1 What the FT (D&R) Act actually does?
| Section | Core power |
| S.3(1) | Central Government may “make provision for the development and regulation of foreign trade” by issuing notifications, orders or the Foreign Trade Policy (FTP). |
| S.3(2) | Government may restrict, prohibit or regulate import or export of any goods or services. |
| S.5 | Empowers Government to notify or amend the FTP (the current one is FTP 2023). |
| S.7–S.9 | Issue, suspend or cancel Importer-Exporter Code (IEC); impose monetary penalty for contravention. |
| S.10-14 | Authorizes search, seizure and arrest; Customs officers are deemed “empowered officers.” |
| S.15 | Offences compoundable by DGFT on payment of composition fee. |
Key deeming clause
S.3(3) – Goods imported or exported in contravention of any order issued under S.3(2) shall be deemed to be goods imported or exported in contravention of the Customs Act 1962.
Effect: Any breach of DGFT directions instantly becomes a Customs contravention (liable to confiscation under Section 111(d) or 113(d) of the Customs Act).
2. How the Customs Act and FT (D&R) Act dovetail
| Customs provision | Interaction with FT (D&R) Act / FTP |
| Customs Act S.11 (power to prohibit imports/exports) | Used when CBIC or Revenue wants a prohibition; DGFT uses FT (D&R) Act S.3. Both powers coexist; whichever instrument (Customs Notification vs. DGFT Notification) is stricter applies. |
| Customs Act S.111(d)/S.113(d) | Goods liable to confiscation if “imported or attempted to be imported contrary to any law” – DGFT’s Import Policy/FTP falls squarely here. |
| Customs Act S.47 & S.51(clearance) | Customs EDI will not grant Out-of-Charge or Let Export Order if IEC is suspended or item is “restricted” without DGFT license. |
| Customs Act S.28AAA | Recovery of duty‐credit scrips mis-claimed under FTP schemes (MEIS, RoDTEP, etc.). |
| Customs Tariff Act S.25 (duty exemption) | Exemption can be linked to DGFT licenses (e.g., Advance Authorization); violation of license conditions triggers demand of duty + penalty. |
Who overrides whom?
There is rarely a clash:
- If Customs imposes a duty exemption but FTP makes the product “prohibited,” Customs clearance cannot override the prohibition.
- If FTP grants a license but Customs later raises a valuation or duty issue, the license does not block revenue recovery.
Courts treat FTP restrictions as substantive law on the right to trade; Customs provisions handle duty assessment and enforcement.
3. Key Rulings
| # | Case / Citation (Court & Year) | Key Issue in Conflict | Holding – Which Prevails? |
| 1 | Director General of Foreign Trade v. Kanak Exports (2016) 2 SCC 226 (SC) | DGFT Public Notice retrospectively curtailed DEPB benefits; customs demand followed. | DGFT lacks power to amend FTP retrospectively; only Central Govt. under S. 5 FTDR Act can amend, and only prospectively. Benefits already vested cannot be withdrawn; customs demand set aside. |
| 2 | Union of India v. Asian Food Industries 2006 (204) ELT 8 (SC) | Ban on export of pulses under S. 5 FTDR Act issued after irrevocable L/Cs; customs confiscation. | Export restriction under FTP is prospective; shipments backed by pre-ban L/Cs allowed. Customs must enforce FTP but cannot apply it retrospectively. |
| 3 | Atul Commodities (P) Ltd. v. Commr. of Customs 2009 (235) ELT 385 (SC) | DGFT Circular treated used photocopiers as “restricted”; customs confiscation. | Classification or re-categorization of goods can be done only by Central Govt. notification under S. 5 FTDR Act, not by DGFT circulars; customs confiscation set aside. |
| 4 | Union of India v. Cosmo Films Ltd. Civil Appeal 290 of 2023; 2023 (385) ELT 66 (SC) – “Pre-import” case | Validity of pre-import condition in AA/IGST exemption; conflict between FTP ¶ 4.14 & customs exemption. | Pre-import condition is a valid policy prescription under S. 5 FTDR Act; customs exemption can be enjoyed only if FTP condition is met. Customs demand for IGST upheld. |
How the doctrines emerged
- Statutory hierarchy – The Supreme Court consistently reads S. 5 FTDR Act as the plenary source of trade policy. DGFT is only an executing arm; any policy change must be by Central Government notification, not by circulars or public notices.
