TMI Blog1992 (3) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ') is the raw material for manufacture of refractories and such D.B.M. having silica content less than 4% by weight is required for highly sophisticated refractories for use in specialised application areas of the steel plants. The said article is not manufactured in India and the Government of India had permitted import of the said material by the actual users under the Open General Licence Scheme. The Government of India published a notification in exercise of their powers under sub-section (1) of Section 25 of the Customs Act, 1962 (hereinafter referred to as the "Act") exempting D.B.M. having silicon content less than 4% by weight from so much of that portion of the duty of customs leviable thereon as is in excess of the amount calculated at the rate of 40% ad valorem. The said notification dated 1st of August, 1985 was to remain in force upto and inclusive of 31st of July, 1986. The aforesaid notification has been annexed as Annexure-2/B to the writ application. By yet another Notification dated 30th July, 1986, issued by the Central Government under sub-section (1) of Section 25 of the Act, validity of the Notification under Annexure-2/B was extended till 30th of November, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d warehouse. 3. Though the Opposite Parties have not filed any return to this Court, but the learned Standing Counsel appearing for the Central Government in course of hearing took the stand that the notification issued by the Government of India in exercise of their powers under sub-section (1) of Section 25 of the Act is statutory in nature and is a legislation to which the principle of promissory estoppel will not apply. The further case is that the Union Government having granted certain concession in its earlier notifications under Annexures-2/B and 2/C was entitled to withdraw or modify the same and, therefore, there has been no illegality in issuing the notification under Annexure-2/A on 28-11-1986. The Opposite Parties also took the stand that under Section 15 of the Act, the date for determination of rate of duty and tariff valuation of imported goods in the case of goods cleared from a warehouse is the date on which the goods are actually removed from the warehouse and, therefore, in respect of the quantity of goods physically removed from the warehouse on or after the 28th of November, 1986, the duty would be payable in accordance with the notification under Annexure-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been removed from the bonded warehouse between 28th November, 1986 and 30th of November, 1986 and a part of it remained in the warehouse not being removed even after 30th of November, 1986. The Central Government issued a notification under Annexure-2/A on the 28th of November, 1986, in supersession of the earlier notifications issued under Annexures-2/B and 2/C fixing the rate at the rate of 55% ad valorem. The additional demand is made on the basis of the aforesaid notification of the Government under Annexure-2/A in respect of the quantity of D.B.M. removed from the bonded warehouse on or after 28th November, 1986, and in respect of the quantity of D.B.M. which had not been removed and were remaining in the bonded warehouse. 6. Before considering the question of applicability of promissory estoppel, it would be appropriate for us to notice certain provisions of the Customs Act itself. Section 2(25) defines "imported goods" to mean any goods brought into India from a place outside India, but does not include goods which have been cleared for home consumption. Section 2(27) defines "India" to include the territorial waters of India. Section 12(1) provides that duties of cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other party, the promise would be binding on the other party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any pre-existing relationship between the parties or not" Adverting to the plea of executive necessity, the Court further observed :- "The defence of executive necessity was thus clearly negatived by this court and it was pointed out that it did not release the Government from its obligation to honour the promise made by it, if the citizen, acting in reliance on the promise, had altered his position. The doctrine of promissory estoppel was in such a case applicable against the Government and it could not be defeated by invoking the defence of executive necessity." So far as the applicability of the principle to taxation is concerned, in the self-same judgment their Lordships observed :- "........... It is true that taxation is a sovereign or governmental function, but, for reasons which we have already discussed, no distinction can be made between the exercise of a sovereign or gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ignore his promise on some undefined and undisclosed grounds of necessity of change the conditions to the prejudice of the person who had acted upon such representation and put himself in a disadvantageous position. (5) The officer would be justified in changing the terms of the agreement to the prejudice of the other party on special considerations such as difficult foreign exchange position or other matters which have a bearing on general interest of the State." Finally, their Lordships observed :- "On a consideration of the decisions of this Court it is clear that there can be no promissory estoppel against the exercise of legislative power of the State. So also the doctrine cannot be invoked for preventing the Government from acting in discharge of its duty under the law. The Government would not be bound by the act of its officers and agents who act beyond the Scope of their authority and a person dealing with the agent of the Government must be held to have notice of the limitations of his authority. The Court can enforce compliance by a public authority of the obligation laid on him if he arbitrarily or on his mere whim ignores the promises made by him on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer of the Government or of the public authority to make....." This decision of the Supreme Court had not been brought to the notice of the Full Bench of the Delhi High Court while their Lordships were deciding the Bombay Conductors and Electricals case. In view of the aforesaid legal position, there cannot be any manner of doubt that though the principle is applicable against the Government in exercise of its Governmental, public or executive functions, but it certainly does not apply against the legislature in the exercise of its legislative function, nor would it apply to the Government or a public authority when it enforces a statutory prohibition. Similarly, if the promise in question emanates from an authority who had no power to hold out that promise or the promise is contrary to law, then certainly the principle of promissory estoppel will not apply. 