Supreme Court upholds customs notification withdrawal, emphasizing legality over economic policy merits.

The Supreme Court overturned the Calcutta High Court's decision, ruling that the withdrawal of the customs notification was valid and within the executive's authority. The Court emphasized that judicial scrutiny should focus on legality and bona fides, not the merits of economic policy decisions. The government's action was deemed justified, as it was supported by relevant reasons, including considerations for domestic manufacturers. The appeal was allowed, with no costs imposed.

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Issues Involved:

1. Validity of the withdrawal of a customs notification.
2. Whether the amended notification was ultra vires Section 25(1) of the Customs Act, 1962.
3. Applicability of the principle of promissory estoppel against the government.
4. Judicial scrutiny of the executive's economic policy decisions.

Summary:

Issue 1: Validity of the Withdrawal of a Customs Notification

The case arises from a judgment by the Calcutta High Court, which held the withdrawal of a customs notification invalid. The assessee imported a high-speed cold set web offset printing machine and claimed a concessional duty rate under the First Notification. The First Notification was amended, shifting the concessional rate to a different type of machine, making the assessee ineligible for the benefit. The High Court set aside the amended notification, stating no intelligible differentia existed for the change, and upheld the single judge's decision to grant exemption to the imported machinery.

Issue 2: Ultra Vires Section 25(1) of the Customs Act, 1962

The Union argued that its power to grant exemptions includes the power to modify or withdraw them under Section 25(1) of the Act and Section 21 of the General Clauses Act, 1897. The High Court, however, observed that the withdrawal was not in furtherance of "public interest" as required under Section 25(1) of the Act, citing the lack of an intelligible differentia between the machines and the absence of domestic manufacturing capabilities for the imported machine.

Issue 3: Principle of Promissory Estoppel

The assessee argued that the government could not withdraw the First Notification without justification and relied on the principle of promissory estoppel, given the irrevocable letter of credit issued before the amended notification. The High Court noted that the government must provide a reasonable opportunity to the promisee to restore the status quo ante if it decides to resile from its promise.

Issue 4: Judicial Scrutiny of Economic Policy Decisions

The Union contended that the High Court's decision challenges the government's fundamental powers to issue notifications under Section 25(1), which falls within the policy domain. The Supreme Court held that judicial scrutiny should be limited to examining the legality and bona fides of the decision, not the merits or sufficiency of the reasons. The High Court erred in conducting a merits review of the economic measure, as the executive's decision was backed by relevant reasons, including the indigenous angle and representations from domestic manufacturers.

Conclusion:

The Supreme Court set aside the High Court's judgment, holding that the withdrawal of the concession was within the executive's domain and backed by relevant considerations. The appeal was allowed without any order on costs.

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