Case Note & Summary
The dispute concerned exemption from customs duty on polyvinyl chloride resins (PVC) under Section 25(1) of the Customs Act, 1962. The appellants, as actual users, imported PVC relying on Notification No.66 dated 15.3.1979, which granted full exemption from customs duty up to 31.3.1981. The Government subsequently issued Notification No.205 dated 16.10.1980, superseding the earlier notification and limiting the exemption to duty in excess of 40% ad valorem, effectively withdrawing the full exemption. The appellants challenged this withdrawal before the Delhi High Court, which dismissed the writ petition on 16.3.1983, relying on a Full Bench decision in Bombay Conductors & Electricals Ltd. v. Government of India. On appeal to the Supreme Court, the appellants contended that the Government was estopped from withdrawing the exemption because they had acted on the solemn assurance of no duty and incurred commitments like opening letters of credit on 2.10.1980 and goods arriving at Bombay Port on 8.11.1980. The Union of India justified the withdrawal on the ground that the initial exemption was intended to equalise prices of indigenous and imported PVC, but subsequent fall in international prices made imported PVC cheaper than indigenous material, thereby eliminating the need for exemption and causing potential harm to domestic industry. The Supreme Court examined the doctrine of promissory estoppel against the Government and reiterated that while the doctrine applies, it is subject to a supervening public equity. The court must determine, on adequate material, whether public interest overrides the promise, and the Government bears a heavy burden of proof. The court referred to its earlier decision in Kasinka Trading v. Union of India, which had upheld the same notification, and observed that the exemption notification itself recited public interest and that the withdrawal was also in public interest. The court noted that the exemption was not meant to be a source of extra profit for importers, and at the time of withdrawal there was no scope for loss to importers as the price differential had disappeared. Consequently, the reasons for withdrawal were relevant and sufficient. The Supreme Court concluded that the withdrawal of the exemption was justified in public interest and dismissed the appeal, upholding the High Court's decision. The final operative order is not explicitly reproduced in the provided excerpt, but the court's reasoning clearly rejects the appellants' promissory estoppel claim.
Headnote
A) Administrative Law - Promissory Estoppel against Government - Doctrine applicable but subject to supervening public equity - Customs Act, 1962, Section 25(1) - The court recognised that promissory estoppel can be invoked against the Government, but if a supervening public interest exists, the Government may resile from its promise. The court must be satisfied on proper material that public interest overrides the promise, and the burden lies on the Government to show overwhelming public interest. Held that the withdrawal of exemption was justified in public interest due to changed economic circumstances (Paras not mentioned). B) Customs Law - Withdrawal of Exemption Notification - Public interest justification for rescinding exemption - Customs Act, 1962, Section 25(1); Customs Tariff Act, 1975, Chapter 39 - The exemption notification was issued to equalise prices of indigenous and imported PVC resin. When international prices fell, the Government withdrew the exemption in public interest. The court found that the reasons for withdrawal were relevant and sufficient, and no importer would suffer loss as the price differential no longer existed. Held that the withdrawal did not violate promissory estoppel (Paras not mentioned).
Issue of Consideration
Whether withdrawal of customs duty exemption notification by the Government attracts promissory estoppel and whether public interest justified the withdrawal.
Final Decision
The Supreme Court dismissed the appeal and upheld the withdrawal of customs duty exemption notification as being in public interest.
Law Points
- Promissory estoppel applies against Government but subject to supervening public equity
- Court must determine whether public interest overrides promise
- Government bears burden of showing overwhelming public interest
- withdrawal of customs exemption justified when changed circumstances make exemption unnecessary
- Section 25 Customs Act confers power to grant or rescind exemption in public interest
