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Shanlal Shantilal and Bros. Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtMumbai High Court
Decided On
Judge
Reported in[1981]132ITR631(Bom)
Acts Central Excise Act; General Clauses Act - Sections 25(1)
AppellantShanlal Shantilal and Bros.
RespondentUnion of India
Excerpt:
- - it is well settled that duty is to be levied at the rate prevailing on the date the goods land in india. in a speculative venture like trade profits and losses are common and it is well known international trade is subject to more speculation in both ways. union of india 1983(14)elt1688(del) ,this point was gone into in detail and it was held as follows `it is well settled that under the general clause act an authority which has power to issue a notification has the undoubted power to rescind, modify the said notification in the like manner. 129 dated 1-7-1977 to keep it alive indefinitely and that accordingly, the government had the power to rescind or modify the order whenever they were satisfied that it was necessary in the public interest so to do......of auxiliary duty on the basis of promissory estoppel. it has also been urged that the earlier exemption notifications were issued in public interest and were to operate to relieve the burden of tax. it is stated that nothing has happened during the intervening period which should compel the respondents to withdraw those exemption notifications. it was submitted that it was not in the public interest to revoke the exemption which has been granted.5. it must immediately be noted that the earlier notification which granted exemption was not for any fixed period of time. it, therefore, cannot be said that by that notification the government had made a representation that it would make available that exemption for any particular period of time. it is well settled that duty is to be.....
Judgment:

1. By this Petition, the Petitioners have challenged the levy of additional duty and also three Notifications all dated 16th November 1982.

2. The challenge to the additional duty no longer survives in view of the judgment of the Supreme Court in the case of Khandelwal Metal and Engineering Works v. Union of India, reported in : 1985(20)ELT222(SC) .

3. The three Notifications which are under challenge are (a) Notification No. 256 dated 16th November 1982. By this Notification the earlier Notifications bearing Nos. 97 and 156 are withdrawn. (b) Notification No.252 dated 16th November 1982. By this Notification the duty leviable on copper waste and scrap was stated to be at the rate of 25 per cent ad valorem. (c) Notification No.254 dated 16th November 1982. By this Notification the exemption granted by an earlier Notification (i.e. No.136 dated 11th May 1982) from payment of auxiliary duty was withdrawn.

4. The challenge is to the withdrawal of exemption from payment of auxiliary duty on the basis of promissory estoppel. It has also been urged that the earlier exemption Notifications were issued in public interest and were to operate to relieve the burden of tax. It is stated that nothing has happened during the intervening period which should compel the Respondents to withdraw those exemption Notifications. It was submitted that it was not in the public interest to revoke the exemption which has been granted.

5. It must immediately be noted that the earlier Notification which granted exemption was not for any fixed period of time. It, therefore, cannot be said that by that Notification the Government had made a representation that it would make available that exemption for any particular period of time. It is well settled that duty is to be levied at the rate prevailing on the date the goods land in India. In this case, admittedly the goods landed in India after the exemption was withdrawn. That being the position, it cannot be said that exemption prevailing earlier should be applied in respect of those goods. As has been said by the Supreme Court in the case of Shri Bakul Oil Industries v. State of Gujarat, reported in : [1987]165ITR6(SC) , an exemption is a form of concession and the same can be withdrawn without violating the rules of promissory estoppel.

6. An identical question also arose for consideration before a Division Bench of the Madras High Court in the case of M. Jamal Company v. Union of India : 1985(21)ELT369(Mad) , wherein the Madras High Court has observed as follows:-

'23.....In fact, promissory estoppel as the name itself would suggest that a promise, in whatever form it may be, is an essential element. In the present case, no promise whatsoever was made by the Government to keep the exemption granted by Notification No.129 dated 1-7-1977 alive indefinitely or upto a certain point of time. Therefore, exemption could be at any point of time put an end to, that notification can be contrasted with another notification in respect of the same product bearing No.390 and issued on 2-8-1976 in which it is specifically stated that the Notification would be in force upto and inclusive of the 31st March 1977. If in the Notification dated 1-7- 1977 (No.129) also there was any indication of the duration of the effect of the Notification and if such Notification was withdrawn before the expiry of that duration any person affected by such withdrawal could plead promissory estoppel. It is not so in the present case. Further, the Notification itself being Section 25 of the Act is only to the effect of suspending temporarily the collection of Customs duties. Such an exemption by its very nature is susceptible of being revoked or modified or subjected to conditions at any point of time unless there is an indication to the contrary in the Notification itself. No doubt, when a certain amount of duty not anticipated by the importer becomes due, the importer is compelled either to increase the price and thereby cause the sale to slow down or to keep the price at the same level and suffer diminution in his profit or even face loss. In a speculative venture like trade profits and losses are common and it is well known international trade is subject to more speculation in both ways. The appellant, who has entered the field, should, therefore, be prepared for tides in the business. At any rate, no justiciable prejudice was caused to the appellant in the absence of any promise by the Government to keep the total exemption alive all the time. Further, in this case, there was not only absence of promise but the Government was acting in discharge of their function under the law and, therefore, the doctrine of estoppel would not be available to the appellant as held in Jitram v. State of Haryana, : [1980]3SCR689 . The same principle was applied in a Bench decision of the Delhi Court in Khandelwal Metal and Engg. v. Union of India : 1983ECR91D(Delhi) . In another decision of the same High Court, viz. Jain Shudh Vanaspati v. Union of India : 1983(14)ELT1688(Del) , this point was gone into in detail and it was held as follows

