IN THE HIGH COURT OF DELHI AT NEW DELHI. SUBJECT : CUSTOMS ACT, 1962 W.P.(C) 2161 of 1982 & CMs & 4678, 5428/1982, 13827/2006

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1 IN THE HIGH COURT OF DELHI AT NEW DELHI SUBJECT : CUSTOMS ACT, 1962 W.P.(C) 2161 of 1982 & CMs & 4678, 5428/1982, 13827/2006 Reserved on : October 16, Date of Decision : November 13, 2006 J.K. SYNTHETICS LIMITED & ANR...PETITIONERS Through S/Shri Ravinder Narain with Ajay Aggarwal, Ms. Nupur Singh, Rajan Narain and Ms. Sonu Bhatnagar, Advocates versus UNION OF INDIA & ORS... RESPONDENTS Through Mr. Sanjay Katyal for Respondent No.2. CORAM :- HON'BLE MR. JUSTICE VIKRAMAJIT SEN HON'BLE DR. JUSTICE S. MURALIDHAR Dr. S. Muralidhar, J. Background facts 1. Petitioner No.1 J.K.Synthetics Ltd. and its shareholder Petitioner No.2 jointly filed this writ petition on seeking a large number of reliefs concerning the levy of customs duty and countervailing duty (CVD) on Caprolactum and Diemethyl Terephthalate (DMT) imported by Petitioner for the manufacture of polyester filament yarn and polyester fibre. In the twenty years during which this writ petition has been pending some of the issues raised have ceased to survive for consideration. The petitioners have restricted their pleas to three issues which will be referred to shortly. 2. By Notification No. 102 Cus dated the Central Government, in exercise of its powers under Section 25 of the Customs Act, 1962 ( Act ), exempted DMT when imported into India from customs duty in excess of 100% ad valorem. In effect, the rate of customs duty payable on imported DMT was 100%. As regards caprolactum, Notification No.86 Cus dated exempted the said goods from payment of custom duty in excess of 25% ad valorem. Thus the basic customs duty on caprolactum, when imported, was 25% ad valorem. 3. Notification No. 86 Cus dated was amended by a Notification No. 164 Cus dated , whereby the rate of basic customs duty on imported caprolactum was increased from 25% to 55% ad valorem. Further para 2 was inserted in the said notification to the effect that: This notification shall be in force upto and inclusive of the 31st day of May Under Section 3 (1) of the Customs Tariff Act, 1975 ( CTA ) an additional duty of customs (otherwise known as countervailing duty- CVD) is payable on imported goods equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. Section 3(2) CTA states that for the purposes of the levy of CVD the value of the imported goods would be loaded with the basic customs duty payable on such goods. As of , excise duty payable on caprolactum produced and manufactured in India was governed by a Notification No. 191/82 dated whereby the basic excise

2 duty was reduced from 28.5% to 15% ad valorem. In addition to the basic excise duty, a special excise duty at 5% of the 15% basic excise duty was payable by virtue of the Finance Act 1982 read with Notification No. 25/82-CE dated On the present writ petition was filed seeking, inter alia, the following reliefs: (a)a declaration to the effect that the expression customs duty in both Notification No. 86 Cus dated amended by a Notification No.164 Cus dated (applicable to caprolactum) and Notification No. 102 Cus dated (applicable to DMT) included not only the basic customs duty but CVD as well. In other words, the petitioners were seeking a declaration and consequent directions to the effect that the central government could not charge any customs duty (basic and CVD included) in excess of 55% on caprolactum with effect from and 100% in respect of DMT. (b)a declaration with consequent directions that the assessable value of the imported goods for the purposes of customs duty does not include landing charges payable to the port authorities by the shipper as these were in the nature of post-importation charges. (c)a declaration that Section 3 (2) CTA which stipulates that the value of the imported goods for the purposes of CVD would include customs duty payable on such goods is ultra vires and unconstitutional. (d)an alternative prayer that in any event CVD in terms of Section 3 (1) CTA cannot be charged at a rate higher than the rate of basic excise duty as on In other words, the rate at which CVD could be charged could only be 15% and not include the special excise duty (5% of 15%). The petitioners also sought interim reliefs to restrain the respondents from including landing charges in the assessable value and undertook to furnish a bond as well as a bank guarantee in the sum of 50% of the disputed amount of duty. 6. At the first hearing on , Rule DB was issued and interim relief as prayed was also granted. Thereafter the petition was permitted to be amended to include a prayer that the petitioner should be held not liable to pay the enhanced customs duty on stocks already imported prior to and be refunded the excess customs duty and CVD already paid. 7. On a further amendment was made to Notification No. 86-Cus dated The effective rate of basic customs duty on imported caprolactum was increased from 55% to 75% ad valorem. Thereafter the Central Excise Laws (Amendment and Validation) Ordinance 1982 (later substituted by an Act) (hereafter the 1982 Amendment Act ) was promulgated to overcome the effect of the judgment date of this Court in Modi Rubber Ltd. v. Union of India holding that the expression duties of excise in an excise exemption notification would include special and additional duties of excise. The petitioners herein relied on the said judgment of this Court to contend that the position in respect of the expression duty of customs in the notifications dated and would be no different. Consequent to these developments, the petitioners were permitted to further amend the present petition to seek the following additional reliefs: (e)a declaration that the respondents were estopped from increasing the basic customs duty on caprolactum from 55% to 75% till since the Notification No. 86 Cus dated as amended by the Notification No. 164 Cus dated was a fixed time notification. On this basis the petitioners sought a quashing of the Notification dated (f)a declaration that the 1982 Amendment Act was ultra vires and unconstitutional. 