8. We shall now notice a few decisions of the different High Courts which are relevant in the field. Mr. Rath appearing for the petitioners places reliance on the decision of the Bombay High Court in the case of Ceat Tyres of India Ltd. v. Union of India and Others, 1987 (31) E.L.T. 332 (Borm.). In that case, an exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) E.L.T. 40 (Borm.), where their Lordships held :- "We were, therefore, inclined to take the view that the doctrine of promissory estoppel was available against Government when it was exercising powers conferred upon it by statute or powers of subordinate legislation. We saw no reason why Government should be permitted to act contrary to the terms of its representation, upon which citizens had based themselves, only because it was so acting in exercise of powers given under statute or in exercise of powers of subordinate legislation. As the Supreme Court has pointed out, Government is under no obligation to make a representation. If, then, it does it must be held to it. If the legislature disapproves, it can enact legislation nullifying the representation. If the equities have changed and the public good demands that Government should act contrary to the terms of its representation, the Courts will not require the Government to honour its representation; but, subject to that, it must." The Division Bench of the Bombay High Court considered the question of principle of promissory estoppel vis-a-vis a notification issued under Section 25 of the Customs Act. In this case a notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Counsel for the Central Government, on the other hand, very much relies upon the Full Bench decision of the Delhi High Court in Bombay Conductors and Electricals case (referred to supra) and contends that the aforesaid Full Bench decision represents the correct view with regard to the application of promissory estoppel and consequently, the said principle will not have any application to the facts and circumstances of the present case. He also further contends that the notification in question brings in the nature of an exemption it would be always open to the authority to withdraw the said exemption and the question of application of promissory estoppel against such withdrawal does not arise, particularly when the same is in respect of a matter of taxation and the public interest demands such withdrawal. Coming to the Full Bench decision of the Delhi High Court in Bombay Conductors and Electricals case, which, in fact, is the sheet-anchor of the learned Standing Counsel for the Central Government, we find that the learned judges fully relied upon the judgment of the Supreme Court in Jit Ram case and had observed :- ".......... If M.P. Sugar Mills is the apogee of promissory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher rate of duty itself is the public interest. We are unable to accept the said submission. However, in our considered opinion, the Bench decision of Andhra Pradesh High Court does not lead us any further in deciding the applicability of principle of promissory estoppel. Mr. Mohanty, the learned Standing Counsel for the Central Government also relies upon the decision of the Calcutta High Court in the case of Black Diamond Beverages Ltd. v. Union of India, 1988 (36) E.L.T. 225 (Cal.). In the said decision, their Lordships have proceeded on the assumption that the issuance of a notification under a statute in exercise of power of legislation and consequently, the principle of promissory estoppel does not apply. If it is held that the exemption notification issued by the Union Government is a legislative function, obviously, the principle of promissory estoppel will not apply, as has been held in M.P. Sugar Mills case, as well as in Godfrey Philips India case. But the question arises, is it a legislative function? The learned Standing Counsel also relies upon a Bench decision of the Delhi High Court in the case of Jain Sudh Vanaspati Ltd. and Another v. Union of India and Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with the notification of the Government of India dated 1-8-1985 and the Central Excise authorities are estopped from demanding the higher rate as provided in the notification dated 28-11-1986. The submission of Mr. Rath, the learned counsel for the petitioners, on this S.C.ore accordingly must succeed. 11. Coming to the second submission of Mr. Rath for the petitioners, namely whether the imported goods having been cleared for home consumption before the subsequent notification was issued by the Government of India, loses its identity as "imported goods" so as to be liable for levy of duty at the rate prescribed under the second notification, it depends upon the interpretation of the provisions of the Act. Under Section 12 of the Act, duties of customs can be levied at such rate as may be specified under the Customs Tariff Act, 1975, or any other law for the time being in force on goods imported into or exported from, India. The expression "imported goods" has been defined in Section 2(25) to mean any goods brought into India from a place outside India, but does not include goods which have been cleared for home consumption. Section 45 of the Act provides restriction on custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners has not been denied, inasmuch as no counter-affidavit has been filed. The argument of the learned Standing Counsel for the Union Government, however, is based upon the provision contained in Section 15 of the Act. Undoubtedly, Section l5(1)(b) stipulates that the rate of duty and tariff valuation in the case of goods cleared from a warehouse under Section 68 would be the rate and tariff valuation in force on the date on which the goods were actually removed from the warehouse. But if the imported goods are for home consumption and the importer of the said goods has made an entry thereof by presenting to the proper officer a bill of entry for home consumption and the proper officer has permitted clearance of the goods for home consumption, and the duty in respect of the same has already been paid, then storage of such imported goods in any warehouse is because of the fact that the customs authorities on being satisfied that the goods cannot be cleared within a reasonable time have permitted the goods to be stored in a warehouse, whether public or private, as provided under Section 49 of the Act. Section 49 clearly indicates that such goods shall not be deemed to be warehoused ..... X X X X Extracts X X X X X X X X Extracts X X X X
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