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Indian Rayon Corporation and Etc. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtKolkata High Court
Decided On
Case NumberMatter Nos. 1270 and 1297 of 1979
Judge
Reported inAIR1988Cal228,1987(13)ECC83,1987(27)ELT626(Cal)
ActsCustoms Act, 1962 - Sections 2(25), 2(27), 12, 15, 25 and 25(1); ;General Clauses Act - Section 21; ;Constitution of India - Article 245; ;Evidence Act, 1872 - Section 115
AppellantIndian Rayon Corporation and Etc.
RespondentCollector of Customs
Advocates:Anindya Mitra and ;Bagaria, Advs.
Cases ReferredHukamchand v. Union of India
Excerpt:
customs - exemption--estoppel--withdrawal of notification granting partial exemption from additional duty for a period and enhancement of additional duty by issue of fresh notification before expiry of period--government not estopped from enhancing rate of additional duty--customs act (51 of 1962), section 25(1)--general clauses act (10 of 1897), section 21.;customs - exemption--date of import--rate of duty--goods entering territorial waters when lower rate of additional duty was in force--filing of bill of entry after enhancement of additional duty--importer liable to pay enhanced rate of duty--imported goods retain such character till clearance for home consumption--operation of section 12 not restricted to point of time when goods acquire character of imported goods--rate can be varied.....ordersudhir ranjan roy, j.1. these two matters involving common questions of fact and law have been heard together and are being disposed of by this common judgment.2. the facts of the two cases, which are practically identical, may be summarised as follows : --the petitioners no. 1 in both the cases are manufacturers of ciscose staple yarn and for that purpose import viscose staple fibre from time to time.3. the central government in exercise of its power under section 25(1) of the customs act, 1962 issued notifications exempting viscose staple fibre from the whole of customs duty and whole of additional duty up to december 31, 1979.4. subsequently, two fresh notifications dated january 5, 1979, were issued under section 25(1) exempting viscose staple fibre from the whole of the basic.....
Judgment:
ORDER

Sudhir Ranjan Roy, J.

1. These two matters involving common questions of fact and law have been heard together and are being disposed of by this common judgment.

2. The facts of the two cases, which are practically identical, may be summarised as follows : --

The petitioners No. 1 in both the cases are manufacturers of Ciscose Staple yarn and for that purpose import Viscose staple fibre from time to time.

3. The Central Government in exercise of its power under Section 25(1) of the Customs Act, 1962 issued notifications exempting Viscose staple fibre from the whole of customs duty and whole of additional duty up to December 31, 1979.

4. Subsequently, two fresh notifications dated January 5, 1979, were issued under Section 25(1) exempting Viscose Staple fibre from the whole of the basic customs duty as before, but introducing additional duty at the rate of Rs. 1.32 per kg. Both these notifications were to remain in force up to and inclusive of December 31, 1979.

5. Relying upon these notifications dated January 5, 1979, the petitioners entered into contracts with foreign companies for supply of different quantities of Viscose Staple fibre under a bona fide belief that the exemption granted thereunder would remain in force up to December 31, 1979.

6. The ships carrying the commodity entered the territorial waters of India long before December 31, 1979, but the bills of entry could not be presented before January, 1980 within the meaning of Section 15 of the Customs Act, 1962.

7. In the meantime, on or about December 30, 1979, a fresh notification purported to be one under Section 25(1) of the Customs Act, 1962, was issued amending the two earlier notifications dated January 5, 1979 by extending the date of expiry of the said notifications till December 31, 1980 instead of December 31, 1979 and simultaneously enhancing the rate of additional duty from Rs. 1.32 per kg. to Rs. 2,37 per kg.

8. It is the validity of this notification dated December 30, 1979 (hereinafter to be referred to as the impugned notification) enhancing the rate of additional duty of Viscose Staple fibre, which is the subject matter of challenge in the present writ petition under Article 226 of the Constitution.

9. Both these applications were contested by the respondents by filing affidavits-in-opposition to which affidavits-in-reply were filed by the petitioners.

10. Appearing on behalf of the petitioners, Mr. Anindya Mitra and Mr. Bageria, the learned counsel, made threefold contentions.