8. On this Court passed the following interim order: CMs & 4678/1982 Consistent with the view we have taken in other similar matters these applications are dismissed. CM 5428/82 Heard. In view of the affidavit filed by the petitioners today it seems that the variation in customs duty does not really control the price of the end product. That the customs duty may be a component of the price cannot be disputed, but the increase in it does not necessarily lead to increase in the price of the end product or vice versa. The notification increasing the duty was issued on In the present case the contracts have been entered into prior to that date and even the bill of lading are earlier. It could perhaps be argued with regard to contracts entered into after the new duty would be applicable.

3 The Government could not be denied the right to chance the duty in every case. In the present case, however, the situation is different and it would have to be examined whether the rule of promissory estoppel is not attracted. Prime facie the petitioners have made out a case that the rule is attracted. We, therefore, grant this application to this extent that the petitioners may clear the goods in question i.e., caprolactam imported by the petitioners, on payment of customs duty at the rate of 55% ad valorem upto 31st May, 1983 or earlier, if the petition is disposed of earlier. For the balance of the duty which is the duty in dispute i.e, of 20% ad valorem the petitioners will execute a bond supported by a Bank Guarantee 50% of the amount of the disputed duty to the satisfaction of the Collector of Customs. Dasti. 9. In Union of India v. Modi Rubber Ltd (25) ELT 849 the Hon ble Supreme Court overruled the judgment dated of this Court. It was held that the expression duty of excise in the exemption notification under Rule 8 (1) of the Central Excise Rules must be read as limited to the duty of excise payable under the Central Excises and Salt Act, 1944 and cannot cover such special, auxiliary or other kind of duty of excise. Consequently, in the same judgment the validity of the 1982 Amendment Act was also upheld. In view of this binding judgment, the prayers in 5 (a) and 7 (f) above do not survive for consideration. Further, in Jain Bros. V. Union of India 1999 (112) ELT 5, the Hon ble Supreme Court upheld the validity of Section 3(2) CTA. Accordingly, the relief sought in this petition as noted in para 5 (c) above also does not survive. When this petition was heard finally on , the learned counsel for the petitioners fairly restricted his arguments to the reliefs as noted in para 5 (b), 5 (d) and 7 (e) above. Submissions of Counsel 10. Mr. Ravinder Narain, learned Advocate for the petitioners, submitted that: (a) The assessable value for the purposes of levy of custom duty cannot include the landing charges and for this proposition he relied on the judgments of the Hon'ble Supreme Court in Garden Silk Mills Limited v. Union of India 1999 (113) ELT 358 and Ispat Industries Limited v. Commissioner of Customs, Mumbai 2006 (137) ECR 495. (b) The rate of CVD payable on imported caprolactum in terms of Section 3 (1) CTA cannot exceed 15% ad valorem which was the rate of basic excise duty leviable on caprolactum manufactured in India as on Reliance was placed on the judgments of the Hon'ble Supreme Court in Collector of Central Excise, Jaipur v. J.K. Synthetics 2000 (120) ELT 54 and Hyderabad Industries Limited v. Union of India 1999 (108) ELT 321. (c) As regards the Notification dated enhancing the rate of basic customs duty on imported caprolactum from 55% to 75%, the doctrine of promissory estoppel applied. Since the Notification No. 86 Cus dated as amended by the Notification No. 164 Cus dated was a fixed time period notification, the rate of customs duty could not be increased beyond 55% till It was submitted that there was no public interest justification shown for the resiling from the promise of the fixed time period notification. In support of this submission reliance was placed on the judgment in Dai-ichi Karkaria Limited v. Union of India (2000) 4 SCC On behalf of the respondents, it was contended by Mr. Sanjay Katyal, learned Advocate, that a plain reading of Section 14 of the Act indicated that landing charges were liable to be included in the assessable value for the purposes of levy of customs duty. Section 15 of the Act left no room for doubt that the relevant date for determining the applicable rate of customs duty was the date when the bill of entry was filed for home consumption i.e. the date of clearance of the goods imported. The law in this regard was settled in Union of India v. Apar Industries Limited 1999 (112) ELT 3 (SC) and reaffirmed in Union of India v. Indian Charge Chrome (1999) 7 SCC 314. Therefore, there was no question of any