2026-VIL-929-BOM-CU
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CUSTOMS High Court Cases

Customs/DGFT - Validity of export prohibition notification for sugar - Vested Rights and Legitimate Expectation - Petitioners are merchant exporters who had entered into contracts with overseas buyers for export of sugar and received advance payments prior to issuance of Impugned Notification - DGFT issued Impugned Notification dated 13th May 2026 changing export policy of sugar from restricted to prohibited with immediate effect until 30th September 2026 except for certain specified exceptions. Petitioners challenged Notification contending that it violates their legitimate expectations and vested rights created by earlier Notifications, violates Article 14 and 19(1)(g) of Constitution, causes irreparable prejudice and constitutes arbitrary action - Whether issuance of export prohibition notification in respect of sugar is valid and whether it violates legitimate expectations, vested rights or constitutional guarantees of Petitioners - HELD - Mere allocation of export quotas under earlier Notifications does not create any vested or accrued rights in favour of exporters. Policy decision to prohibit export was taken in larger public interest after due deliberation by Committee of Ministers considering that sugar is essential commodity and domestic production had declined significantly from estimated 343 lakh metric tonnes to actual 308 lakh metric tonnes with closing stock likely to fall below safe level of 40 lakh metric tonnes - Legitimate expectation is not an enforceable right more particularly in context of well-reasoned policy decision taken in public interest. Petitioners failed to comply with statutory requirements including holding Irrevocable Commercial Letter of Credit before issuance of Notification as mandated by paragraph 1.05(b) of Foreign Trade Policy 2023. Earlier relaxation granted in 2022-23 season cannot constitute binding precedent for subsequent seasons as each sugar season has different market conditions - Earlier Notifications dated 14th November 2025 and 13th February 2026 were issued under Essential Commodities Act for quota allocation whereas Impugned Notification was issued under Foreign Trade Development and Regulation Act dealing with export policy and both operate under different statutes for distinct purposes. Impugned Notification does not operate retrospectively and contains prospective language – The exceptions in Notification for consignments already in physical export pipeline must be read in context of Section 51 of Customs Act requiring actual permission from proper officer for clearance and loading of goods for exportation and shipping bills filed. Petitioners have not fulfilled conditions required under Section 51 of Customs Act such as Let Export Order or evidence of shipment commencement before Notification - Doctrine of promissory estoppel and legitimate expectation cannot override policy decisions taken in accordance with law and in public interest unless policy is shown to be irrational, perverse or actuated by mala fides - Constitutional guarantee under Article 19(1)(g) is not absolute and permits reasonable restrictions in public interest. Protection of domestic sugar supply and pricing at relevant time appears to be need of hour – Petitioners remain at liberty to sell retained sugar quantities in domestic market subject to compliance with Sugar Control Orders and applicable laws - The writ petitions are dismissed
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