11. Their first contention was that the ships carrying the consignments in question having entered the territorial waters of India when the previous notifications dated January 5, 1979 were in force, the additional duty should have been charged at the rate of Rs. 1.32 per kg. and not at the enhanced rate of Rs. 2.37 per kg. as introduced subsequently by the impugned notification.

12. It was next contended that the petitioners having imported the goods acting on the basis of a representation of the respondents as contained in the notifications dated January 5, 1979 and in a bona fide belief and impression that the exemption granted by the said notifications would be in force up to and inclusive of December 30, 1979 as had been stated in the said notifications, the respondents were bound by the said representation and promise and were estopped from changing the rate of additional duty by the impugned notification before the expiry of December 31, 1979.

13. The last contention was that at any event the retrospective introduction of the impugned notification was bad in law.

14. In reply to the aforesaid contentions raised on behalf of the petitioners, it was contended by Mr. Roy Chowdhury, the learned Counsel representing the respondents, that though Section 12 of the Customs Act is the charging section, it should be read conjointly with Section 15 and so read, the vital dates for determination of the rate of duty would be the dates as specified in the said section and not the date of actual importation of the goods, particularly when the imported goods retain their character as such till the date of their clearance for home consumption.

15. As regards to the applicability of the doctrine of promissory estoppel, Mr. Roy Chowdhury's contention was that a notification issued under Section 25(1) of the Customs Act being in the natureof a piece of subordinate legislation, the said doctrine can have no application to such notification since there can be no promissory estoppel against the exercise of legislative power.

16. Mr. Roy Chowdhury further contended that the impugned notification was also not bad in law on account of its being introduced before the expiry of December 31. 1979, since it was not given any retrospective effect, but only prospecting effect since the date of its publication of December 30, 1979.

17. Coming now to the first point first. the question regarding chargeability to the customs duty of imported goods in the background of exemption notifications issued under Section 25(1) of the Customs Act exempting such goods either wholly or partially from payment of customs duty, still remains a highly controversial issue and in the absence of any authoritative pronouncement on the point by the Supreme Court, two distinct and different views are now holding the field.

18. The Bombay High Court in its latest Full Bench decision in Apar Private Ltd. v. Union of India, (1985) 22 ELT 644 : (1986 Tax LR 2022) has after taking into consideration its earlier decisions and particularly the decision in Shawhney v. Sylvania and Laxman, (1975) 77 Bom LR 380 : ILR 1978 Bom 425 and disagreeing with the contrary decisions of the other High Courts, taken the view that since 'India' includes its territorial waters, the taxable event occurs no sooner than the goods enters the territorial waters of India and does not postpone till they are actually off-loaded on the land-mass or till the goods are valued under Section 14 or till the date for determining the rate at which the customs duty should be levied under Section 15 arrives or until they are cleared for home consumption. According to the Bombay High Court, if the goods at the time of their entering into the territorial waters of India are wholly exempted from levy of customs duty by virtue of a notification under Section 25(1), duty is not at all leviable on such goods. The subsequent withdrawal of the notification before the clearance of the goods does not render such goods liable to duty. Section 15 of the Customs Act, according to the said High Court, comes into play only if the goods are chargeable to duty on the date of their importation under Section 12 of the Act, that is, when such goods enters the territorial waters of India. In other words, if duty is leviable under Section 12, then only for the calculation of the duty the schedules of the Tariff Act become relevant and have to be looked into. The Court further is of the view that the link between the Customs Act and the Customs Tariff Act established by Section 12, is severed by a notification under Section 25(1) and the schedule to the Customs Tariff Act cease to apply and no notion of 'nil' duty can be imported where the goods are wholly exempt from duty under the notification. The metaphysical concept of 'nil duty' according to the Court, cannot be invoked so as to subject to duty goods wholly exempt from levy when the taxable event occurred, that is, when they entered the territorial waters of India, even if the exemption notifications were withdrawn by the time these goods came to be cleared for home consumption.

