Section 25(1) exemption can be rescinded if government withdraws it for public interest; not promissory estoppel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notification issued under Section 25(1) was not an unequivocal promise attracting promissory estoppel and could be rescinded when the Government, satisfied that public interest required it, withdrew the exemption before its extended expiry. The Court found the High Court correct that statutory notifications issued in public interest do not create enforceable legal relationships by way of promise, and therefore the appeals challenging the withdrawal were dismissed.

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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merely mentioning the expiry date does not constitute an unequivocal representation that the notification could not be rescinded or modified before that date if public interest so demanded.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.

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