1992 (11) TMI 115 - HC - Customs

Summary

Issues Involved:
1. Prohibition on export of red-sanders wood under the new Import-Export Policy.
2. Application of the principle of promissory estoppel against the new policy.
3. Reasonableness and arbitrariness of the new policy regarding already prepared goods.

Detailed Analysis:

1. Prohibition on Export of Red-Sanders Wood Under the New Import-Export Policy:
The petitioner, a recognized exporter of musical instrument parts made from red-sanders wood, was affected by a sudden change in the Import-Export Policy in March 1992. The new policy, effective from April 1, 1992, introduced a prohibition on the export of red-sanders wood in any form, including musical instruments and chips, which were previously exported based on licenses issued by the Chief Controller of Imports and Exports. The petitioner sought clarification from the authorities, who confirmed the prohibition, citing Serial No. 7 of Part I and Serial No. 44 of Part V of the Negative List of Exports in the Export and Import Policy, 1992-97.

2. Application of the Principle of Promissory Estoppel Against the New Policy:
The petitioner contended that the principle of promissory estoppel should apply since they had acted upon the earlier policy, which was valid until March 31, 1993, and had incurred financial detriment by entering into contracts and obtaining loans. The respondents argued that promissory estoppel does not apply to legislative actions, as the Import-Export Policy is a result of a legislative function under Section 3 of the Imports and Exports (Control) Act, 1947. However, the court referred to various judgments, including the Full Bench of Delhi High Court in Bansal Exports (P) Ltd. v. Union of India and the Supreme Court's ruling in Union of India v. Anglo Afghan Agencies, which established that promissory estoppel can be invoked against executive actions but not against legislative actions.

3. Reasonableness and Arbitrariness of the New Policy Regarding Already Prepared Goods:
The court found the new policy to be arbitrary and unreasonable concerning goods already prepared for export. The respondents claimed the prohibition was an ecological conservation measure, yet there was no evidence that cutting red-sanders wood had been banned by the government. The court noted that if the trees had already been cut and converted into musical instrument parts, banning their export would not serve the purpose of ecological conservation. The court emphasized that the policy change at this stage, when the goods were ready for export, was unreasonable and arbitrary, lacking any nexus with the proclaimed objective of the new policy.

Conclusion:
The court concluded that the petitioner was entitled to relief and issued a mandamus directing the respondents to grant a license for the value of US $75,000 against the specified letter of credit. The writ petition was allowed to this extent, with no order as to costs.