19. It may be mentioned here that so far the above view is concerned, the Bombay High Court stands practically alone. However, a learned single Judge of the Madras High Court seems to have taken the above view in Sundaram Textile Ltd. v. Assistant Collector of Customs, 1983 ELT 909 : 1983 Tax LR 2807. But this was not accepted in the subsequent Bench decision of the Court in N. Jamal Company v. Union of India, (1985) 21 ELT 369 (Mad) though on different grounds.

20. The Delhi High Court in its Bench decision in Jain Shudh Vanaspati Ltd. v. Union of India, 1983 ELT 1688 : (1984 Tax LR NOC 26) has, however, taken a different view. According to that High Court, Section 15 of the Customs Act does not cover only the quantification and that irrespective of the date when the ship enters the territorial waters of India, calculation for the purpose of rate of duty must be done with reference to the dates mentioned in Section 15. The Court further held that entry in the territorial waters, though amounting to import, will not for fiscal purpose determine the date and time for the purpose of calculating the rate of duty which is leviable under the Customs Act and for which Section 15 has to be looked into.

21. The Bombay High Court in the case of Apar Pvt. Ltd. (1986 Tax LR 2022) (supra), has, however, explained the position by observing that chargeability is different from assessing the duty payable, which has to be done with referenece to the dates mentioned in Section 15. Taxability, as it was explained, is determined on the date when the goods enter the territorial waters and amount of duty payable with reference to the dates mentioned in Section 15.

22. A learned single Judge of the Kerala High Court in Aluminium Industries Ltd. v. Union of India, (1984) 16 ELT 183 has taken the view that in view of the definition of 'imported goods' in Section 2(25) of the Customs Act the goods retain the character of 'imported goods' till they are cleared for home consumption. As such, the provision of Section 12 would continue to apply to the goods until they are cleared. Even if they were totally exempted from duty at the time they entered the territorial waters, a rate of duty could still fasten on them under Section 12, so long they retain the character of imported goods, if an appropriate notification is issued in the meanwhile. And, if a rate becomes applicable at any time before clearance, that will be a rate, for the purpose of Section 12, the determination of which will have to be done under Section 15. The Court observed that the circumstances that there was no duty at the point of time when the vessel entered the territorial waters, does not altogether take the goods out of the provisions of Section 12.

23. In the instant case it was urged on behalf of the petitioners that in view of the relevant notifications dated January 5, 1979 issued under Section 25(1) which were in force at the time the goods entered the Indian territorial waters, the rate of additional duty chargeable was Rs. 1.32 per kg. and that being so, the revised rate of Rs. 2.37 per kg. introduced by the subsequent notification dated December 30, 1979 could not be enforced though the Bills of Entry were presented thereafter in the month of January, 1980 either actually or under the deeming provision of the proviso to Section 15(1) of the Customs Act.

24. The above contention was sought to be supported by the Bombay decisions and particularly by the decision in All India Medical Corporation v. A, R. Almeida, 1981 ELT 929 (Bom), where contrary to the Full Bench decision of the said High Court in the case of Apar Private Limited (1986 Tax LR 2022) (supra) it was held that there is no distinction between the case of total exemption and partial exemption and that the Customs Authorities were required to consider the rate of duty only after taking into consideration whether on the date of importation of the goods the notification of exemption was applicable or not.

25. It may be recalled here incidentally that the Bombay High Court in its Full Bench decision has taken the view that in the caseof partial exemption on the date of importation, Section 15 of the Customs Act would have application, though the matter would be different in the case of total exemption.

26. Against the above argument advanced on behalf of the petitioners, it was contended by Mr. Roy Chowdhury, the learned counsel representing the respondents, that since in view of the definition of 'imported goods' as given in Section 2(25) of the Customs Act, goods brought into India from a place outside India continue to be imported goods till their clearance for home consumption, it would be wrong to assume that the goods cease to be imported goods immediately on their entry into the Indian Territorial Waters. And that being so, Mr. Roy Choudhury's contention was that any change in the rate of duty subsequent to the date of importation could not be said to be invalid and would be quite operative in terms of Section 15 of the Act.