estoppel against the law. In any event no promissory estoppel vis-avis an exemption notification could be pleaded. He relied on the observations in Union of India vs. Modi Rubbers Limited 1986 (25) ELT 848 to contend that the plea that the CVD could not exceed the rate of basic excise duty was without basis. Landing Charges 12. The plea of the petitioners in regard to landing charges is that this represents the amounts paid to stevedore labour for unloading goods from a ship to the wharf or to move the goods from the wharf to the place of storage. These are in the nature of post importation charges as they become payable only after the entry of the goods into the territorial waters of India. Further, in a c.i.f contract these are usually borne by the shipping company. It has been further averred in para 18 that in addition to these charges the Customs

4 Authorities insist on loading a percentage of the value of the goods which is about 0.75% of the value of goods as landing charges for the purpose of determining the assessable value and levying duties of customs. It is contended that in the consignments imported by the petitioner the landing charges have been paid by the shipping company and included in the freight and this value is already included in the assessable value. Therefore the landing charges and the additional landing charges of 0.75% ought not to be included in the assessable value again. 13. The issue concerning landing charges appears to be fully covered by the decision of the Hon ble Supreme Court in Garden Silk Mills Limited v. Union of India (supra). The main question which arose in the said case, as set out in the para 1 of the said judgment, was whether while assessing customs duty payable in respect of imported goods, the customs authorities can add/include landing charges in arriving at the value of those goods. It was noticed in those cases that It was not in dispute that under a CIF contract the price which was paid included not only the cost of the goods but also the insurance and freight charges. After analysing the provisions of sub-section (23) of Section 2 of the Act which defines the import and Section 14 of the Customs Act, 1962 it was conclusively held (at ELT page 365, para 13) as under: The aforesaid provisions of the Act, therefore, clearly show that after the imported goods are discharged from the vessel at the wharf the importer cannot immediately take delivery thereof. The imported goods remain in the custody of the Port Trust Authorities till they are inter alia, cleared for home consumption. This being the position the goods cannot be cleared and delivery taken without their being valued and assessed and, thereafter, duty being paid. Section 14 of the Act provides that the value of the goods shall be deemed to be the price of the goods for the delivery at the time and place of importation in the course of international trade. The value has to be determined with relation to the time when physical delivery to the importer can take place. Physical delivery can take place only after the bill of entry, inter alia, for home consumption is filed and it is the value at that point of time which would be relevant. It is evident that there normally will be some lapse of time between the time when the shipper discharges the goods and the time when the bill of entry is filed. The landing charges, which are imposed at or after the time of the discharge of the goods and prior to the clearance being granted under Section 47 of the Act, necessarily have to be an element which have to be taken into account in determining the value thereof for the purpose of assessing the customs duty which would be chargeable. Thereafter in para 14 it was held as under: The language of Section 14 clearly indicates that though the transaction value may be a relevant consideration, the value for the purpose of customs duty will have to be determined by the Customs Authorities which value can be more, and at times even less, than what is indicated in the documents of purchase or sale. Even in those cases it was contended that since they were cif contracts, the landing charges formed part of freight which was included in the assessable value. The Court however did not accept this and observed that there was nothing to show that the shipper had paid the landing charges to the Port Trust Authorities. It was emphasized that the burden of showing this was on the importer. This is clear from the following passage (ELT p.366, para 17): It was submitted by the learned counsel for the appellants that in actual effect in the case of CIF contracts like the present, it is the shipper who pays the landing charges and the Indian Importer does not incur these expenses in addition to that he has paid on the basis of the CIF contract. In other words the submission was that the landing charges are already included in the CIF value of the goods as they form part of the freight paid to the steamer agent and the said charges are recovered by the Port Trust Authorities directly from the steamer agents and, therefore, a second inclusion of such landing charges by loading a flat percentage of the CIF value is uncalled for. In this connection, reliance was placed on clause 15 of the terms and conditions of a sample of a Bill of Lading which deals with loading, discharge and delivery and reads as under: any expenses, costs, dues and other charges which incur before loading and after discharge of the goods shall be borne by the Merchant.

