Court orders goods release upon 50% payment of duty. Bank guarantee needed for balance. Interim measure pending main petition.

The court ordered the release of the goods upon payment of 50% of the auxiliary duty along with customs duty, and the petitioner was required to provide a bank guarantee or security for the remaining 50%. This decision was made in line with a previous ruling in a similar case and was an interim measure, preserving the rights of both parties pending further proceedings in the main writ petition.

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Issues Involved:
1. Validity of demand for auxiliary duty.
2. Applicability of notifications No. 208/88 and 159/88.
3. Doctrine of promissory estoppel.
4. Alleged violation of constitutional provisions (Articles 14, 19(1)(g), and 265).

Detailed Analysis:

1. Validity of Demand for Auxiliary Duty:
The petitioner challenged the demand for auxiliary duty imposed by the second respondent, arguing it was arbitrary, illegal, and without jurisdiction. The petitioner contended that the goods were imported based on the promise of exemption from auxiliary duty as per Notifications No. 208/88 and 159/88, which were valid until 31-3-1989. The demand for auxiliary duty under Notification No. 110/89, effective from 1-3-1989, was deemed unjust as it contradicted the earlier promise.

2. Applicability of Notifications No. 208/88 and 159/88:
The petitioner relied on Notification No. 208/88, which exempted certain power generation equipment from basic customs duty above 35% ad valorem and wholly from additional duty, valid until 31-3-1989. Notification No. 159/88 further exempted goods from auxiliary duty if they were already exempt under other notifications, including No. 208/88. The petitioner argued that the conditions of Notification No. 208/88 were met, and thus, the goods should be exempt from auxiliary duty as per Notification No. 159/88.

3. Doctrine of Promissory Estoppel:
The petitioner invoked the doctrine of promissory estoppel, asserting that the government, having made a representation through the notifications, was estopped from rescinding or superseding them before their stated expiration date. The petitioner cited Supreme Court judgments (M.P. Sugar Mills and Godfrey Phillips India Limited) to support the argument that the government must honor its promises if acted upon by the petitioner. The petitioner argued that the sudden change in duty imposition was against the principles of equity, justice, and fair play.

4. Alleged Violation of Constitutional Provisions:
The petitioner claimed that the demand for auxiliary duty violated Articles 14, 19(1)(g), and 265 of the Constitution. Article 14 was invoked on grounds of discrimination, as different importers would be treated unequally based on the timing of their imports. Article 19(1)(g) was cited, arguing that the imposition of auxiliary duty restrained trade and affected the petitioner's competitiveness. Article 265 was mentioned, asserting that the demand lacked legal sanction as it did not conform to the valid notifications.

Judgment:
The court directed the release of the goods upon payment of 50% of the auxiliary duty in addition to the customs duty and furnishing either a bank guarantee or security for the remaining 50%, following a precedent set in a similar case. This interim order was passed without prejudice to the contentions of either party in the main writ petition.

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