1987 (4) TMI 167 - SC - Customs

Whether items were sought to be imported by diamond merchants were canalised, would not be an impediment to the import directly by them, the Court meant to say that this could be imported directly by them through the canalisation organisation. The need for canalisation stands on public policy and that need cannot be lightly or inferencially given a go-bye. It should not be presumed that collaterally the court had done away with the system of canalisation based on sound public policy. We have found nothing in the different authorities on this subject, which militate against the above views. Therefore, the action taken by the Customs authorities in issuing adjudication notice and proceeding in the manner they did, we are of the opinion that they have not acted illegally or without jurisdiction. This must proceed in accordance with law as laid down by this Court which, in our opinion, is clear enough. The fact that in subsequent decision, the petitioner is not a party is not relevant. Generally legal positions laid down by the court would be binding on all concerned even though some of them have not been made parties nor were served nor any notice of such proceedings given. Appeal dismissed.

Issues Involved:
1. Validity of Show Cause Notices issued to the petitioners.
2. Entitlement of diamond exporters to import items under the Import Policy of 1978-79.
3. Interpretation of the term "whether canalised or otherwise" in the context of import policies.
4. Application of promissory estoppel against the Government.

Detailed Analysis:

1. Validity of Show Cause Notices:
The writ petition challenges Show Cause Notices dated 21st August 1986, 11th September 1986, and 26th September 1986 issued to the petitioners. The petitioners argued that these notices were inconsistent with the Supreme Court's order dated 18th April 1985, which directed the issuance of Export House Certificates without the requirement of diversification of exports. The Court found no merit in this argument, holding that the subsequent decisions did not deviate from the earlier decision and that the Show Cause Notices were valid.

2. Entitlement of Diamond Exporters:
The Court examined whether diamond exporters were entitled to import items under the Import Policy of 1978-79. The petitioners contended that the order dated 18th April 1985 allowed them to import all items, whether canalised or otherwise, except those specifically banned. The Court clarified that the entitlement was limited to items permissible under the Import Policy of 1978-79 and also under the prevailing Import Policy at the time of import, which in this case was the Import Policy of 1985-88. The Court emphasized that the items had to pass two tests: being importable under both the 1978-79 and 1985-88 policies.

3. Interpretation of "Whether Canalised or Otherwise":
The Court addressed the interpretation of the term "whether canalised or otherwise" used in its order dated 18th April 1985. The Court held that this phrase did not imply that canalised items could be imported directly by the importers ignoring the canalisation process. The Court emphasized that canalisation, a matter of public policy, could not be lightly or inferentially disregarded. The Court stated that the phrase meant that items could be imported directly by the importers through the canalisation organisation if permitted by the prevailing import policy.

4. Application of Promissory Estoppel:
The petitioners argued for the application of the doctrine of promissory estoppel against the Government, citing several cases including Union of India v. Godfrey Philips India Ltd. The Court acknowledged that the doctrine of promissory estoppel is applicable against the Government in its public or executive functions. However, the Court found no case of promissory estoppel made out in this instance.

Conclusion:
The Court dismissed the writ petition, holding that the Show Cause Notices were valid and the petitioners were not entitled to import canalised items directly without following the canalisation process. The Court also dismissed the related writ petitions and directed that the proceedings should continue in accordance with the law. The applications for impleadment were allowed, and the Court reiterated that its decisions are binding on all concerned. The Court emphasized the importance of adhering to the principles of law and public policy in the context of import regulations.

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