taken
place but in the event goods are handed over to the custom authorities before
expiry of the export obligation period but actual export takes place after expiry
thereof, the same shall be considered within the export obligation and taken
C towards fulfillment of such obligation.

Section 51 Qf the 1962 Act, therefore, does not say that unless and until
the shipment crosses the international border, the notification imposing
prohibition shall be attracted.

Different stages for the purpose of the said Act would, therefore, be
D different. For interpretation of the provisions of the 1992 Act and the policy
!aid down as also the procedures framed thereunder vis-a-vis the provisions
of the 1962 Act, the rate of custom duty has no relevance. What would be
relevant for the said purpose would be actuai permission of the proper officer
granting clearance and loading of the good for exportation. As soon as such
E permission is granted, the prncedurns laid down for export must be held to
have been complied with.

Strong reliance has been placed by foe learned additional Solicitor
General upon a decision of this Court in Principal appraiser (Exports),
Col/ectorate of Customs and Central Excise and Ors. v. Esajee Tayabally
F Kaposi, Calicut, [1995] 6 SCC 536 wherein this Court was concerned with the
change in th:; rate of duty and in that context the construction of Sections
16(1 ), 39 and 51 of the 1962 Act fell for its consideration. In relation to the
rate of duty it was held that the date of "entry outwards" would be the
relevant date with reference to which the rate of custom duty on the exported
G duty is to be worked out.

In that case, the goods were cleared for a vessel known as S.S. Neils
Maersk. However, for want of space therein goods were shut out. Necessary
space for exporting those were secured in another vessel named S.P. P'Xilas
where for fresh shipping bill was filed on 9.08.1996. It was in the peculiar fact
H of that case, this Court opined that the rate of export duty prevalent as on
... U.0.1. v. ASIAN FOOD INDUSTRIES [S.B. SINHA, J.] 497
9.08. l 996 would be leviable stating: A
" .. .It becomes thus clear that the shipping bill as well as the ultimate
<
entry outwards for the goods concerned sought to be exported must
;

have reference to the vessel through which such goods are to be
exported. Therefore, before any goods are exported out of India
territorial waters which vessel is to be utilized for exporting them, B
becomes a relevant consideration. The shipping bill concerned has to

..
be lodged with reference to a given vessel which is to carry these
goods out of the Indian territorial waters and in connection with such
a vessel the entry outwards has to be obtained and only thereafter
the master of the vessel should allow the loading of the goods for
being exported out of India. The rate of duty payable on such exported
c
goods would, therefore, be the rate of duty that was prevalent at the
time when entry outwards through a given vessel is obtained. There
cannot be an entry outwards in connection with a vessel which does
not actually carry such goods for the purpose of export. In the facts
of the present case, therefore, conclusion is inevitable that earlier D
entry outwards for the vessel S.S. Neils Maersk was an ineffective
entry outwards for the purpose of computing the rate of customs duty
of export on the goods in question. Only the subsequent entry
outwards for vessel S.S. PXilas which actually carried these g;)ods out
of Indian territorial waters and effected the export of these goods was
E

-
the only relevant and operative entry outwards and the rate of duty
prevalent on the date of the said entry outwards for vessel S.S. PXilas
was the only effective rate of duty payable on the export of these
goods. Consequently it must be held that the respondent has made
out no case for refund of Rs. 4444.96 for which he lodged the claim."
F
We may notice that a Constitution Bench of this Court in Gangadhar
Narsingdas Agarwal v. P.S. Thrivikraman and Anr., [1972] 3 SCC 475 opined
that Section 16 of the 1962 Act speaks of the fictional date only in relation
to the order of date of entry outwards of the vessel, but the issue with which
we are concerned did not arise therein. The fundamental and statutory right
of an exporter, in that case, were not sought to be taken away. G
Esajee Tayabal/y Kapasi (supra), therefore, has no application in the
instant case.