5 Learned Additional Solicitor General is correct in submitting that the aforesaid clause 15 does not in any way indicate that the CIF value includes therein the charges levied by the Port Trust Authorities after the discharge of the goods. It is difficult to imagine that at the time when the contract is entered into, and the CIF price is fixed, as to how the parties could envisage as to what the port charges at the destination are likely to be. It does appear that any expense which is incurred with regarded to the loading or unloading of the goods to and from the ship would be included in the CIF price paid by the importer. But there is nothing on record to show that in actual effect landing charges were collected by the Port Trust Authorities from the shipper. No document in this regard showing the discharge of such a liability by the shipper to the Port Trust Authorities has been produced. There can be little doubt that if the importer is able to establish that the obligation to pay the landing charges was on the seller or by the shipping agent, and not by the buyer, and the said charges have in fact been paid to the Port Trust Authorities not by or on behalf of the importer, then the importer can claim that the landing charges should not once again be added to the price because in such an event, where payment is made of landing charges by the seller or the shipper, the CIF price must be regarded as including the said landing charges. There is, however, in these cases, no factual basis for contending that the landing charges were included in the CIF price and, consequently the said obligation was discharged not by the importer or by its agent but by the seller or the shipper. Further it was held that it was initially for the importer to show that the price indicated in the CIF contract included the element of landing charges and that the Department cannot be asked to prove the negative, namely, that the CIF contract does not include the element of landing charges. Ultimately, on the facts of those cases, the Hon'ble Supreme Court held that the landing charges was rightly taken into consideration in determining the assessable value of the goods imported in terms of Section 14 (1) (a) of the Act. 14. In our view, the facts of the present case are no different from those in the cases before the Hon ble Supreme Court in Garden Silk Mills Ltd. Like the importers in those cases, the petitioners here have also failed to show that either the shipper or the importer in fact paid the landing charges and additional landing charges to the Port Authorities. The petitioners having failed to discharge the aforesaid onus, the landing charges have to be included while determining the assessable value of the imported goods. Thererfore in the present case, the challenge by the petitioners to the inclusion of landing charges and additional landing charges to the assessable value must fail. 15. The judgment in Ispat Industries Limited (supra) turned on its facts. In para 21 of Ispat Industries the decision in Garden Silk Mills Ltd. was noted and distinguished as under: It may be noted that Garden Silk (supra) was a case where the question was whether landing charges could be included in the value of the imported goods for the purpose of valuation of the goods for imposing custom duty. That was not a case relating to transportation charges nor was it a case relating to charges for transportation of goods from the mother ship on a barge to the place (jetty) approved under Section 8(a) of the Act. For the same reason the decision of this Court in Coromdandal Fertilizer Limited v. Collector of Customs 2000 (1) SCC 448, also is not relevant because that decision is a case relating to landing charges and has nothing to do with the question as to whether transportation charges for transporting the goods from the mother ship by barge to the place approved under Section 8(a) has to be added for the purpose of valuation of the goods for imposing custom duty. Since the present case stands fully covered by the decision in Garden Silk Mills Limited the decision Ispat Industries can have no application. Therefore, on the issue of inclusion of landing charges, we negative the plea of the petitioner. Countervailing Duty 16. The next issue is whether CVD could be levied at a rate higher than the prevailing rate of basic excise duty on caprolactum, i.e.15% ad valorem as on In other words, could it also include special excise duty at the rate of 5% of 15% ad valorem? In order to examine this issue, we may first refer to the relevant provisions of the CTA: 3. Levy of additional duty equal to excise duty. (1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article.

