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2019 (9) TMI 791 - SC - Central ExciseDoctrine of Promissory Estoppel - withdrawal of exemption N/N. 71 of 2003 dated 09.09.2003 - Exemption from duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts as was equivalent to the amount of duty paid by the manufacturer of the said goods, other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2002 - whether, by invoking the doctrine of promissory estoppel, can the Union of India be estopped from withdrawing the exemption from payment of Excise Duty in respect of certain products, which exemption is granted by an earlier notification; when the Union of India finds that such a withdrawal is necessary in the public interest? HELD THAT - This Court in a catena of decisions has considered the issue with regard to inapplicability of the doctrine of promissory estoppel, when the larger public interest demands so. In the case of KASINKA TRADING VERSUS UNION OF INDIA 1994 (10) TMI 64 - SUPREME COURT , this Court was considering the case of the appellant, who were manufacturing certain products, requiring PVC resin as one of the raw materials for its manufacturing process. By Notification No. 66 dated 15.03.1979 issued under Section 25 of the Customs Act, 1962 which is pari materia with Section 5A of the Central Excise Act, the PVC resin was exempted from basic import duty. The exemption was to be effective till 31.03.1981. However, by Notification No. 205 dated 16.10.1980 issued under Section 25 of the Customs Act, the exemption granted earlier came to be withdrawn. This Court has clearly held that the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to see all aspects including the objective to be achieved and the public good at large. It has been held that while considering the applicability of the doctrine, the courts have to do equity and the fundamental principle of equity must forever be present in the mind of the Court while considering the applicability of the doctrine. It has been held that the doctrine of promissory estoppel must yield when the equity so demands and when it can be shown having regard to the facts and circumstances of the case, that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation. The withdrawal of exemption in public interest is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in the public interest. It has been held that, where the Government acts in public interest and neither any fraud or lack of bona fides is alleged much less established, it would not be appropriate for this Court to interfere with the same. Ultimately, this Court came to the conclusion that the withdrawal of the exemption was in the public interest and, therefore, refused to interfere with the order of the Delhi High Court dismissing the petitions. Thus, when withdrawal of the exemption is in public interest, the public interest must override any consideration of private loss or gain. In the said case, the change in policy and withdrawal of the exemption on the ground of severe resource crunch have been found to be a valid ground and to be in public interest. It could thus be seen that, it is more than well settled that the exemption granted, even when the notification granting exemption prescribes a particular period till which it is available, can be withdrawn by the State, if it is found that such a withdrawal is in the public interest. In such a case, the larger public interest would outweigh the individual interest, if any. In such a case, even the doctrine of promissory estoppel would not come to the rescue of the persons claiming exemptions and compel the State not to resile from its promise, if the act of the State is found to be in public interest to do so. Thus, it is concluded that the withdrawal of the exemption to the pan masala with tobacco and pan masala sans tobacco is in the larger public interest. As such, the doctrine of promissory estoppel could not have been invoked in the present matter. The State could not be compelled to continue the exemption, though it was satisfied that it was not in the public interest to do so. The larger public interest would outweigh an individual loss, if any. In that view of the matter we find that the appeals deserve to be allowed. Appeal allowed.
Issues Involved:
1. Applicability of the doctrine of promissory estoppel against the Union of India in withdrawing excise duty exemptions. 2. Public interest considerations in withdrawing excise duty exemptions. 3. Judicial review of policy decisions related to public health. Issue-wise Detailed Analysis: 1. Applicability of the Doctrine of Promissory Estoppel: The central issue was whether the Union of India could be estopped from withdrawing excise duty exemptions on certain products by invoking the doctrine of promissory estoppel. The respondents argued that they had established industries based on the promise of tax exemptions, and thus, the government should honor this promise. The Supreme Court, however, reiterated that the doctrine of promissory estoppel cannot be invoked in the abstract and must yield to equity and public interest. The court cited several precedents, including Kasinka Trading vs. Union of India, where it was held that the government could modify or withdraw exemptions if public interest so demanded. 2. Public Interest Considerations: The Union of India argued that the withdrawal of exemptions was necessary due to the hazardous nature of the products (pan masala with and without tobacco) to public health. The court noted that public interest is a superior equity that can override individual equity. The court referred to scientific studies and expert opinions that demonstrated the carcinogenic and addictive nature of these products, which justified the withdrawal of exemptions in the public interest. The court emphasized that the government must be free to act in public interest and modify policies accordingly. 3. Judicial Review of Policy Decisions: The court reviewed the decisions of the Sikkim High Court and the Gauhati High Court. The Sikkim High Court had erroneously concluded that there was no overriding public interest in withdrawing the exemptions and that pan masala was not hazardous to health. The Gauhati High Court's Appellate Bench had also erred in setting aside the Single Judge's decision, which had upheld the withdrawal of exemptions in public interest. The Supreme Court held that courts should not interfere with policy decisions made in public interest unless there is evidence of fraud or lack of bona fides. Conclusion: The Supreme Court allowed the appeals, quashing the judgments of the Sikkim High Court and the Gauhati High Court's Appellate Bench. The court upheld the Union of India's decision to withdraw the excise duty exemptions, emphasizing that the larger public interest outweighed any individual loss. The doctrine of promissory estoppel could not be invoked to compel the state to continue exemptions that were no longer in the public interest. The court's decision reinforced the principle that public health considerations and policy decisions made in public interest must take precedence over individual or commercial interests.
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