27. In my judgment, this contention of Mr. Roy Choudhury, has sufficient force in it. It is true that in view of the definition of 'India' as given in Section 2(27) of the Customs Act, importation takes place as soon as the goods enter the Indian territorial waters, but though the importation is complete at' that point of time, the imported goods in view of the definition given in Section 2(25) retain their character as such till the date of their clearance for home consumption. Section 12 of the Customs Act, which is the charging section, provides that goods imported into India shall be leviable to Customs Duty. But as it is true that the goods acquire the character of 'imported goods' no sooner they enter the Indian territorial waters, it is equally true that they do not cease to be imported goods immediately thereafter and continue to be so till they are cleared. Thus, though the goods become leviable to duty as soon as they are imported and chargeability does not remain suspended till they are cleared, Section 12 does not limit its operation only to the point of time when the goods acquire the character of imported goods. It remains operative so long the goods retain their character as imported goods, since it refers to levy of duty on goods imported without any reservation and without in any way trying to restrict or limit the scope of the definition of imported goods as given in Section 2(25) of the Customs Act.

28. There appears to be no warrant for the proposition that the situation relating to levy of duty prevailing at the time of the importation of the goods or when the goods acquire the character of imported goods namely, their entering the territorial waters of India, will continue to prevail till the date of their clearance in spite of any change in between in the Government policy in the matter of levy of duty in public interest. Customs Duty under Section 12 as already seen, is levied on goods imported and so long the goods retain that character there can obviously be no finality in the matter and it would be too narrow a view to accept that chargeability once fixed cannot be altered thereafter even in public interest while the goods still retain the character of imported goods. At least, the Customs Act does not contain any such provision restricting the operation of Section 25 at any time after the entry of the goods into the Indian Territorial Waters or after the goods acquire the character of imported goods.

29. Incidentally, it may he mentioned that the charging section, namely, Section 12, is always subject to the Central Government's power to issue notifications under Section 25(1) exempting any specified goods from levy of Customs Duty either wholly or in part in public interest. There is apparently no limitation to such power of the Central Government excepting constitutional limitations; public interest being the guiding factor in all cases. And under Section 21 of the General Clauses Act power to issue a notification includes a power to add to, amend, vary or rescind it. Thus, if after issuing a notification exempting any specified goods from levy of Customs Duty, the Central Government is of the view that to allow such notification to continue for any further period would be detrimental to the public interest, the Government has ample powers subject to constitutional limitations, to withdraw, to rescind or to modify it. To say that an exemption notification in force at the time of the entry of the goods into the Indian Territorial Waters, or in other words, at the time they acquire the character of imported goods; cannot he subsequently withdrawn, rescinded, added to or modified, would he putting unwarranted restrictions to the Central Government's power under Section 25 of Act in public interest. As it seems to me, the Bombay High Court while laying loo much emphasis on chargeability of the goods under Section 12 at the time they acquire the character of imported goods, failed to take proper note of j the extent of the Central Government's power junder Section 25. The observation made by the said High Court in the case of Apar Private Limited (1986 Tax LR 2022) (Bom) (FB) (supra) that subsequent withdrawal of the notification before clearance of the goods does not render such goods liable to duty, is not quite discernible since withdrawal of the exemption notification apparently removes the bar to chargeability under Section 12 and makes the imported goods leviable to duty under the law at the rates specified. In other words, Section 12 which is kept dormant for the time being by issue of exemption notification, springs into action as soon as the bar of the exemption notification is removed subject, however, to the goods still retaining their character as imported goods. To limit the operation of Section 12 only to the point of importation would be putting undue restriction to its language and spirit which is not warranted by the statute itself. In fact, Section 12 remains operative throughout the length and breadth of the imported goods retaining their character as such, subject, however, to any bar imposed by the Central Government by issue of exemption notifications under Section 25 from time to time relating to specified goods and no sooner the said bar is removed it becomes operative once again.

30. Thus, even if under an exemptionnotification any specified goods are not leviable to duty at the time of their entry into the Indian Territorial Waters or in other words, when they acquire the character of imported goods, they become so leviable with the withdrawal etc. of the said notification at any time before the actual clearance of the goods for home consumption.

