2005 (9) TMI 695 - HC - Indian Laws

Summary

Issues Involved:
1. Applicability of the Export and Import Policy (2002-2007) to 100% Export Oriented Units (EOUs).
2. Validity of retrospective amendments to the policy.
3. Application of the doctrines of promissory estoppel and legitimate expectation.
4. Authority of the Central Government to amend the policy in public interest.

Detailed Analysis:

1. Applicability of the Export and Import Policy (2002-2007) to 100% Export Oriented Units (EOUs):
The petitioner, a company engaged in the manufacture and export of gold jewellery, contended that as a recognized status holder under the Export Import Policy (2002-2007), it was entitled to the benefits mentioned therein, specifically under para 3.7.2.1(vi) of the policy and para 3.2.5 of the Handbook of Procedures. The petitioner argued that the exclusion of export turnover of units operating under the EOU scheme from the calculation of export value was contrary to the policy. However, the court held that the original policy, when properly construed, did not intend to include exports made by EOUs for further duty-free entitlements. The notification dated 28-1-2004 clarified that exports made by EOUs would not be considered in calculating the total value of exports, as EOUs were already entitled to 100% duty-free imports under Chapter VI of the policy.

2. Validity of Retrospective Amendments to the Policy:
The petitioner challenged the retrospective application of the notification excluding EOUs from the calculation of export value. The court noted that clarifications to a policy are inherently retrospective as they elucidate the original intent of the policy. The court found that the notification dated 28-1-2004 was a clarification rather than an amendment and thus applied retrospectively to the original date of the policy. The court dismissed the challenge to the retrospective application, stating that the clarification did not alter the structure of the original policy.

3. Application of the Doctrines of Promissory Estoppel and Legitimate Expectation:
The petitioner argued that it had altered its position based on the policy and thus the doctrines of promissory estoppel and legitimate expectation should apply. The court held that the doctrines of promissory estoppel and legitimate expectation do not apply when the government is empowered to amend the policy in public interest. The court emphasized that these doctrines cannot be invoked in the abstract and must be supported by clear, sound, and positive foundation. Mere assertions without supporting material were insufficient to invoke these doctrines. The court found no evidence of the petitioner altering its position to its detriment based on the policy.

4. Authority of the Central Government to Amend the Policy in Public Interest:
The court affirmed the Central Government's authority to amend the policy in public interest under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. The policy itself reserved the right for the government to make amendments in public interest. The court noted that economic policies are subject to change based on the exigencies of the situation and the necessity. The court found that the amendments were made in public interest to prevent misuse of the scheme and thus were valid.

Conclusion:
The court dismissed the writ petitions, upholding the validity of the notifications and amendments to the Export and Import Policy (2002-2007). The court found that the clarifications and amendments were made in public interest and within the authority of the Central Government. The doctrines of promissory estoppel and legitimate expectation were not applicable in this case due to the lack of supporting evidence and the government's power to amend the policy.