Court directs refund of excess duty, upholds promissory estoppel plea

The court allowed the appeals, directing the respondents to levy additional duty at the rate specified in the first notification on the imported goods. The excess duty collected was to be refunded, bank guarantees discharged, and no costs were awarded. The plea of promissory estoppel was upheld as the Government failed to justify amending the initial notification without sufficient public interest grounds. The application for leave to appeal to the Supreme Court was denied, citing precedent supporting the application of promissory estoppel in similar circumstances.

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Issues Involved:
1. Availability of the plea of promissory estoppel against the Government.
2. Applicability of promissory estoppel in the context of subordinate legislation.
3. Equities involved in sustaining the plea of promissory estoppel.

Detailed Analysis:

1. Availability of the Plea of Promissory Estoppel Against the Government:
The principal issue in these appeals is whether the plea of promissory estoppel is available to a party aggrieved when a notification issued under statutory powers granting exemption from a duty or tax for a stated period is superseded during that period. The appellants had acted on the first notification and imported viscose staple fibre, which arrived subsequent to the date of the second notification, leading to a demand for additional duty at a higher rate. The appellants filed writ petitions for quashing the assessment orders and refund of the excess duty paid.

2. Applicability of Promissory Estoppel in the Context of Subordinate Legislation:
The learned single Judge rejected the appellants' contentions, holding that the doctrine of promissory estoppel had no application to the legislative exercise of powers by the Central Government under Section 25(1) of the Customs Act. The case law cited by the appellants included judgments from the Madras High Court, Rajasthan High Court, and the Supreme Court, which upheld the plea of promissory estoppel in similar circumstances. However, the Full Bench of the Delhi High Court in Bombay Conductors and Electricals Ltd. v. Government of India held that the plea of promissory estoppel did not apply in the fiscal field, as it would be trespassing on the legislative domain. The Delhi High Court's Full Bench opined that notifications under Section 25(1) were legislative orders, against which estoppel could not be pleaded.

3. Equities Involved in Sustaining the Plea of Promissory Estoppel:
The Supreme Court's judgments in Godfrey Philips and M.P. Sugar Mills were pivotal. In Godfrey Philips, it was held that there could be no promissory estoppel against the legislature in the exercise of its legislative functions, nor could the Government be debarred from enforcing a statutory prohibition. The Supreme Court in Pournami Oil Mills v. State of Kerala applied the doctrine of promissory estoppel to a situation where the State Government had issued a notification granting tax exemption and later issued another notification altering the concession to the detriment of small-scale industries. The Supreme Court held that the plea of promissory estoppel was unanswerable in such a context.

The court concluded that the plea of promissory estoppel was available to the appellants and must be upheld. The respondents failed to provide adequate material to justify the amendment of the first notification by the second notification on grounds of public interest. The court emphasized that the Government must satisfy the court that public interest necessitated acting contrary to the representation made in the first notification. The respondents did not dispute that the appellants had acted on the representation contained in the first notification.

Conclusion:
The appeals were allowed, and the respondents were directed to levy additional duty on the imported viscose staple fibre at the rate specified in the first notification. Excess additional duty collected was to be refunded within eight weeks. The bank guarantees furnished by the appellants were discharged, and no order as to costs was made. The application for leave to appeal to the Supreme Court was denied, referencing the judgment in Pournami Oil Mills' case.

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