- Prospectivity vs. retrospectivity – Unless Parliament confers express power, delegated legislation under S. 5 is prospective. Retrospective curtailment of vested export-import benefits offends Article 14.
- Customs’ enforcement role – Once goods contravene an existing FTP restriction, customs can invoke S. 111(d) or S. 113 for confiscation, even if no specific customs notification exists.
- Fiscal levies – FTP may prescribe conditions, but cannot itself create interest or penalty liability; those must flow from the Customs Act / Tariff Act.
- Judicial deference to public-interest trade measures – Where Central Government properly amends FTP in public interest (Cosmo Films), courts will uphold the policy and allow customs demands.
4 Why understanding this hierarchy matters
- License first, duty later – No amount of low duty helps if DGFT labels your item “prohibited.”
- Condition-linked exemptions – Most Customs-duty exemptions invoke FTP license numbers; violate license → exemption dies.
- Dual penalties – A single violation may lead to DGFT monetary penalty and Customs confiscation / Section 112 penalty.
- Appeal routes differ – DGFT orders go to Additional DGFT → DGFT HQ → HIGH COURT; Customs demands go to Commissioner (Appeals) → CESTAT. Coordinate timelines.
Quick-reference flow
DGFT issues FTP license → Importer files Bill of Entry
│ │
│ Customs verifies license │
│ and policy status │
▼ ▼
If license valid & item “free” → Duty assessed under Customs Tariff Act
If license invalid / item “restricted” without permit → Confiscation under S.111(d), penalty,
and DGFT may suspend IEC / impose FTDR Act fine
Key takeaway:
- FT (D&R) Act controls permission to trade.
- Customs Acts control duty and border enforcement.
- In any clash over permissibility, DGFT’s policy call is decisive, and Customs must toe that line.
5 │ Why the FTP Exists
*“The Central Government hereby notifies the Foreign Trade Policy 2023 in exercise of the powers conferred by section 5 of the Foreign Trade (Development & Regulation) Act, 1992.”
Translation: Parliament lets the Government set a living rulebook for every export, import and service transaction.
- FTP = Policy direction.
- HBP = Step-by-step playbook.
Both ride on—but do not replace—Customs, GST or FEMA statutes
6 │ Vision & Duration
| Clause (FTP Ch-1) | Plain-English Meaning |
| 1.02 Vision | Boost exports, integrate into global value chains, improve logistics & compliance ease. |
| 1.03 Validity | Policy starts 1 Apr 2023 and stays in force until the Govt. changes it. |
No five-year sunset anymore—updates arrive through Notifications.
7 │ FTP’s Legal Neighborhood
| Layer | Governs | Where FTP plugs in |
| Customs Act 1962 / Customs Tariff Act 1975 | Duty, valuation, clearance | Customs officers verify every authorisation, RoDTEP scroll & EPCG import against FTP rules. |
| GST Acts (2017) | Zero-rating, refunds | Exporters need LUT/IGST refund; FTP incentives don’t override GST but operate beside it. |
| FEMA 1999 | Forex realisation | FTP para 1.17 links DGFT’s e-BRC to RBI-EDPMS for payment tracking. |
8 │ Organogram in a Nutshell (HBP 1.01 & FTP 1.06)
Ministry of Commerce
├─ Directorate General of Foreign Trade (DGFT)
│ ├─ HQ (Policy + NIC Tech Cell)
│ └─ 24 Regional Authorities
└─ Development Commissioners for SEZs
- DGFT = Issues IEC, licenses, duty-credit scrips.
- Customs / CBIC = Checks all DGFT documents at ports.
- NCTF = High-level taskforce aligning FTP with WTO Trade Facilitation Agreement.