Now, so far the instant cases are concerned, the position is not at all different. Here, the rate of additional duty prevailing at the time of importation was Rs. 1.32 per kg. and was subsequently enhanced to Rs. 2.37 per kg. by issue of a fresh notification under Section 25(1) and the said enhanced rate was in force when the Bills of Entry were actually presented or deemed to have been presented. Thus, the goods were leviable to duty under Section 12 at certain specified rates at the time of their importation. But in view of Section 15(1)(a) the rate of duty and tariff valuation applicable to any imported goods shall be the rate and valuation in force on the date on which a Bill of Entry in respect of such goods is presented. And in the instant cases the rate at the relevant time was Rs. 2.37 per kg.

31. In this connection, it may not be out of place to mention here that so far Matter No. 1297 of 1979 is concerned, entry inward was granted to the Ship S. S. Johu at Cochin on November 10, 1979 and Bill of Entry was lodged with the Customs Authority at Calcutta on 19th and 21st December, 1979.

32. But since the goods were meant for Calcutta, granting entry inward to Cochin is immaterial. Section 15(1)(a) speaks of entry of goods for home consumption under Section 46. And since the goods were meant for consumption at Calcutta the relevant date was the date of entry inwards to Calcutta Port, which was not before January, 1980.

33. Thus, though the Bill of Entry was presented to the Customs Authority at Calcutta in December, 1979, it should he deemed to have been presented on the date of entry inwards to Calcutta in view of the proviso to Section 15(1) and on that date the enhanced rate of duty had already come into force.

34. So, in case of the other contentions raised on behalf of the petitioners failing, they would be liable to pay additional duty at the rate of Rs. 2.37 per kg. in respect of the goods imported.

35. This brings us to the more important contention raised on behalf of the petitioners, namely, that the impugned notification dated December 30, 1979 enhancing the rate of additional duty from Rs. 1.32 per kg. to Rs. 2.37 per kg. is hit by the doctrine of promissory estoppel since the earlier notification relating to additional duty dated Januarys, 1979 fixing the rate of such duty at Rs. 1.32 per kg. was to remain in force up to December 31, 1979, as per declaration made in the notification itself.

36. It was contended by Mr. Bagaria, the learned counsel representing the petitioners, that the petitioners having imported the goods on the basis of the said notification, the respondent No. 3 was duty bound to honour the said promise and could not alter the rate of duty to the detriment of the petitioners. In support of this contention Mr. Bagaria mainly relied upon two decisions of the Supreme Court, namely, M. P. Sugar Mills v. State of Uttar Pradesh, : [1979]118ITR326(SC) and Union of India v. Godfrey Phillips India Ltd., : [1986]158ITR574(SC) .

37. On the other hand, Mr. Roy Choudhury, the learned counsel representing the respondents, contended that a notification issued under Section 25(1) of the Custom's Act granting, modifying or withdrawing an exemption from duty being in the nature of a piece of subordinate legislation, there can be no promissory estoppel against the exercise of such legislative power.

38. Coming now to the merits of the rival contentions, it has been specifically held in M. P. Sugar Mills case : [1979]118ITR326(SC) (supra) that there can be no promissory estoppel against the exercise of legislative power and that the legislature can never be precluded from exercising its legislative function by resort to the doctrine of promissory estoppel. According to Mr. Bagaria, however, this refers to legislative functions exercised by the legislature and not by the Government even assuming for the time being that the notification issued by the Central Govt. under Section 25(1) is a piece of subordinate legislation.

39. To neutralise Mr. Bagaria'scontention, Mr. Roychowdhury referred to certain other decisions of the Supreme Court including the one in Excise Commissioner, U. P. v. Ram Kumar, : AIR1976SC2237 , where it has been held that there can be no question of estoppel against the Government in the exercise of its legislative, sovereign or executive powers.

40. This decision, it may be recalled, was referred to in M.P. Sugar Mills case (supra) and at page 651 of the Report it was observed that:--

'Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it.'

41. Significantly, however, the Supreme Court while making the aforesaid observations in M. P. Sugar Mills case (supra), did not specifically refer to any legislative function of the Government which the Government exercises as the delegate of the legislature, and regarding taxation it was simply observed that taxation was a sovereign or a governmental function.

