1989 (3) TMI 278 - HC - Customs

High Court rules exporters entitled to export benefits despite policy change, upholds promissory estoppel doctrine

The Bombay High Court, in a judgment delivered by Sawant and Kantharia, JJ., ruled in favor of exporters of electrical contacts regarding export benefits. ... Promissory estoppel Issues:1. Interpretation of the doctrine of promissory estoppel in relation to export benefits.2. Validity of Government's change in policy affecting export benefits.3. Entitlement of exporters to benefits promised under earlier policy.4. Applicability of the doctrine of promissory estoppel against the Government.5. Claim for both replenishment licenses and cash assistance by exporters.6. Effect of change in method of calculating export benefits on exporters.Analysis:1. The judgment by the Bombay High Court, delivered by Sawant and Kantharia, JJ., addressed the issue of the doctrine of promissory estoppel in the context of export benefits. The Court noted that the respondents, exporters of electrical contacts, were promised twin benefits under the government's policy. The Court emphasized that the doctrine of promissory estoppel prevented the government from denying these benefits to the exporters, as they had complied with all necessary formalities as per the policy.2. The Court examined the validity of the Government's change in policy affecting the export benefits. The Government had altered the method of calculating benefits by excluding the value of silver from the F.O.B. value of exported products. The Court rejected the Government's argument that the change was justified due to concerns about the export of silver, emphasizing that the exporters had not breached the requirement of having silver content less than 50%.3. The judgment highlighted the exporters' entitlement to benefits promised under the earlier policy. The Court rejected the Government's contention that the change in policy only affected the method of calculation, emphasizing that the nature of the product for which benefits were available had been altered. The Court affirmed that the exporters were entitled to the benefits under the original policy as they had already entered into contracts before the policy change.4. The Court discussed the applicability of the doctrine of promissory estoppel against the Government. It cited various legal precedents, emphasizing that the doctrine applied against the Government in its public or governmental functions. The Court clarified that executive action could not defeat the applicability of promissory estoppel, especially when exporters had relied on the promised benefits.5. The judgment addressed the exporters' claim for both replenishment licenses and cash assistance. The Court dismissed the Government's argument that only the Rep. License should be granted, emphasizing that both benefits were promised as a package under the original policy. The Court rejected the Government's attempt to deny cash assistance to the exporters.6. Finally, the Court ruled in favor of the exporters, dismissing the appeal and ordering the Government to discharge the Bank guarantee provided by the exporters. The Court affirmed that the exporters were entitled to the benefits promised under the original policy, emphasizing the application of the doctrine of promissory estoppel in this case.