`It is well settled that under the General Clause Act an authority which has power to issue a notification has the undoubted power to rescind, modify the said notification in the like manner. .....The Central Government when issuing notification under Section 25(1) is not in any way violating the mandate of Parliament because in fact the power to issue a notification under Section 25(1) is a delegation of the legislative power given to the Central Government, and in any case the notifications were placed before the Parliament. Therefore, if the same Central Government which initiated notification and amended it subsequently under Section 25(1) ibid it cannot be said that the Central Government cannot modify the total exemption or partial exemption....'

We, therefore, find that there was no promise made by the Government in the Notification No.129 dated 1-7-1977 to keep it alive indefinitely and that accordingly, the Government had the power to rescind or modify the order whenever they were satisfied that it was necessary in the public interest so to do. Therefore, the notification cannot be challenged on the ground of promissory estoppel and this plea is also rejected.'

7. I am in complete agreement with the view expressed therein.

8. A similar question also arose before a Division Bench of our Court in the case of Bharat Commerce & Industries Ltd. v. Union of India, reported in : 1987(32)ELT40(Bom) . This was case where exemption Notification laid down that it would remain in force upto a particular period. Before that period was over, the exemption was sought to be withdrawn. On the facts of that case, the Division Bench held that there was representation that the exemption would be available upto that period. But the Division Bench, while upholding this contention, also observed that normally the doctrine of promissory estoppel is not available against the Legislature in exercise of its legislative function.

9. In the present case, the only ground taken out by the Petitioners for claiming promissory estoppel is that on 3rd November 1982 the Petitioners had entered into a High Seas Basis contract for purchase of these goods. That their seller had himself entered into a contract with a foreign buyer on 8th October 1982. It is submitted that these contracts were entered into on the footing that the exemption would be available. It is submitted that the Petitioners have acted to their detriment. In my view, this argument merely needs to be stated to be rejected. The fact that the Petitioners had entered into the contract cannot avail the Petitioners. They are bound to pay duty at the rate/s prevailing on the date that the goods are imported into India.

10. It was next argued on the basis of certain observations of the supreme court in the case of Indian Express Newspapers (Bombay) Ltd. v. Union of India, reported in , that even though the Notification may be a piece of subordinate legislation, it is open to the scrutiny of the Court and that the legislator must satisfy the Court that it is not unreasonable and arbitrary. It is pointed out that the Petitioners have specifically pleaded that it was in the public interest ti issue the exemption, that the fundamental rights of trade of various parties were affected and violated and that the Petitioners' right to property was violated as tax was sought to be recovered with authority of law. It is submitted that the Respondents have given no reasons or justification for withdrawing this exemption. It is submitted that on 11th May 1982 when the exemption was granted, the Government obviously thought it necessary to do so in public interest. It is argued that there had been no change of circumstance and therefore no reason existed for withdrawal of exemption. It is argued that in the absence of any material the Court must hold the action to be arbitrary and strike it down.

11. In this case, as is usual nowadays, the affidavit in reply is a most cursory one. Except for denying and/or not admitting, there is nothing else in the affidavit. These can be no doubt that action of the Government is subject to the scrutiny of the Court. Undoubtedly, it is advisable that proper material be placed before the Court. This action on the part of the Government to file such cursory affidavits must be deprecated in the strongest terms. However, this cannot confer any right on the Petitioners. I see no substance in the argument of the Petitioners. There is no violation of any fundamental right.

12. In the circumstances, the Petition must be dismissed. However, I find that the Petitioners have obtained interim reliefs on the footing that they would furnish and keep alive a Bank Guarantee. The Bank Guarantee, even though initially furnished, has not been renewed. Having obtained an Interim Order in their favour, on this basis the Petitioners are accordingly directed to forthwith renew the Bank Guarantee. The Petition to be kept pending for that purpose till 15th January 1990. To be on my board on that day.


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