Reliance has also been placed on Union of India and Ors. v. Mis. C.
H
498 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.
I
A Damani & Co. and Ors., [1980] Supp SCC 707 wherein the vires of Exports
(Control) Fifteenth Amendment Order, 1979 prohibiting pre-ban commitments
was in question. It was held that there was no ground to discredit the policy
The question raised therein, viz, the effect of failure to honor foreign contracts
owing to change in law imposing ban on goods covered thereby whether
B would attract the plea of frustration of contract ..yas not decided stating:

" ... This contention may have to be considered here or elsewhere, but,
if we may anticipate our conclusion even her, this question is being
skirted by us because the kismet of this case can be settled on other
principles. The discipline of the judicial process forbids decisional
adventures not necessary, even if desirable."
c
We may, however, notice that Mis. C. Damani (supra) was explained by
this Court in State Trading Corporation of India Ltd. v. Union of India and
Ors., [ 1994] Supp 3 SCC 40. It is not necessary for us to advert thereto as the
said judgment has no application in the instant case.
D We are, however, not oblivious of the fact that in certain circumstances
regulation may amount to prohibition. But, ordinarily the word "regulate"
would mean to control or to adjust by rule or to subject to governing
principles [See U.P. Cooperative Cane Unions Federations v. West U.P. Sugar
Mills Association and Ors., [2004] 5 SCC 430] whereas the word "prohibit"
E would mean to forbid by authority or command. The expressions" regufate"
and "prohibit" inhere in them elements of restriction but it varies in degree.
The element of restriction is inherent both in regulative measures as well as
in prohibitive or preventive measures.

We may, however, notice that this Court in State of U.P. and Ors. v.
F Mis Hindustan Aluminium Corpn. and Ors., AIR (1979) SC 1459 stated the
law thus:

"It appears that a distinction between regulation and restriction or
prohibition has always been drawn, ever since Municipal Corporation
of the City of Toronto v. Virgo. Regulation promotes the freedom or
G the facility wh:ch is required to be regulated in the interest of all
concerned, whereas prohibition obstructs or shuts off, or denies to
those to whom it is applied. The oxford English Dictionary does not
define regulate to include prohibition so that if it had been the intention
to prohibit the supply, distribution, consumption or use of energy, the
H legislature would not have contended itself with the use of the word
U.0.1. v. ASIAN FOOD INDUSTRIES [S.B. SINHA, J.] 499
regulating without using the word prohibiting or some such word, to A
bring out that effect."

However, in Talcher Muncipality v. Talcher Regulated Market Committee
and Anr., [2004] 6 SCC 178, it was opined that regulation is a term which is
capable of being interpreted broadly and it may amount to prohibition. [See
also K Ramanathan v. State of Tamil Nadu and Anr., AIR (1985) SC 660]. B
· The terms, however, indisputably would be construed having regard to
the text and context in which they have been used. Section 3(2) of the 1992
Act uses prohibition, restriction and regulation. They are, thus, meant to be
applied differently. Section 51 of the 1962 Act also speaks of prohibition.
Thus, in terms of the 1992 Act as also the policy and the procedure laid down c
thereunder, the terms are required to be applied in different situations wherefor
. for different orders have to be made or different provisions in the same order
are required therefore.

We, however, need not dilate on the said question as in the case of Agri D
Trade India Services (P) Ltd., the requirements of Section 51 of the 1962 Act
had not been complied with whereas in the case of Asian Foods Industries,
it was done.

The Delhi High Court, however, in our view correctly opined that the
notification dated 4.07.2006 could not have taken into consideration on the E
basis of the purported publicity made in the proposed change in the export
policy in electronic or print media. Prohibition promulgated by a statutory
order in terms of Section 5 read with the relevant provisions of the policy
decision in the light of Sub-section (2) of Section 3 of the 1992 Act can only
have a prospective effect. By reason of a policy, a vested or accrued right
cannot be taken away. Such a right, therefore, cannot a fortiori be taken away F
by an amendment thereof.

In construing such a prohibitory order, whereas the rule of strict
construction must be followed, the interpretation which subserves the intention
of the Central Government as laid down in the policy as well as in the
procedure should be given effect to. A statute as is well known may have G
to be construed in the light of the subordinate legislations framed thereunder.
When subordinate legislation has been framed by the same authority which
exercises the power under the policy, the intention of such policy "1aker must
be found out from the words used therein albeit having regard to the rights
of the exporters which are sought to be protected thereby. H
500 SUPREME COURT RJ?PORTS [2006) SUPP. 8 S.C.R.
....
A We, therefore, are of the opinion that whereas the judgment of the
Gujarat High Court must be upheld, that of the Delhi High Court, albeit for,
different reasons, cannot be sustained.

For the reasons aforementioned, whereas Civil Appeal arising out of
SLP (C) No. 17008 of2006 is dismissed with costs and counsel's fee assessed
B at Rs. 1,00,000/-, Civil Appeal arising out of SLP (C) No. 17558 of 2006 is
allowed and the parties shall pay and bear their own costs.

B.S. C.A. No. 4695 of 2006 dismissed and
C.A. No. 4696 of 2006 allowed.

c