TaxTMI 
TaxTMI 
1989 (4) TMI 93
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....ms duty and on furnishing either bank guarantee or security in respect of the other 50% by the petitioner to the satisfaction of the second respondent. This order is passed without prejudice to the contentions of either party in the main writ petition. AFFIDAVIT OF R. VASUDEVAN I, R. Vasudevan, son of late M.J. Raghavachary, aged about 38 years, residing at 2D Marble Arch, Bishop Wallers Avenue, Madras - 600 004, do hereby sincerely and solemnly affirm and state as follows: 1. I am the Purchase Manager of the Petitioner Company and I am well acquainted with the facts of the case and I am empowered to file this affidavit on behalf of the Petitioner. 2. The Petitioner is a Public Limited Company incorporated under the Companies Act, 1956, and has its registered office at Mettur Dam, RS, Salem District, Tamilnadu. The Petitioner is engaged in the manufacture and sale of chemicals and refrigerant gases and has its factory at Mettur Dam. 3. The present dispute with the respondents has arisen under the provisions of the Customs Act. 4. Under Section 12 of the Customs Act (hereinafter called the Act), duties of Customs shall be levied at such rates as may be specif....
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....e Finance Bill read with Provisional Collection of Taxes Act, 1931. All the provisions of Customs Act relating to exemptions are applicable to all the above three levies. 8. The First Respondent issued a Notification No. 208/88-Cus., dated 29-6-1988 under Section 25(1) of the Customs Act exempting machinery and equipments for generation of electrical power (including generating sets) of capacity 2.5 MW and above but not exceeding 50 MW from basic customs duty as was in excess of 35% ad valorem and wholly from additional duty subject to the following conditions : A. That at the time of clearance, the importer produces a certificate from an officer duly authorised in this behalf by the Director General of Technical Development of the Government of India in the Ministry of Industry or by the Director or Commissioner of Industries of the State Government concerned in the case of firms which are classified as falling in the small scale sector or by any other sponsoring authority concerned referred to in Projects Import Regulations, 1986, as the case may be, to the effect that the goods in respect of which the exemption under this Notification is claimed are required for the purpos....
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....the importer obtains a certificate from the appropriate authority to establish the import of power generating machinery for captive use in its industrial plant, so long as the imports are made before 31-3-1989 such goods are eligible for 35% ad valorem rate of basic customs duty and are totally exempt from additional duty and auxiliary duty of customs. 10. The Petitioner on the basis of the representation made by the First Respondent to the effect that the power generating machinery for captive use will be subject to only 35% customs duty and would be totally exempted from additional duty and auxiliary duty and in view of the growing power shortage in the country approached a foreign supplier in Czechoslovakia, Messrs Transakta, for the purpose of importing power generation equipment of 6500 KW (6.5 MW) capacity. After negotiations with the foreign supplier the Petitioner placed an order for power generation equipment of capacity 6500 KW (6.5 MW) with the foreign supplier on 16-9-1988. Under this purchase order the price of the equipment was fixed at Rs. 3.1 crores CIF Madras Port. The Petitioner thereafter obtained an import licence from the licensing authorities on 02-12-1988 ....
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....en, where the equipment was carried for shipment to India, to ensure that the consignment was put on board STATE OF ORISSA which left the port on 6-2-1989. All these precautions were taken by the Petitioner solely with the object of ensuring that the goods would reach India before 31-3-1989. 13. The Finance Bill, 1989 was introduced in the Parliament on 28-2-89 with effect from 1-3-89. Notfn. No. 208/88 was superseded by Notfn. No. 59/89 and Notfn. No. 159/88 was rescinded by Notification No. 117/89 dated 1-3-1989. Another Notification No. 116/89-Cus., dt. 1-3-89 was issued exempting all goods from the whole of the auxiliary duty of customs levied under the Finance Act, 1988, during the period 1-3-89 to 31-3-89. Notification No. 110/89 Cus., dated 1-3-89 was issued under which an effective rate of 30% ad valorem auxiliary duty was levied on goods covered by Notification No. 59/89 which related to power generation equipment. The effect of these changes made on 1-3-1989 was that the basic customs duty on power generation equipment was reduced to 30% ad valorem while 30% duty was levied as auxiliary duty, thus making a total duty liability at the rate of 60% ad valorem on the goods....
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.... of Notifications No. 208/88 and 159/88 whereas the petitioner would not be entitled to those benefits even though its equipment has arrived in Madras well before 31-3-1989. The petitioner has no adequate, effective alternate remedy for redressal of its grievance since all the authorities who are acting under the statute are bound by the Notifications issued under the statute. Hence it will be futile to approach any of the adjudicating or appellate authorities provided for under the Act to seek justice in this matter. Even CUSTOMS, EXCISE AND GOLD CONTROL APPELLATE TRIBUNAL has held, being creatures of the statute, that they are bound by the notification issued by the Central Government and cannot question their validity. Further, the question of promissory estoppel against the Government is involved and the demand for auxiliary duty is also unconstitutional. Hence the petitioner has no other alternative remedy except to approach this Hon'ble Court under Article 226 of the Constitution of India to quash the demand of the second respondent for auxiliary duty as assessed in Bill of Entry No. 221/89 dated 20-3-1989 on the following among other. GROUNDS A. The demand for auxiliar....
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....sic, additional or auxiliary. It is quite a well known fact that import of any goods into India would take at least 7 to 8 months since a number of formalities have to be complied with before an import could take place. First, a suitable foreign supplier has to be located, terms and conditions for supply of equipment have to be negotiated and Import licence has to be obtained, Letter of credit has to be opened, sufficient time for the supplier has to be given for manufacture and testing of equipment and last but not the least the time for transportation by sea from Europe to India should be taken into account. All these procedural formalities would result in a time of gap of about 7 to 8 months before the goods can actually arrive in India. Apparently these Considerations had weighed on the mind of the first respondent when Notifications No. 208/88 and 209/88 read with Notification No. 159/88 were issued in fixing the validity of this notification till 31-3-1989. The petitioner had also acted diligently in importing the said goods. The first respondent having held out a promise/representation that total exemption from auxiliary duty will be available to the petitioner till 31st Mar....
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....nder that Order for the full period of five years from the date they started production and that new industries set up after the second notification would not be entitled to that benefit as they had noticed curtailment in exemption before they came to set up their industries. Similarly in their present case, the first respondent can deny the benefits of Notification No. 159/88 only to those who had taken steps to import the goods after 1-3-1989. A Division Bench of the Bombay High Court has followed this ratio of the S.C. and has applied it to notification issued under Sec. 25 of the Customs Act in the case of Bharat Commerce and Industries Ltd. v. Union of India reported in 1987 (32) E.L.T. 40 (Bom.). E. It is therefore now well settled Law that any order issued under subordinate legislation will also be subject to rule of promissory estoppel. In the present case the first respondent had held out a promise to the petitioner that all power generation equipment for captive use imported into India before 31-3-1989 would not be subject to auxiliary duty and the petitioner having acted on that representation by placing orders, procuring the goods, the respondent has to make good the....
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.... of equity, justice and fair play. G. The very intention of the first respondent was to encourage industries to set up their own power generation plant so that their reliance on public power distribution system will be reduced and the industries will be able to function to their rated capacity thereby contributing to the national growth. It was with this public interest in mind that the first respondent extended concession to industries who wished to import power generation equipment plants for captive use. The petitioner craves leave of this Hon'ble Court to refer to the historical background and statements of various Minister and Govt. Officials made to the public in this connection. It is not known now how the public interest will be served by suddenly levying auxiliary duty on these goods. While it may be true that interest of revenue will be served it is certain that public interest will not be served by this arbitrary act on the part of the first respondent. Hence the very Notfn. No. 110/89 is not in public interest. H. The act of the first respondent in levying auxiliary duty on power generation equipment imported for captive use will also be violative of Art. 19(l)(g)....