6 Explanation. In this section, the expression the excise duty for the time being leviable on a like article if produced or manufactured in India means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs and where such duty is leviable at different rates, the highest duty. 17. The object behind the levy of CVD has been succinctly explained by the Hon ble Supreme Court in Hyderabad Industries Ltd. v. Union of India, (1999) 5 SCC 15 in the following passages (SCC, p. 25): 12. Section 12 of the Customs Act levies duty on goods imported into India at such rates as may be specified in the Customs Tariff Act, When we turn to the Customs Tariff Act, 1975, it is Section 2 which states that the rates at which duties of customs are to be levied under the Customs Act, 1962 are those which are specified in the First and Second Schedules of the Customs Tariff Act, In Section 12 of the Customs Act there is no reference to any specific provision of the Customs Tariff Act, In other words for the purpose of determining the levy of customs duty on goods imported into India what is relevant is Section 12 of the Customs Act read with Section On the other hand levy of additional duty under Section 3 is equal to the excise duty for the time being leviable on the like article which is imported into India if produced or manufactured in India. The rate of additional duty under Section 3(1) on an article imported into India is not relatable to the First and the Second Schedules of the Customs Act but the additional duty if leviable has to be equal to the excise duty which is leviable under the Excise Act. This itself shows that the charging section for the levy of additional duty is not Section 12 of the Customs Act but is Section 3 of the Customs Tariff Act, This apart subsections (3), (5) and (6) of Section 3 refer to additional duty as being leviable under sub-section (1). In subsection (5), for instance, it is clearly stated that the duty chargeable under Section 3 shall be in addition to any other duty imposed under this Act or under any other law for the time being in force. 14. There are different types of customs duties levied under different Acts or rules. Some of them are: (a) a duty of customs chargeable under Section 12 of the Customs Act, 1962; (b) the duty in question, namely, under Section 3(1) of the Customs Tariff Act; (c) additional duty levied on raw materials, components and ingredients under Section 3(3) of the Customs Tariff Act; and (d) duty chargeable under Section 9-A of the Customs Tariff Act, The Customs Act, 1962 and the Customs Tariff Act, 1975 are two separate independent statutes. Merely because the incidence of tax under Section 3 of the Customs Tariff Act, 1975 arises on the import of the articles into India it does not necessarily mean that the Customs Tariff Act cannot provide for the charging of a duty which is independent of the customs duty leviable under the Customs Act. 15. The Customs Tariff Act, 1975 was preceded by the Indian Tariff Act, Section 2-A of the Tariff Act, 1934 provided for levy of countervailing duty. This section stipulated that any article which was imported into India shall be liable to customs duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. In the notes to the clauses to the Customs Tariff Bill, 1975 with regard to clause 3 it was stated that clause 3 provides for the levy of additional duty on an imported article to counterbalance the excise duty leviable on the like article made indigenously, or on the indigenous raw materials, components or ingredients which go into the making of the like indigenous article. This provision corresponds to Section 2-A of the existing Act, and is necessary to safeguard the interests of the manufacturers in India. Apart from the plain language of the Customs Tariff Act, 1975 even the notes to the clauses show the legislative intent of providing for a charging section in the Tariff Act, 1975 for enabling the levy of additional duty to be equal to the amount of excise duty leviable on a like article if produced or manufactured in India was with a view to safeguard the interests of the manufacturers in India. Even though the impost under Section 3 is not called a countervailing duty there can be little doubt that this levy under Section 3 is with a view to levy additional duty on an imported article so as to counterbalance the excise duty leviable on the like article indigenously made. In other words Section 3 of the Customs Tariff Act has been enacted to provide for a level playing field to the present or future manufacturers of the like articles in India. 18. These observations make it clear that the Act and the CTA operate in different fields. To repeat Merely because the incidence of tax under Section 3 of the Customs Tariff Act, 1975 arises on the import

