1994 (10) TMI 64 - SC - Customs

Section 25(1) exemption can be rescinded if government withdraws it for public interest; not promissory estoppel

The SC held that a time-bound exemption notification issued under Section 25(1) was not an unequivocal promise attracting promissory estoppel and could be ... Challenged the action of the Union of India in withdrawing a time bound exemption Notification No. 66 dated 15-3-1979 for the import of PVC resins - ambit, scope and amplitude of the doctrine of promissory estoppel - Held that:- The Notification on the plain language of it was conceived and issued on the Central Government 'being satisfied that it is necessary in the public interest so to do.' Strictly speaking, therefore, the Notification cannot be said to have extended any 'representation' much less a 'promise' to a party getting the benefit of it to enable it to invoke the doctrine of promissory estoppel against the State. It would bear repetition that in order to invoke the doctrine of promissory estoppel, it is necessary that the promise which is sought to be enforced must be shown to be an unequivocal promise to the other party intended to create a legal relationship and that it was acted upon as such by the party to whom the same was made. A Notification issued under Section 25 of the Act cannot be said to be holding out of any such unequivocal promise by the Government which was intended to create any legal relationship between the Government and the party drawing benefit flowing from the said Notification. It is, therefore, futile to contend that even if the public interest so demanded and the Central Government was satisfied that the exemption did not require to be extended any further, it could still not withdraw the exemption. Unable to agree with the learned counsel for the appellants that Notification 66/79 could not be withdrawn before 31-3-1981. First, because the exemption Notification having been issued under Section 25(1) of the Act, it was implicit in it that it could be rescinded or modified at any time if the public interest so demands and secondly it is not permissible to postpone the compulsions of 'public interest' till after 31st March 1981 if the Government is satisfied as to the change in the circumstances before that date. Since, the Government in the instant case was satisfied that the very public interest which had demanded a total exemption from payment of customs duty now demanded that the exemption should be withdrawn it was free to act in the manner it did. It would bear a notice that though Notification 66/79 was initially valid only upto 31-3-1979 but that date was extended in 'public interest', we see no reason why it could not be curtailed in public interest. Individual interest must yield in favour of societal interest. In our considered opinion therefore the High Court was perfectly right in holding that the doctrine of promissory estoppel had no application to the impugned notification issued by the Central Government in exercise of its powers under Section 25(1) of the Act in view of the facts and circumstances, as established on the record. Appeals fail and are dismissed Issues Involved:1. Applicability of the doctrine of promissory estoppel against the Government.2. Validity of the withdrawal of exemption notification before its stipulated expiry date.3. Public interest as a justification for modifying or withdrawing an exemption notification.Issue-wise Detailed Analysis:1. Applicability of the Doctrine of Promissory Estoppel Against the Government:The appellants invoked the doctrine of promissory estoppel, arguing that the Central Government could not withdraw the exemption notification before its expiry date, as they had placed orders for the import of PVC resin based on the exemption. The doctrine of promissory estoppel is well-established in administrative law to avoid injustice where a party has made an unequivocal promise or representation intended to create legal relations, which the other party has acted upon. The Supreme Court noted that the doctrine is applicable against the Government to prevent fraud or manifest injustice but cannot compel the Government to carry out a promise contrary to law or outside the authority of the officer making it. The Court emphasized that the doctrine must yield when equity demands, especially if it would be inequitable to hold the Government to its promise considering public interest.2. Validity of the Withdrawal of Exemption Notification Before Its Stipulated Expiry Date:The appellants argued that the Government could not withdraw the exemption notification before the stipulated expiry date of 31st March 1981, as they had placed orders relying on the notification. The Court held that merely mentioning the expiry date does not constitute an unequivocal representation that the notification could not be rescinded or modified before that date if public interest so demanded. The power to grant exemption under Section 25 of the Customs Act includes the power to modify or withdraw the same. The Court noted that the exemption notification was issued in public interest and could be withdrawn in public interest if the Government was satisfied that it was necessary to do so.3. Public Interest as a Justification for Modifying or Withdrawing an Exemption Notification:The respondents argued that the exemption had been withdrawn in public interest, and individual interest must give way to public interest. The Court agreed, stating that the power to grant exemption under Section 25 of the Customs Act is contingent upon the satisfaction of the Government that it is necessary in public interest. The Court found that the reasons given by the Government for withdrawing the exemption were not irrelevant or insufficient. The exemption was initially granted to equalize prices between indigenous and imported PVC resin, and when international prices fell, making imports cheaper, the exemption was withdrawn to protect indigenous producers. The Court held that the withdrawal of the exemption in public interest was justified and did not constitute a breach of any enforceable promise.Conclusion:The Supreme Court upheld the withdrawal of the exemption notification before its stipulated expiry date, emphasizing that public interest justified the modification. The doctrine of promissory estoppel could not be invoked against the Government in this case, as the exemption notification did not constitute an unequivocal promise, and the withdrawal was in public interest. The appeals were dismissed, affirming the High Court's judgment.