42. Mr. Roychowdhury, in thisconnection, referred to the decision of Supreme Court in Narenderchand v. Lt. Governor, Administrator, Union Territory, Himachal Pradesh, : [1972]1SCR940 and drew my attention to the following observations of the Supreme Court at Page 2401 of the Report :

'The power to impose a tax is undoubtedly a legislative power. That power can be exercised by the legislature directly or subject to certain conditions, the legislature may delegate that power to some other authority. But the exercise of that power, whether by the legislature or by its delegate, is an exercise of a legislative power. The fact that the power was delegated to the executive does not convert that power into an executive or administrative power. No Court can issue a mandate to a legislature to enact a particular law. Similarly, no Court can direct a subordinate legislative body to enact or not to enact a law, which it may be eompo.te.nt to ' enact.'

43. The question which therefore, arises for consideration in this connection, is whether, as argued by Mr. Roy Chowdhury, a Notification issued under Section 25(1) of the Customs Act granting, modifying or withdrawing an exemption from duty, is a piece of subordinate legislation so as to keep itself out of the harm's way of the doctrine of promissory estoppel.

44. Exactly the identical question came up for consideration before a larger Bench of the Supreme Court constituted by three learned Judges, in Indian Express Newspapers (Bombay) Pvt. Ltd. v. Union of India, . There, before the Supreme Court, the same argument was advanced on behalf of the Government as has been advanced before me by Mr. Roychowdhury the learned counsel representing the respondents, and the same decision, namely, the decision in Narender Chand's case : [1972]1SCR940 (supra) was referred to. The Supreme Court referred to the relevant observations made in the said decision, as already quoted by me earlier and also to the following observations :

'Article 265 of the Constitution lays down that no tax can be levied and collected except by authority of law. Hence, the levy of a tax can only be made by the authority of law and not by any executive order. Unless the executive is specifically empowered by law to give any exemption, it cannot say that it will not enforce the law against a particular person. No Court can give a direction to a Government to refrain from enforcing a provision of law.'

45. Significantly, the Supreme Court in Indian Express Newspapers' case (supra) did not entertain any doubt regarding the correctness of the observations made in Narenderchand's case : [1972]1SCR940 (supra) but at the same time, did not also express any view as to the nature of the power exercised by the Government under Section 25(1) of the Customs Act. The Supreme Court, however, observed that 'we shall assume for the purpose of these cases that the power to grant exemption under Section 25 of the Customs Act, 1962, is a legislative power and a Notification issued by the Government also amounts to a piece of subordinate legislation.'

46. The aforesaid observation, in my view, at least indicates that the contention raised on behalf of the Union of India that a Notification issued under Section 25(1) of the Customs Act is in the nature of a piece of subordinate legislation, was not rejected outright by the Supreme Court. On the other hand, the Supreme Court on the basis of the decision in Narenderchand's case (supra) went to the extent of assuming that the power exercised by the Government under Section 25 of the Customs Act is a legislative power and a Notification issued by the Government thereunder amounts to a piece of subordinate legislation. However, in view of the nature and facts of the cases under consideration, the Supreme Court in Indian Express Newspapers' case (supra) did not consider it necessary to express any positive view in the matter.

47. In my judgment, the power to impose a tax being a legislative power, the power to grant exemption from payment of tax is also a legislative function and since in public interest it may very often become necessary to grant exemption to levy of customs duty, which is in the nature of a tax, the Legislature in its wisdom delegated to the Central Government under Section 25(1) of the Customs Act, the power to grant, modify or withdraw an exemption from duty and that being so the power exercised by the Central Government in the matter of granting exemption under Section 25 of the Customs Act is nothing but a legislative power and a Notification issued by the Government thereunder amounts to a piece of delegated or subordinate legislation.

48. In this connection, it may be recalled that in Narendra Chand's case : [1972]1SCR940 (supra) it has been specifically held that the power to impose a tax whether exercised by the legislature or its delegate is in exercise of legislative power and that being so, there can be no promissory estoppel against the exercise of governmental power under Section 25 of the Customs Act, which is legislative in nature.

