Supreme Court dismisses appeal on International Price Reimbursement Scheme eligibility

The Supreme Court dismissed the appeal, affirming that the appellant was not entitled to reimbursement under the International Price Reimbursement Scheme (IPRS) as the procurement of steel from domestic sources constituted "deemed exports," which are excluded from the scheme. The court also rejected the application of promissory estoppel due to the lack of evidence showing any representation by the Union of India that contradicted the IPRS terms. The appeal was dismissed with no order as to costs.

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Issues Involved:
1. Eligibility for reimbursement under the International Price Reimbursement Scheme (IPRS).
2. Definition and applicability of "deemed exports".
3. Application of the equitable rule of promissory estoppel.

Issue-wise Detailed Analysis:

1. Eligibility for reimbursement under the International Price Reimbursement Scheme (IPRS):

The appellant, Larsen & Toubro Ltd., sought reimbursement under the IPRS for the price difference between domestic and international steel prices used in constructing two steel bridges for export to Malaysia. The IPRS was introduced to ensure that engineering exporters could obtain steel at international prices, thus enabling them to compete globally. The appellant procured steel from domestic sources at higher prices set by the Joint Plant Committee (JPC) instead of importing it at lower international prices, believing it would be reimbursed the difference under the IPRS. However, the Government of India rejected the reimbursement claim, leading to the appellant filing a writ petition. The Single Judge allowed the petition, but the Division Bench reversed this decision, stating that the appellant was not eligible for reimbursement under the IPRS as the procurement amounted to "deemed exports."

2. Definition and applicability of "deemed exports":

The term "deemed exports" is not defined under the IPRS but is defined in Chapter XVI of the Import and Export Policy. Paragraph 190(g) of the Policy states that supplies made in India to units in free trade zones/export processing zones or 100% export-oriented units are considered "deemed exports." The Division Bench held that since the appellant's procurement of steel from domestic sources fell under this category, it was not eligible for reimbursement under the IPRS, which explicitly excludes contracts for "deemed exports." The appellant argued that "deemed exports" is a legal fiction meant to extend export benefits for domestic consumption of indigenous raw materials and should not apply to physical exports. However, the court found that the supplies to the appellant's unit in the Free Trade Zone (FTZ) were indeed "deemed exports" as per the policy, thus disqualifying them from IPRS benefits.

3. Application of the equitable rule of promissory estoppel:

The appellant invoked the equitable rule of promissory estoppel, arguing that it was induced to procure steel domestically at higher prices based on assurances from the Working Group that it would be reimbursed under the IPRS. The appellant cited a previous instance where it was reimbursed for a different export contract to Nepal. However, the court noted that no representation was made by the Union of India or its officers that the IPRS would apply to units in the FTZ. The appellant failed to provide precise factual data to support its claim, such as details of the export, the amount of the claim, the price difference, and the price at which materials were supplied. The court reiterated that for promissory estoppel to apply, there must be a representation of an existing fact, reliance on that representation, and resultant detriment. Since the appellant could not demonstrate these elements, the plea for promissory estoppel was dismissed.

Conclusion:

The Supreme Court dismissed the appeal, affirming that the appellant was not entitled to reimbursement under the IPRS as the procurement of steel from domestic sources constituted "deemed exports," which are excluded from the scheme. The court also rejected the application of promissory estoppel due to the lack of evidence showing any representation by the Union of India that contradicted the IPRS terms. The appeal was dismissed with no order as to costs.

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