The Delhi High Court has set aside three orders passed by the Policy Relaxation Committee (PRC) under the Directorate General of Foreign Trade (DGFT), holding that the authorities failed to properly consider an exporter’s plea that export benefits under the Advance Authorization Scheme could not be availed because of technical glitches in transmission of data to ICEGATE/customs systems.
The bench of Justice Purushaindra Kumar Kaurav also held that denial of personal hearing amounted to violation of principles of natural justice.
The case arose from a writ petition filed by O.C. Sweaters LLP, a garment manufacturer and exporter based in Gurugram, Haryana. The exporter had received an urgent purchase order from a US-based buyer, EMJ Apparel Group LLC, for supply of garment items. To fulfill the export obligation, the company obtained an Advance Authorization dated 1 October 2021 permitting duty-free procurement/import of raw materials. However, instead of importing inputs, the exporter opted for indigenous procurement and obtained an invalidation letter from DGFT for domestic sourcing of raw materials.
According to the petitioner, raw materials were procured domestically through GST invoices and finished goods were manufactured for export. The goods were thereafter exported through Shipping Bill Nos. 6482393 and 6483064 dated 3 December 2021. The exporter claimed that while filing the shipping bills, it specifically sought processing under the Advance Authorization Scheme using Customs Code No. 63. However, due to technical glitches attributable to the authorities, the data relating to the Advance Authorization was allegedly not transmitted to ICEGATE/customs systems.
The exporter contended that because the shipment was time-sensitive and delay could have resulted in cancellation of the export order, it proceeded with exports under the zero-rated scheme while simultaneously mentioning the authorization details in the GST invoices and shipping bills. The company repeatedly informed DGFT authorities and ICEGATE regarding the technical problem and sought rectification, but no effective action was taken.
Subsequently, the exporter approached the PRC under Paragraph 2.58 of the Foreign Trade Policy (FTP), seeking relaxation on grounds of genuine hardship. However, the PRC rejected the request in January 2023, observing that no cogent reasons had been shown demonstrating hardship. Review applications were also rejected in October 2023 and March 2024, despite repeated requests for personal hearing.
Before the High Court, the petitioner argued that the export obligation had in fact been fulfilled within the prescribed period and that subsequent export shipments under the same Advance Authorization were accepted by authorities under the scheme. It was argued that the only reason the two disputed shipping bills were not processed under the scheme was the failure of authorities to transmit authorization data to customs systems.
The petitioner further contended that the PRC orders were mechanical and failed to consider material facts, including repeated representations regarding the technical glitch. It was also emphasized that despite specific requests, no personal hearing was granted, contrary to Paragraph 2.60 of the FTP which contemplates personal hearing for grievance redressal in cases involving policy relaxation and genuine hardship.
The court examined Paragraphs 2.59 and 2.60 of the FTP and observed that the DGFT possesses sufficient powers to grant exemptions, relaxations, or relief in cases involving genuine hardship and adverse impact on trade. The Court noted that the FTP framework itself recognizes the necessity of personal hearing in such matters.
The High Court found that the PRC orders failed to meaningfully examine whether the exporter had been prevented from availing benefits due to technical glitches beyond its control.
The Court also noted that the petitioner had consistently asserted that the authorization was not transmitted to ICEGATE/customs systems, thereby preventing filing under the Advance Authorization Scheme, and that these assertions remained substantially uncontroverted because the respondents did not file any reply before the Court.
Relying upon the Supreme Court judgment in Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan, the Court reiterated that administrative and quasi-judicial authorities are required to pass reasoned orders and cannot merely issue “rubber-stamp” decisions without independent application of mind.
The Court further relied on the Constitution Bench judgment in Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation and observed that observance of principles of natural justice, including fair hearing, is fundamental in quasi-judicial proceedings. It also referred to the Supreme Court ruling in Automotive Tyre Manufacturers Association v. Designated Authority to reiterate that natural justice requirements apply even in administrative decision-making when adverse civil consequences are involved.
Holding that the PRC orders suffered from non-application of mind and violation of natural justice, the Delhi High Court set aside the impugned orders dated 3 January 2023, 20 October 2023, and 22 March 2024. The matter was remanded back to the competent authority for fresh consideration after granting the petitioner an effective opportunity of personal hearing and thereafter passing a fresh reasoned order in accordance with law.
Case Details
Case Title: O.C. Sweaters Llp. Versus UOI
Citation: JURISHOUR-1444-HC-2026(DEL)
Case No.: W.P.(C) 8336/2025
Date: 28/05/2026
Counsel For Petitioner: P C Patnaik
Counsel For Respondent: Nishant Gautam