49. Since a larger Bench of the Supreme Court than in M. P. Sugar Mills' case : [1979]118ITR326(SC) (supra) has not expressed any doubt regarding the correctness of proposition laid down in Narender Chand's case (supra), it may safely be held that there can be no promissory estoppel against exercise of legislative power by the legislature or by its delegate.

50. Mr. Bagaria, however, referred to a later decision of the Supreme Court in Union of India v. Godfrey Philips India Ltd. : [1986]158ITR574(SC) , in support of his plea of promissory estoppel. In the said case a representation was made by the Central Board of Excise and Customs that cost of corrugated-fibre-board containers would not be included in the transport value of cigarettes for the purpose of excise duty. The respondents acted upon this representation, which continued to hold that field until the Central Board of Excise and Customs by a circular letter stated that the cost of such fibre board packing may form part of assessable value of the cigarettes for the purpose of assessment of excise duty. On such facts the Supreme Court held that the Government was clearly bound by promissory estoppel to exclude the cost of fibre board containers from the value of the goods for the relevant period.

51. Significantly, the relevant order was purely an executive order and did not amount to an exemption Notification under Rule 8 of the Central Excise Rules, which contains identical provisions as in Section 25 of the Customs Act.

52. It is undoubtedly true that in the case of Union of India v. Godfrey Phillips : [1986]158ITR574(SC) (supra), a Bench constituted by three learned Judges of the Supreme Court, reiterated the view expressed earlier in M. P. Sugar Mills' case : [1979]118ITR326(SC) (supra) that there can be no promissory estoppel against the legislature in the exercise of its legislative functions, but in neither of these two cases it did specifically come up for consideration whether the exercise of legislative power by a delegate of the Legislature also amounts to legislative function. This point, as already seem was directly in issue in Narender Chand's case : [1972]1SCR940 (supra) and the observations made therein by the Supreme Court, as referred to earlier, appear to be still holding the field, protecting subordinate or delegated legislations as well from the operation of the rule of promissory estoppel.

53. Identical view was taken by a Full Bench of the Delhi High Court in Bombay Conductors and Electricals v. K. Chandra Mauli, (1986) 23 ELT 87 : (1983 Tax LR 2788), while holding that the delegated power exercised by the Central Government under Section 25 of the Customs Act being legislative in nature, promissory estoppel could not be pleaded against the issue of statutory Notifications under the said section.

54. That being so, the plea of promissory estoppel as raised on behalf of the petitioners in the instant cases, cannot be sustained.

55. The last contention raised on behalf of the petitioners was that at any event, the impugned Notification dated April 30, 1979 could not be retrospectively issued before the expiry of the period as specified in the earlier Notification dated January 5, 1979 and in support thereof reference was made to the decision of the Supreme Court in Hukamchand v. Union of India, : [1973]1SCR896 . But that decision has no application in these cases, since the Notification dated December 30, 1979 was not given any retrospective effect. In fact, it was given a prospective effect from December 30, 1979 onwards.

56. Thus, the subsequent Notification dated December 30, 1979 issued by the Central Government under Section 25(1) of the Customs Act enhancing the rate of additional duty from Rs. 1.32 per kg. to Rs. 2.37 per kg. is neither bad in law nor does it attract the rule of promissory estoppel and the said enhanced rate being in force when the bills of entry were presented in January, 1980 either actually or under the deeming provision of the proviso to Section 15(1) the writ petitioners are liable to pay additional duty at the said enhanced rate of Rs. 2.37 per kg. on the goods imported, in view of Section 15(1)(a) of the Customs Act, 1962.

57. The Rules issued are, accordingly, discharged and interim orders, if any, do stand vacated.

58. Respondents may now realise the additional duty from the petitioners at the enhanced rate of Rs. 2.37 per kg. by enforcing the bank guarantees furnished by the petitioners and by any other legal method.

59. The verbal prayer made by Mr. Bagaria, the learned counsel representing the petitioners, for stay of operation of this order is considered and rejected.

60. There will be no order for costs.


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