7 of the articles into India it does not necessarily mean that the Customs Tariff Act cannot provide for the charging of a duty which is independent of the customs duty leviable under the Customs Act. The yardstick for interpreting an expression ( duties of excise ) in an exemption notification under the Central Excises Act cannot be the same when it comes to interpreting a like or similar expression ( excise duty for the time being leviable ) in the CTA since the context of the two legislations is different. The wording of Section 3 CTA is:..liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India (emphasis supplied).the expression excise duty for the time being leviable is not qualified by any word limiting the excise duty to that payable under the Central Excises Act, In other words, it can include a special duty of excise payable in terms of the Finance Act. 19. The rule of interpretation of a taxing statute in the context of an exemption provision containing an undefined expression has been explained in CWT v. Officer-in-Charge (Court of Wards), Paigah, (1976) 3 SCC 864 where the Hon ble Supreme Court was required to examine the meaning of the words agricultural lands in s. 2 (e) of the Wealth Tax Act, 1957 which exempted such lands from the scope of taxable assets under that provision. The Court said (SCC p. 870): We think that it is not correct to give as wide a meaning as possible to terms used in a statute simply because the statute does not define an expression. The correct rule is that we have to endeavour to find out the exact sense in which the words have been used in a particular context. We are entitled to look at the statute as a whole and give an interpretation in consonance with the purposes of the statute and what logically follows from the terms used. We are to avoid absurd results. Applying this rule, if the object of introducing Section 3 CTA was, as noted in Hyderabad Industries, to counterbalance the excise duty leviable on the like article made indigenously then such excise duty has to include the special excise duty payable by the local manufacturers. The purpose of levying CVD would be defeated if the rate had to be restricted to the rate of basic excise duty when the local manufacturers have to compulsorily pay the special excise duty as well. If the interpretation sought to be placed on the language of Section 3 (1) CTA by the petitioners is accepted, the CVD so levied would not counterbalance the excise duty payable by the local manufacturers on a like product in order to ensure a level playing field. 20. We are also not able to accept the contention of the petitioner that in view of the decision in Collector of Central Excise, Jaipur v. J.K. Synthetics (supra), the Government cannot charge CVD duty in excess of 15% ad valorem. The decision in J.K. Synthetics shows that the product involved there was 'Mono- Ethylene Glycol' (MEG) in respect of which no excise duty at all was leviable. It was in that context that it was held that where goods are completely exempted from excise duty, the question of levying CVD under Section 3 (1) CTA would not arise. Here there is no dispute that as on , caprolactum manufactured locally attracted basic excise duty of 15% ad valorem and special excise duty of 5% on the basic excise duty. Therefore, the judgment in J.K. Synthetics is of no help the petitioners. For these reasons, the second issue is answered against the petitioners by holding that CVD on the caprolactum imported by the petitioner could be charged at a rate inclusive of the rate of basic excise duty (15% ad valorem) as well as the special duty of excise (5% of the 15%). Promissory Estoppel: Validity of Notification dated On the question of promissory estoppel, it requires to be first noticed that it is now settled law that import is complete only when the goods are cleared for home consumption and the mere entry into the Indian territorial waters will not constitute import for the purposes of the Act [See Union of India v. Apar Industries Limited (supra)] Therefore, it follows that the date on which the bill of entry is presented for clearance of the imported goods for home consumption is the only relevant date for determining the applicable rate of duty. Section 15 of the Act makes this abundantly clear. Consequently, the imported goods of the petitioner which were cleared for home consumption on or after would only be governed by the said notification notwithstanding the fact that the ship carrying the goods may have entered the territorial waters earlier. 22. The wording of the notification dated does not indicate that the Government has disabled itself from amending such notification till It is one thing to say that notification will be in force till a particular date and it is another for the Government to state that the exemption will not be withdrawn or modified before that date. It is not possible to accept the contention of the petitioner that the

