2002 (9) TMI 116 - HC - Customs

Issues Involved:
1. Applicability of Export Promotion Capital Goods (EPCG) scheme and duty rates.
2. Principle of promissory estoppel.
3. Prospective vs. retrospective application of the duty scheme.
4. Validity of the importation process and customs notifications.
5. Entitlement to refund of duty paid.

Detailed Analysis:

1. Applicability of Export Promotion Capital Goods (EPCG) Scheme and Duty Rates:
The petitioner company applied for a license to import capital goods under the EPCG scheme at a 10% ad valorem customs duty rate on 14th January 1999, which was approved on 18th February 1999. However, from 1st April 1999 to 31st March 2000, the Government of India amended the duty to 0%. The petitioner argued that since the goods were released on 31st August 1999, when the 0% duty scheme was effective, they should not pay any duty and should receive a refund for the duty already paid on one machine.

2. Principle of Promissory Estoppel:
The petitioners invoked the principle of promissory estoppel, arguing that the authorities had promised to grant the license under the 0% duty scheme by a letter dated 29th June 1999. The withdrawal of this promise by the authorities was challenged as a violation of promissory estoppel. The petitioners cited several judgments to support their claim, emphasizing that the doctrine of fairness and Section 115 of the Evidence Act should prevent the authorities from reneging on their promise.

3. Prospective vs. Retrospective Application of the Duty Scheme:
The authorities contended that the policy was prospective and could not be applied retrospectively. They clarified that the customs notification extending the 0% duty benefit to the textile sector was issued on 4th November 1999, making it prospective. Thus, the petitioners' EPCG license issued on 10th March 1999 could not be converted to a 0% duty license.

4. Validity of the Importation Process and Customs Notifications:
The court examined the importation process and the customs notifications. It was noted that the bill of entry is crucial for determining the legal importation date. The court referred to a previous judgment, emphasizing that the arrival of goods and their legal entry are distinct. The transitional period during which goods are examined does not constitute valid importation for duty imposition.

5. Entitlement to Refund of Duty Paid:
The petitioners sought a refund of Rs. 1,24,45,091.80 along with interest, arguing that the duty was paid under the 10% scheme before the 0% scheme became effective. The respondents argued that the communication dated 24th June 1999 was for the issuance of an import license, not for the 0% duty scheme. The court found the authorities' explanations inconsistent and noted that the exemption scheme for the textile sector should cover the petitioners' capital goods.

Conclusion:
The court directed the appropriate respondent authority to provide a hearing and pass a reasoned order within one month, addressing why the exemption could not be granted and whether the duty paid should be refunded. If the petitioners are dissatisfied with the reasoning, they may appeal or seek a review. If the authority finds the petitioners' grievance genuine, relief should be granted without a reasoned order, superseding earlier rejections. No order as to costs was passed, and certified copies of the judgment were to be provided within seven days.

Operative Part:
The writ petition is disposed of with directions for a reasoned order and potential relief, with provisions for appeal or review if necessary. All parties are to act on a signed copy of the judgment's operative part.

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