1990 (4) TMI 66 - HC - Customs

Summary

Issues Involved:
1. Application of promissory estoppel against the government.
2. Validity of subordinate legislation and its impact on vested rights.
3. Entitlement to refund of customs duty paid under a superseded notification.

Issue-wise Detailed Analysis:

1. Application of Promissory Estoppel Against the Government:
The petitioner argued that the respondents were bound by the principle of promissory estoppel and should allow the benefit of Notification No. 66-Cus., dated 15-3-1979, which exempted PVC Resin from customs duty until 31-3-1981. The petitioner had placed orders and opened letters of credit based on this notification. The respondents, however, invoked Notification No. 205-Cus., dated 16-10-1980, which imposed a 40% ad valorem duty, and refused to allow clearance without payment of customs duty.

The court referred to the Supreme Court's decision in UOI v. Godfrey Philips India Ltd., which established that the doctrine of promissory estoppel is well recognized in Indian administrative law and can be used as a cause of action. The court found that the respondents had made a clear and unequivocal promise through Notification No. 66-Cus., and the petitioner had acted on this promise. Therefore, the respondents could not go back on their representation, and the doctrine of promissory estoppel applied.

2. Validity of Subordinate Legislation and Its Impact on Vested Rights:
The respondents contended that a notification issued under Section 25 of the Customs Act is a legislative measure, and promissory estoppel cannot be applied against legislation. The court, however, cited the Division Bench decision in Union of India v. Chakra Tyres Ltd., which followed the Supreme Court's ruling that subordinate legislation, even if laid before Parliament, remains subordinate and is subject to the doctrine of promissory estoppel.

The court held that the notification in question was subordinate legislation and not a legislative enactment. Therefore, the principle of promissory estoppel was applicable, and the respondents could not apply Notification No. 205-Cus., dated 16-10-1980, to the consignments imported by the petitioner before 31-3-1981.

3. Entitlement to Refund of Customs Duty Paid Under a Superseded Notification:
The petitioner had to warehouse the consignment due to financial constraints and later cleared it by paying the duty as per Notification No. 205-Cus., dated 16-10-1980. The petitioner argued that the duty paid was not voluntary but compelled by the respondents' wrongful act, and thus, it should be refunded.

The respondents countered that the petitioner should have filed a refund application within the stipulated period under the Customs Act and that a writ petition was not the appropriate remedy. The court, however, emphasized that tax collected without authority of law cannot be retained by the Revenue and that it would be unfair to drive the petitioner to file a suit when the facts were undisputed.

The court allowed W.P. No. 12025 of 1983, directing the respondents to refund any excess duty collected from the petitioner, giving the benefit of Notification No. 66-Cus., dated 15-3-1979. The refund was to be processed by 31st July, 1990, with no order as to costs.

Conclusion:
The court concluded that the respondents could not apply Notification No. 205-Cus., dated 16-10-1980, to the consignments imported by the petitioner before 31-3-1981, and directed the refund of any excess duty collected. The principle of promissory estoppel was upheld against the subordinate legislation, ensuring the petitioner received the benefits promised under the earlier notification.