8 notification dated is a fixed time notification which fetters the statutory powers of the Government to verify or modify the rate of exemption till There is no such express limitation in the said notification. Moreover, it is a settled proposition that there can be no estoppel against the law. In Dai-Ichi Karkaria Ltd. v. Union of India (2000) 4 SCC 57 (at 62) it was held: The law on the matter is now well settled that even in respect of exemptions that may have been made by the Government the doctrine of promissory estoppel will not be applicable if the change in the stand of the Government is made on account of public policy. This position has been explained in detail by this Court in Kasinka Trading v. Union of India (1995) 1 SCC 274 and reiterated in Shrijee Sales Corpn. v. Union of India (1997) 3 SCC 398. In both these cases this Court was concerned with notifications issued under Section 25 of the Customs Act. In Kasinka Trading case it is stated that the exemptions granted under Section 25(1) of the Customs Act in public interest is designed to offset the excess price which the local entrepreneurs were required to pay for importing PVC resin at a time when the difference between the indigenous product and the imported product was substantial and at a time when the notification was withdrawn by the Government there was no scope for any loss to be suffered by the importers and, therefore, the change of policy was permissible. This decision is the same as in Shrijee Sales Corpn. wherein it was noticed that once public interest is accepted as the superior equity which can override individual equity, the principle would be applicable even in cases where a period has been indicated for which period the notification would remain in force and the Government is competent to resile from a promise. It was further noticed therein that the Government can resile from a promise even if there is no manifest public interest involved provided, of course, that no one is put in any adverse situation which cannot be rectified. 23. Section 25 of the Act is also instructive in this regard. The power to grant exemption is, by its very nature, dependent on several factors which will have to be kept in mind in view of the changing international economic scenario. The exemption, by its very nature, cannot be a permanent feature. This position cannot change merely because the notification states that it will continue up to a particular date. The concept of a fixed time period exemption notification is not one recognised by the statute and cannot be interpreted as limiting the scope of the statutory power to vary or modify it. Given the purpose for which the power has been granted, it is difficult to accept the submission that the doctrine of promissory estoppel should be applied to curtail the power of the Central Government under the Act to vary or modify an exemption notification. 24. Since we are not inclined to accept the contention of the petitioner that the notification dated as amended by the Notification dated constituted a promise, there is no need to examine the further contention that the Central Government had to show a public interest justification for resiling from such alleged promise. Nevertheless, we may observe that the petitioner has not laid any factual foundation in the pleadings for this Court to entertain such a plea, which is entirely based on the judgment in Dai-Ichi Karkaria Limited (supra). In the said case, it was specifically pleaded by the assessee that the Government had not shown that any public interest involved in withdrawing the exemption. The Court there noted that a specific plea has been raised that there is no basis for formaion of the opinion as to public interest calling for withdrawal or modification of the exemption already granted. The justification offered on affidavit by the government in that case was not accepted in the peculiar facts of the case. Consequently, the decisions in Kasinka Trading and Shrijee Sales Corporation were distinguished and the withdrawal of the exemption was invalidated. 25. However, in the present case, the petitioners have nowhere in the writ petition, and in its amended versions, pleaded that the impugned notification dated is invalid because the respondents have failed to demonstrate any public interest or justification for the reduction of the exemption (and the corresponding increase in the rate of customs duty) by 20%. The only plea is that the petitioner had already firmed up several contracts prior to the date of the notification dated and that the petitioner would suffer losses if the increased rate of customs duty is levied. In any event these are matters of economic policy and in the absence of pleadings to show that there was no public interest involved, it is not possible to conclude that the reduction of the exemption was not activated by public interest. We accordingly reject the petitioner s challenge to the validity of the Notification dated

9 26. Before concluding, a mention must be made of the fact that the petitioners have filed an application No.13827/2006 on stating that although pursuant to the interim order of this Court, the bank guarantee for 50% of the disputed amount was furnished, it was not kept renewed by the petitioners and it has since been encashed by the respondents. The prayer in this application is that in the event of the petitioners succeeding, the encashed amount must be directed to be refunded. Since we find no merit in this writ petition, the prayer in this application requires to be rejected. The application is accordingly dismissed. It will be open to the respondents to expeditiously recover the balance amount of duty, if any, from the petitioner No.1 at the earliest. 27. For all the above reasons, we find no merit in the writ petition and it is accordingly dismissed with costs of Rs.10,000/-. The interim orders stand vacated and all applications are disposed of accordingly. Sd/- (S. MURALIDHAR) Judge Sd/- (VIKRAMAJIT SEN) Judge