Kerala HC maintains the floor price of 500 per kg for the import of pepper

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The High Court of Kerala suspended the order of the Director General of Foreign Trade (DGFT) fixing the minimum import price (MIP) of pepper at a CIF value (cost, insurance, freight) of 500 per kg.

The order was issued following a written motion filed by Travancore Solvents and Oils, Aluva, a company specializing in the spice trade, namely black pepper, cloves and areca nuts. In accordance with the order issued by the DGFT, the import of pepper with a CIF value (cost, insurance, freight) of 500 per kg and more was free.

However, this MIP would not apply to imports under the prior authorization regime, imports of 100 percent export oriented units, and special economic zone units. It also exempted the import of pepper under the prior authorization scheme for oleoresin extraction or re-export by MIP manufacturer-exporters.

The petitioner pointed out that this was discriminatory as importers like him could not import pepper, and it was made free for these importers under the prior authorization scheme.

In fact, it was akin to a political decision, and the DGFT did not have the power to modify a policy of the Center. In accordance with Article 6 (2) of the Foreign Trade (Development and Regulation) Law, the DGFT had the power to advise the central government and not to issue an ordinance like this.

The petitioner also argued that the value of imports / exports of goods should only be negotiated between the parties and not set by any other relevant authority. The DGFT had acted in derogation from the provisions of the customs law by issuing such an order.

The petitioner pointed out that the national pepper production in Kerala had declined after the floods between 2018 and 2019. To meet domestic consumption, the country has to import pepper. The petition added that the imposed requirement of 6 percent piperine content in imported pepper was also very irregular.

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