Case Note & Summary
The Bombay High Court dismissed two writ petitions challenging the validity of Notification No.2(RE 2013)/2009-14 dated 18th April 2013, which retrospectively amended the Foreign Trade Policy (FTP) and correspondingly amended Customs Notification No.98/2009-Cus dated 11th September 2009. The petitioners, M/s. Sevantilal & Sons and M/s. Global Exim, were importers who had availed the benefit of duty exemption under the FTP for import of raw materials against export obligations. The impugned notification amended the FTP to provide that the export obligation must be fulfilled within the original period specified in the license, and any extension granted earlier would not be valid for the purpose of claiming duty exemption. The customs notification was also amended retrospectively to deny the benefit of exemption if the export obligation was not fulfilled within the original period. The petitioners argued that the retrospective amendment was arbitrary, violated Article 14, and defeated their legitimate expectation. The court, however, held that the amendment was valid and necessary to prevent misuse of the scheme. It observed that no vested right exists in the export obligation period, and the government has the power to amend policies retrospectively to close loopholes. The court also held that the doctrine of legitimate expectation cannot be invoked against a policy change made in public interest. The petitions were dismissed with no order as to costs.
Headnote
A) Constitutional Law - Retrospective Amendment - Validity of Notification - The court considered whether a notification retrospectively amending the Foreign Trade Policy and Customs notification is valid. The court held that the amendment was valid and did not violate Article 14 or any vested rights. The amendment was aimed at preventing misuse of the duty exemption scheme. (Paras 1-35)
B) Foreign Trade Policy - Export Obligation - Vested Rights - The court held that an importer does not have a vested right in the export obligation period or the conditions of the duty exemption scheme. The policy can be amended retrospectively to close loopholes. (Paras 15-25)
C) Customs Law - Notification Amendment - Retrospectivity - The court held that the amendment to Customs Notification No.98/2009-Cus was valid and retrospective in operation. The amendment was necessary to align the customs notification with the amended Foreign Trade Policy. (Paras 26-30)
D) Administrative Law - Legitimate Expectation - The court held that the doctrine of legitimate expectation cannot be invoked to prevent a retrospective amendment of policy when the amendment is in public interest and to prevent fraud. (Paras 31-35)
Issue of Consideration
Whether the impugned Notification No.2(RE 2013)/2009-14 dated 18th April, 2013, which retrospectively amended the Foreign Trade Policy and correspondingly amended Customs Notification No.98/2009-Cus dated 11th September, 2009, is valid and constitutional.
Final Decision
The Bombay High Court dismissed both writ petitions with no order as to costs, upholding the validity of the impugned notification and the corresponding amendment to the Customs notification.
Law Points
- Retrospective amendment of policy is permissible
- No vested right in export obligation
- Policy can be amended to prevent misuse
- Customs notification can be amended retrospectively
- Doctrine of legitimate expectation not applicable
- Article 14 not violated
Case Details
2015 LawText (BOM) (01) 32
Writ Petition No.9955 of 2013 and Writ Petition No.9009 of 2014
S.C. Dharmadhikari, A.A. Sayed
Mr. V. Sridharan, Senior Counsel, with Prakash Shah, Jas Sanghavi i/b. Yogesh Rohira and PDS Legal for the Petitioner. Mr. Pradeep S. Jetly with Smt. S. V. Bharucha and Shri N. D. Sharma for the Respondent Nos.1 to 3 and Shri A. S. Rao for the Respondent No.4 in Writ Petition No.9955/2013. Shri Suresh S. Pakale a/w M. S. Bhardwaj for the Respondent No.1-Union of India, in Writ Petition No.9009/2014.
M/s. Sevantilal & Sons and M/s. Global Exim
Union of India, Directorate General of Foreign Trade, Jt. Director General of Foreign Trade, Commissioner of Customs (Import)
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Nature of Litigation
Writ petitions under Article 226 of the Constitution of India challenging the validity of a notification retrospectively amending the Foreign Trade Policy and correspondingly amending a Customs notification.
Remedy Sought
Striking down Notification No.2(RE 2013)/2009-14 dated 18th April, 2013 and the corresponding amendment to Customs Notification No.98/2009-Cus dated 11th September, 2009.
Filing Reason
The petitioners claimed that the retrospective amendment was arbitrary, violated Article 14, and defeated their legitimate expectation that the export obligation period as originally granted would be honored.
Issues
Whether the impugned notification retrospectively amending the Foreign Trade Policy is valid and constitutional.
Whether the corresponding amendment to the Customs notification is valid.
Whether the petitioners had a vested right in the export obligation period.
Whether the doctrine of legitimate expectation applies to prevent the retrospective amendment.
Submissions/Arguments
The petitioners argued that the retrospective amendment is arbitrary and violates Article 14 of the Constitution.
The petitioners argued that they had a legitimate expectation that the export obligation period as originally granted would be honored.
The respondents argued that the amendment was necessary to prevent misuse of the duty exemption scheme and that no vested right exists in the export obligation period.
The respondents argued that the government has the power to amend policies retrospectively in public interest.
Ratio Decidendi
The court held that an importer does not have a vested right in the export obligation period or the conditions of a duty exemption scheme. The government has the power to amend policies retrospectively to prevent misuse and close loopholes. The doctrine of legitimate expectation cannot be invoked against a policy change made in public interest. The retrospective amendment did not violate Article 14 as it was reasonable and aimed at preventing fraud.
Judgment Excerpts
The court held that the amendment was valid and did not violate Article 14 or any vested rights.
The court observed that no vested right exists in the export obligation period.
The court held that the doctrine of legitimate expectation cannot be invoked against a policy change made in public interest.
Procedural History
The writ petitions were filed under Article 226 of the Constitution of India challenging Notification No.2(RE 2013)/2009-14 dated 18th April, 2013 and the corresponding amendment to Customs Notification No.98/2009-Cus dated 11th September, 2009. The petitions were heard together and reserved on 22nd December, 2014, and judgment was pronounced on 30th January, 2015.
Acts & Sections
- Constitution of India: Article 14, Article 226
- Foreign Trade (Development and Regulation) Act, 1992:
- Customs Act, 1962:
