1993 (10) TMI 172 - HC - Customs

Court protects vested right to import goods under old policy, quashes unreasonable circular, upholds promissory estoppel

The High Court held that the petitioners had a vested right to import goods under the old policy and could not be deprived of this right. The court found ... Import Policy - Promissory estoppel Issues:Scope and effect of a circular on import of raw silk under REP Licences/Exim Scrips challenged by petitioners.Analysis:The petitioners contested a circular issued by respondent authorities regarding the import of raw silk under REP Licences/Exim Scrips. They argued that the circular contradicted the Import and Export Policy 1990-93, which allowed raw silk import under these licenses. The new Import Policy 1992-97 stated that licenses issued before its commencement remained valid. The petitioners purchased licenses before the new policy and entered contracts for raw silk import. Customs had previously cleared raw silk consignments under these licenses. However, a circular in December 1992 restricted imports against general endorsements on licenses.The High Court held that the petitioners had a vested right to import goods under the old policy and could not be deprived of this right. The court cited the principle that licenses remain valid until canceled and emphasized that the circular could not override statutory provisions. The court referred to a Supreme Court case stating that government clarifications are not binding on courts and authorities must follow the law rather than administrative instructions.The court found the circular unreasonable and against principles of promissory estoppel. It noted that the circular rendered the petitioners' licenses ineffective without proper grounds. The court also mentioned a previous case where a similar clarification had no statutory force against licenses issued under the Import Control Act. Additionally, the court highlighted that REP Licences/Exim Scrips were transferable and could be used for importing goods not on the prohibitive list.The court analyzed the new policy's transitional arrangements for licenses issued before its commencement, ensuring their validity for import/export. It emphasized that licenses issued under the old policy could be used for importing silk under the new policy. The court quashed the impugned circular, directing the release of 80% of the goods immediately and the remaining 20% within three weeks. All parties were instructed to act on the court's order.