9 │ Ten Power Clauses Exporters Actually Use
| FTP / HBP Clause | What you’re allowed to do | Why it matters |
| FTP 1.09 | Apply for Importer-Exporter Code (IEC) entirely online. | IEC is passport for every Shipping Bill/Bill of Entry. |
| HBP 1.02(b) | File every license application, amendment & redemption digitally—no paper printouts. | Saves weeks; DSC or Aadhaar esign accepted. |
| FTP 1.13–1.16 | Use DGFT portals for e-IEC, e-RCMC, e-CoO and e-BRC. | End-to-end trade documentation is machine-readable. |
| HBP 1.04 | Ask DGFT for pre-application consultation to resolve HS code or policy doubts. | Written reply to cuts future queries at Customs. |
| HBP 1.05 | DGFT can amend procedures by Public Notice—same legal weight as HBP. | Watch the DGFT website for every PN. |
| HBP 1.08-1.12 | Status-Holder Recognition (e-application in ANF 1B). | Fast-track Customs clearance & Self-Certification benefits. |
| FTP 1.21 | Avail Faceless Assessment, SWIFT, e-Sanchit at Customs. | Reduces port dwell time and hard-copy submissions. |
| FTP 1.22 | Grievance redress through Niryat Bandhu & DGFT Helpdesk. | Escalate stuck authorizations electronically. |
| HBP 1.06 | Digital transmissions = “documents” under Evidence Act. | Ensures enforceability of online approvals. |
| FTP 1.04 (Specific vs General) | A scheme-specific clause overrides general FTP text. | Vital when duty-credit scrip rules clash with generic policy. |
10│ How Customs & FTP Talk to Each Other (Real-Life Flow)
1 Exporter files online license → DGFT issues digitally signed PDF
2 License auto-pushes to ICEGATE via API (FTP 1.13, HBP 1.02) ➜
3 Customs EDI validates HS lines + quantity at port
4 On export, Shipping Bill carries License/Authorization number ➜
5 Upon Let Export Order, ICES generates RoDTEP scroll back to DGFT portal ➜
6 Bank realization hits RBI-EDPMS; e-BRC auto-syncs to DGFT (FTP 1.17) ➜
7 Exporter closes license in DGFT portal; Customs cross-confirms utilization
11 │ Transitional Protection (FTP 1.08)
If an item’s import policy shifts from “free” to “restricted,” consignments backed by irrevocable Letter of Credit opened before the policy change can still be cleared. Customs must honor DGFT’s transitional clause.
12 │ Compliance Red Flags
| Area | Risk | Mitigation |
| IEC not updated for director changes | ICEGATE mismatch & Shipping Bills blocked | File IEC amendment within 30 days (HBP 1.14 note). |
| Multiple digital signatures in same firm | Application re-submission | Authorise one DSC per IEC on DGFT portal. |
| Old Status-Holder certificate (2015-20) | Invalid after 30 Sep 2023 | Reapply in ANF 1B with updated export turnover data. |
| Paper-based submissions | DGFT returns file | Use PDF & XML uploads only; physical files accepted only if rule demands test samples. |
Disclaimer
The information shared in this post (and throughout the 30-Day Customs Series) is provided solely for general, educational purposes. It is not intended to be—and should not be relied on as—legal advice or a substitute for professional guidance tailored to your specific facts and jurisdiction.
- No attorney-client relationship is created by reading, commenting on, or sharing these materials.
- Customs statutes, regulations, circulars and court rulings are subject to change, and their application can vary with minute factual differences.
- While every effort is made to quote current law and landmark judgments accurately, no warranty—express or implied—is given as to completeness, timeliness or fitness for a particular purpose.
- You should consult a qualified customs or trade lawyer, or other licensed professional adviser, before acting (or refraining from acting) on any information herein.
- The authors, contributors and publishers disclaim all liability for any loss, damage or penalty arising from reliance on this content, whether in contract, tort (including negligence) or otherwise.
- By continuing to read or share this material, you acknowledge and accept the above terms.
About the Author & Office Locations
CA Navjot Singh is a seasoned indirect-tax specialist with deep expertise in Customs, Foreign Trade Policy and GST. He delivers strategic advisory and hands-on execution to conglomerates, Fortune 500 companies and high-growth enterprises.
- Key architect of long-term retainership models that pre-empt audit objections and mitigate litigation risk.
- Designs India-wide GST frameworks that optimise tax and cash-flow while dovetailing cross-border VAT regimes (EU VAT, GCC VAT).
- Advises clients through assessment proceedings, prepares robust submissions and representations, and drafts precise replies to show-cause notices, audit objections and spot memos.
- Represents taxpayers before adjudicating authorities, the Tribunal, the Sales-Tax Revisionary Board and the West Bengal Taxation Tribunal.
- Conducts comprehensive GST-impact assessments, incentive-scheme evaluations and cash-flow modelling; recommends mitigation strategies as benefits phase out.
- Prepares advance-ruling applications and engages with GST-Council committees to shape interpretative guidance.
- Develops end-to-end dispute-resolution roadmaps, from pre-litigation negotiation to appellate and judicial forums.
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