1992 (9) TMI 95 - HC - Customs

Summary

Issues Involved:
1. Constitutionality of Section 3(2) of the Customs Tariff Act, 1975.
2. Determination of the value of imported goods under Section 4 of the Central Excises and Salt Act, 1944.
3. Exclusion of certain charges from the assessable value for countervailing duty (C.V.D.).
4. Application of the doctrine of promissory estoppel against the withdrawal of exemption notifications.

Detailed Analysis:

1. Constitutionality of Section 3(2) of the Customs Tariff Act, 1975:
The petitioners sought a declaration that Section 3(2) of the Customs Tariff Act, 1975, and related regulations were ultra vires the Constitution of India. However, the court noted that the issues raised in prayers (d), (e), (f), and (g) were already concluded against the petitioners by two Division Bench judgments: Ashok Traders v. Union of India and Polyset Corporation v. Collector of Customs. Consequently, the court did not address these contentions.

2. Determination of the value of imported goods under Section 4 of the Central Excises and Salt Act, 1944:
The petitioners requested that the value of imported goods be determined based on Section 4 of the Central Excises and Salt Act, 1944, after deducting all deductible expenses. This issue, like the first, was also concluded against the petitioners based on the aforementioned judgments, so the court did not delve into this matter.

3. Exclusion of certain charges from the assessable value for countervailing duty (C.V.D.):
The petitioners sought a writ of mandamus to exclude packing charges, lending charges, and post-importation charges, including customs duty and surcharge, from the assessable value for levying C.V.D. This issue was similarly concluded against the petitioners, and the court did not address it further.

4. Application of the doctrine of promissory estoppel against the withdrawal of exemption notifications:
The core issue that survived for consideration was the application of the doctrine of promissory estoppel. The facts were that the petitioners had entered into contracts based on an exemption notification (Exh. C) dated 28th February 1982, which granted a 50% duty reduction on PVC resins from Romania. However, a subsequent notification (Exh. F) dated 4th November 1982 withdrew this exemption, increasing the duty rate to 75% ad valorem.

Arguments by Petitioners:
The petitioners argued that the exemption notification constituted a clear and unequivocal promise that created legal relations. They contended that they had acted upon this promise by entering into contracts and opening a letter of credit. The withdrawal of the exemption was argued to be against the principles of promissory estoppel, as established in cases like M/s. Motilal Padampat Sugar Mills Co. Ltd. v. The State of Uttar Pradesh and Others and Union of India v. Godfrey Philips India Ltd.

Arguments by Respondents:
The respondents argued that the exemption was granted under Section 25(1) of the Customs Act, 1962, which allows the Central Government to issue or withdraw exemptions based on public interest. They contended that the withdrawal notification (Exh. F) was also issued under the same section and approved by Parliament, making it a legislative action against which promissory estoppel could not be invoked.

Court's Analysis:
The court reviewed several precedents, including M.P. Sugar Mills, Godfrey Philips, Pournami Oil Mills, and Bharat Commerce & Industries. It noted that in cases where exemptions were granted for a stated period, the plea of promissory estoppel was upheld. However, in the present case, the exemption notification (Exh. C) did not specify a period, distinguishing it from the cited cases.

The court agreed with the respondents that the withdrawal of the exemption was a legislative function, and promissory estoppel could not be applied against legislative actions. The court also referenced the Supreme Court's decision in Shri Bakul Oil Industries v. State of Gujarat, which emphasized that exemptions granted as concessions could be withdrawn at any time.

Conclusion:
The court concluded that the plea of promissory estoppel was not available to the petitioners because the exemption was not granted for a stated period and the withdrawal was a legislative action. Consequently, the relevant date for determining the duty was the date of entry of the vessel inwards, which was after the issuance of the withdrawal notification.

Final Order:
The petition was dismissed, and the rule was discharged with costs. The respondents were directed to calculate the exact liability of the petitioners and make necessary adjustments. If any excess amount had been recovered, it was to be refunded with interest, and if any further amount was due, the petitioners were to pay it with interest.

Rule discharged with costs.