1981 (6) TMI 41 - HC - Customs

Summary

Issues Involved:

1. Validity of the impugned notification dated 16th October 1980.
2. Applicability of the doctrine of promissory estoppel against the Central Government.
3. Public interest considerations in modifying or rescinding exemption notifications.

Issue-wise Detailed Analysis:

1. Validity of the Impugned Notification:

The case revolves around the Central Government's power under Section 25 of the Customs Act, 1962, to issue notifications exempting goods from customs duty. The initial notification No. 66/79 dated 15th March 1979 exempted polyvinyl chloride resins from customs duty until 31st March 1981. However, the impugned notification No. 205/F.No. 355/141/80 Customs 1, dated 16th October 1980, modified the earlier notification by imposing a 40% customs duty on the same goods. The petitioners argued that they placed orders based on the initial notification and sought to remove the goods from the warehouse before 31st March 1981. The customs authorities, however, demanded a 40% duty based on the new notification. The court examined whether the Central Government was estopped from enforcing the impugned notification due to the principle of promissory estoppel.

2. Applicability of the Doctrine of Promissory Estoppel:

The petitioners contended that the Central Government, having issued a notification valid until 31st March 1981, was estopped from modifying it before that date. They relied on the principle of promissory estoppel, which, as stated by Bhagwati J. in M.P. Sugar Mills v. State of U.P., binds a party to a clear and unequivocal promise intended to create legal relations, especially when acted upon by the other party. The petitioners argued that they altered their position based on the initial notification, thus invoking promissory estoppel against the Central Government. However, the court noted that the rule of promissory estoppel cannot prevent the Government from discharging its statutory functions or acting in public interest. The court highlighted exceptions to this rule, including the exercise of legislative functions and actions justified by public interest considerations.

3. Public Interest Considerations:

The court emphasized that Section 25 of the Customs Act, 1962, empowers the Central Government to issue exemption notifications based on public interest. The initial exemption was granted in public interest, and the subsequent modification was also justified by public interest. The court found that the initial notification did not constitute a representation or promise specifically intended to induce the petitioners to import polyvinyl chloride resins. The notification was issued for broader public interest reasons, not to benefit individual importers. The court held that the exemption notification could not serve as the basis for promissory estoppel, as it was subject to modification or rescission based on public interest demands. The court referred to the Supreme Court decision in Excise Commissioner, U.P. v. Ram Kumar, which affirmed that there can be no estoppel against the Government in exercising its statutory powers in public interest.

Conclusion:

The court concluded that the Central Government's impugned notification modifying the exemption was valid and justified by public interest. The plea of promissory estoppel was not applicable in this case, as the initial notification did not constitute a specific promise to the petitioners. The court dismissed the writ petitions, stating that the Government must retain the flexibility to modify or rescind exemption notifications as public interest demands. The court emphasized that the power to grant exemptions under Section 25 of the Customs Act is a statutory power exercised in accordance with public interest considerations. Consequently, the writ petitions were dismissed without any order as to costs.