1983 (12) TMI 68 - HC - Customs

Exemption notification - Government is competent to amend or withdraw the exemption and such power is not arbitrary

Summary

Issues:
1. Interpretation of Customs Duty and Countervailing Duty exemption notifications.
2. Application of the doctrine of promissory estoppel in legislative exercises.
3. Validity of amending Customs Duty rates retrospectively.
4. Discretion of the Government to vary duty rates.

Analysis:
The judgment involves a dispute regarding the interpretation and application of Customs Duty and Countervailing Duty exemption notifications issued by the Government of India. The petitioners, a Public Limited Company engaged in textile manufacturing, imported fibres subject to these duties. The initial notification exempted certain fibres from additional duty exceeding a specified amount. However, a subsequent notification amended the exemption criteria, leading to increased duty liability for the petitioners.

The primary contention raised by the petitioners was the application of the doctrine of promissory estoppel due to the change in the exemption criteria. The court, however, rejected this argument, emphasizing that such estoppel does not apply to legislative exercises by the Central Government under the Customs Act. Citing precedent from the Delhi High Court, the judgment highlighted the importance of the Government's flexibility in setting duty rates to align with economic considerations and foreign exchange dynamics.

Another issue addressed was the retrospective application of amended duty rates. The petitioners argued that the revised rates should only apply prospectively from January 1, 1980, as the original exemption notification was extended until December 31, 1980. The court dismissed this argument, asserting the Government's authority to amend duty rates at any stage, including retrospectively. It clarified that the liability to pay duty arises upon goods' arrival, with no vested right to a specific duty rate for a defined period.

Ultimately, the court ruled against the petitioners, discharging the rule and dismissing the petition. While costs would typically be awarded to the respondents, the court noted their delayed response to the matter and decided against awarding costs in their favor. The judgment underscores the Government's discretionary power to vary duty rates and highlights the limitations of invoking promissory estoppel in legislative matters.