1980 (1) TMI 107 - HC - Customs

Summary

Issues Involved:
1. Legitimacy of withholding exemption from payment of excise duty.
2. Compliance with the Import Policy and relevant notifications.
3. Validity of endorsements made by the licensing authority.
4. Application of the public notice dated February 28, 1979.
5. Entitlement to exemption from duty based on the notification dated June 19, 1978.
6. Retrospective application of policy changes.
7. Rule of promissory estoppel.

Issue-wise Detailed Analysis:

1. Legitimacy of Withholding Exemption from Payment of Excise Duty:
The petitioners challenged the action of the respondents in withholding the exemption from payment of excise duty on imported goods under Article 226 of the Constitution. They contended that their imports were in accordance with the Import Policy and the relevant notifications, and thus, they were entitled to the exemption.

2. Compliance with the Import Policy and Relevant Notifications:
The petitioners, as registered exporters of nylon fabrics, were entitled to import replenishment at the rate of 50% of the f.o.b. value of the exported goods under the Import Policy for 1977-1978 and 1978-1979. The relevant notifications under Section 25 of the Customs Act required an endorsement of both the value and quantity of the goods for exemption from duty.

3. Validity of Endorsements Made by the Licensing Authority:
The petitioners obtained import licenses with endorsements of value only, as required by the earlier notifications. However, the customs authorities refused exemption from duty because the licenses did not conform to the notification dated June 19, 1978, which required endorsements of both value and quantity. The court found that the licensing authority could have endorsed the actual quantity imported or clarified that the endorsement was made only relating to value due to the lack of quantity restrictions under the Import Policy.

4. Application of the Public Notice Dated February 28, 1979:
The respondents endorsed the licenses based on the public notice dated February 28, 1979, which limited the permissible imports to 1.2 kgs against 1 kg of yarn used in the exported product at 32% of the f.o.b. value. The petitioners argued that this public notice was wrongly applied to their case, as their exports and imports occurred before the date of the public notice.

5. Entitlement to Exemption from Duty Based on the Notification Dated June 19, 1978:
The court held that the petitioners were entitled to exemption from duty based on the notification dated June 19, 1978, which required endorsements of both value and quantity. However, since the Import Policy did not restrict the quantity of imports for the petitioners' goods, the endorsement of value alone was sufficient.

6. Retrospective Application of Policy Changes:
The court found that the public notice dated February 28, 1979, could not be applied retrospectively to the petitioners' case. The policy changes introduced by the public notice were prospective and did not affect imports and endorsements made before its issuance.

7. Rule of Promissory Estoppel:
The court did not find it necessary to consider the application of the rule of promissory estoppel, given the conclusions reached on the other issues.

Conclusion:
The court directed the respondents to cancel the new endorsements made based on the public notice of February 28, 1979, and restore the original endorsements regarding the value limited to 50% of the f.o.b. value. Respondent No. 2 was instructed to grant the petitioners' claim for exemption from duty under the notification dated June 19, 1978. The petition was allowed, and the respondents were ordered to pay the costs.