The Kerala High Court has stayed the Director-General of Foreign Trade‘s (DGFT) order setting the minimum import price (MIP) of pepper at ₹500 per kg CIF (cost, insurance, freight).
The order was issued in response to a writ petition filed by Travancore Solvents and Oils, Aluva, a company that trades spices such as black pepper, cloves, and areca nuts. According to the DGFT’s order, pepper imports valued at CIF (cost, insurance, and freight) of ₹500 per kg or more were exempt from duty.
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This MIP, however, would not apply to imports under the advance authorization scheme, imports by 100% Export Oriented Units, or units in the Special Economic Zone. It has also exempted from MIP the import of pepper under the Advance Authorisation Scheme for oleoresin extraction or re-export by manufacturer-exporters.
The petitioner claimed that it was discriminatory because importers like him were unable to import pepper, which was made available to them under the Advance Authorisation Scheme.
In reality, it was a policy decision, and the DGFT had no authority to change a Centre policy. According to Section 6(2) of the Foreign Trade (Development and Regulation) Act, the DGFT has the authority to advise the Central Government rather than issue orders such as the current one.
The petitioner also argued that the value of goods imported or exported should be negotiated between the parties and not set by any other authority. By issuing such an order, the DGFT had violated provisions of the Customs Act.
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The petitioner stated that domestic pepper production in Kerala had decreased following the floods in 2018 and 2019. To meet domestic demand, the country must import pepper. The petition also stated that the imposed condition of a 6% Piperine content in imported pepper was highly irregular.