Case Note & Summary
The case arose from the Duty Exemption Scheme under the Export and Import Policy 1992-1997, which allowed duty-free import of raw materials for export production subject to value addition norms. The appellant exporter entered six export contracts for marine products between May and June 1992 and filed five applications for advance licences from May to September 1992. On 31 March 1992, the value addition norm for frozen marine products packed in polythene bags was 1000%; on 25 September 1992 it was increased to 1900%. The advance licences were not issued before the change and were later issued in February 1993 based on the enhanced norm. The appellant contended that since applications predated the change, the earlier norm should apply, and sought relief. The Calcutta High Court Single Judge allowed the writ; the Division Bench modified, granting relief only for exports actually made before 25 September 1992. Both parties appealed. The Supreme Court considered whether filing an application created a vested right to the earlier norm and whether promissory estoppel applied. The appellant argued that the policy was statutory, that applications could be filed before exports, that a right accrued on filing, and that the government could not take advantage of its own delay. The Union of India argued that mere filing did not confer any right, that there was no fundamental right to import, that the policy in force on the date of licence governed, and that no undue delay was found. The Supreme Court held that the scheme was an incentive and no fundamental right to import free of duty existed. The advance licence was granted in advance to enable exports and conditions must reflect norms in force on date of grant. Mere filing of an application did not create any vested right; the date of licence was relevant. The court rejected the analogy with a pending suit and vested right of appeal. It also held promissory estoppel unsustainable. The processing of licences required verification and reasonable time, which could not be predetermined. Thus, the value addition norm in force on the date of grant of licence applied.
Headnote
A) Export and Import Policy - Duty Exemption Scheme - Advance Licence - Vested Right - Export and Import (Control) Act, 1947, Section 3 - The court considered whether filing an application for an advance licence creates a vested right to obtain a licence as per the value addition norm prevailing on the application date. Held that the scheme is an incentive and no citizen has a fundamental right to import free of duty; the licence is an advance licence granted to enable exports and the conditions must be determined by norms in force on the date of grant, not application. Mere filing of application does not create any right; the date of licence is relevant.
B) Export and Import Policy - Duty Exemption Scheme - Advance Licence - Promissory Estoppel - The exporter argued promissory estoppel because it entered export commitments relying on existing policy. Held that promissory estoppel is unsustainable in the facts of the case given the nature of advance licence; the policy does not confer a promise that norms will remain unchanged until licence issuance.
C) Export and Import Policy - Duty Exemption Scheme - Processing of Applications - Reasonable Time - The court observed that grant of licence is not mechanical or formal; authorities must verify correctness and compliance, and reasonable time is allowed. No hard and fast limit prescribed.
D) Constitutional Law - Import Rights - No Fundamental Right to Import - The court reiterated that no citizen has a fundamental right to import, much less import free of duty; import rights depend on policy for the time being in force.
Issue of Consideration
Whether mere filing of an application for an advance licence under the Duty Exemption Scheme creates a vested right to obtain the licence according to the value addition norm in force on the date of application; whether the subsequent change in value addition norm before licence issuance applies; whether promissory estoppel can be invoked
Final Decision
The Supreme Court rejected the appellant's claim of a vested right and held that mere filing of an application for an advance licence does not create any right, and promissory estoppel is unsustainable. The value addition norm in force on the date of grant of licence governs, not the date of application. Consequently, the appellant was not entitled to advance licences based on the pre-25 September 1992 norm merely because applications were filed earlier.
Law Points
- Mere filing of application for advance licence does not create vested right
- policy in force on date of grant governs
- promissory estoppel not applicable in such matters
Case Details
1996 LawText (SC) (01) 46
B.P. Jeevan Reddy, B.N. Kirpal
1996 SCC (2) 439, JT 1996 (1) 588, 1996 SCALE (1) 576
P.V. Kapoor, A. Subba Rao
S.B. International Limited etc.
Assistant Director General of Foreign Trade & Ors. etc.
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Nature of Litigation
Writ petition challenging application of revised value addition norm to advance licence applications filed before the change
Remedy Sought
Appellant sought advance licences based on pre-revised value addition norm of 1000% for all export contracts, not just exports made before 25 September 1992
Filing Reason
The government enhanced the value addition norm from 1000% to 1900% on 25 September 1992 after the appellant had filed applications and entered export commitments, causing the appellant to receive lower value licences
Previous Decisions
Single Judge of Calcutta High Court allowed writ petition; Division Bench dismissed appeal but modified relief, limiting entitlement to pre-revised norm only for exports actually made before 25 September 1992
Issues
Whether mere filing of an application for an advance licence creates a vested right to obtain the licence as per the value addition norm in force on the date of application
Whether a subsequent change in value addition norm before licence issuance applies to such applications
Whether promissory estoppel can be invoked to compel the government to apply pre-revised norms to licences issued after the change
Submissions/Arguments
Appellant argued that the Export and Import Policy is statutory under Section 3 of the Export and Import (Control) Act, 1947, and applications for advance licences can be filed before effecting exports. Once applications were made, a vested right accrued to obtain licences as per the then prevailing policy, and subsequent changes cannot defeat that right.
Appellant invoked promissory estoppel, stating that it entered export commitments at prices based on the existing policy and would suffer grievous losses if the government changed the norm suddenly.
Appellant contended that the authorities cannot take advantage of their own wrong in delaying licence issuance; if licences had been issued before 25 September 1992, the appellant would have obtained higher value licences. The appellant should be entitled to advance licences for the whole value of export contracts.
Respondent argued that mere filing of an application does not confer any right, much less a vested right, for issuance of an advance licence. No one has a fundamental right to import, and the policy in force on the date of issue of licences alone governs.
Respondent submitted that there was no allegation or finding of deliberate or undue delay in issuing licences, and that issuance is not mechanical; authorities must verify facts and compliance before granting licences.
Ratio Decidendi
Under the Duty Exemption Scheme of the Export and Import Policy, an advance licence is a facility and incentive, not a right. No citizen has a fundamental right to import free of duty. Mere filing of an application does not create a vested right to obtain a licence as per norms in force on the application date. The licence is granted in advance to enable exports, and the conditions, including value addition norms, must be determined by the norms in force on the date of grant. The grant is not mechanical and requires verification; reasonable time is allowed. Promissory estoppel does not apply because the policy does not promise that norms will remain unchanged until licence issuance.
Judgment Excerpts
Mere making of an application does not create any right in the applicant since he has no pre-existing right to such licence.
It is the date of licence that is relevant and not the date of application therefor.
The theory of a vested right accruing to the applicant to get a licence as per the norms in force on the date of application is inconceivable in such a situation - unless, of course, the policy itself says so.
Procedural History
The appellant, engaged in export of marine products, entered six export contracts between 27 May and 27 June 1992 and filed five applications for advance licences between 29 May and 15 September 1992. The value addition norm was enhanced from 1000% to 1900% on 25 September 1992, before licences were issued. Licences were issued in February 1993 based on the enhanced norm. The appellant protested and filed a writ petition in the Calcutta High Court. A Single Judge allowed the writ petition. The respondents filed a Letters Patent Appeal. The Division Bench dismissed the appeal but modified the relief, granting entitlement to pre-revised norm only for exports actually made before 25 September 1992. Both the appellant and the State filed appeals to the Supreme Court, insofar as the Division Bench decision went against them.
Acts & Sections
- Export and Import (Control) Act, 1947: Section 3
- Export and Import Policy (1 April 1992 - 31 March 1997): Clauses 47, 48, 49, 52, 59, 60, 63, 66
