ISPAT ALLOYS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The issue that arises for our consideration in this petition is: "Whether the petitioner is entitled to the benefit of exemption notification issued under Section 25 of the Customs Act, 1962 bearing Notification No. 208/88-Cus., dated 29th June 1988 and No. 159/88-Cus., dated 13th May 1988 in respect of a consignment which arrived in the Port of Bombay after rescinding of the notifications -

(2.) On 29th June 1988, the Government of India in exercise of power conferred upon it under Section 25 of the Customs Act, 1962 issued a Notification No. 208/88-Cus exempting machinery and equipment for generation of electrical power (including generating sets) of capacity of 2.5 MW or above but not exceeding 50 MW, from payment of customs duty in excess of 35% ad valorem for a period upto 31st March 1989. By Notification No. 159/88-Cus. dated 13th May 1988 also issued under Section 25 of the Customs Act, 1962 , the Government of India exempted several goods, which were granted full or partial exemption from customs duty, from payment of auxiliary duty of customs. On 10th September 1988, the petitioner placed orders for supply of two diesel generating sets of 4.3 MW each on Wartsila Diesel AB, Sweden for value of approximately Rs. 3,86,73,175/-. After obtaining necessary licence from DGFT on 17th August 1988, the petitioner opened a letter of credit on 2nd January 1989 in favour of the vendor. The vendor shipped the diesel generating sets in several boxes. The first consignment valued at Rs. 3,02,03,745/- appropriately arrived in the Port of Calcutta on 16th February 1989 and was cleared by the customs authorities applying the concessional rate of customs duty on the basis of exemption notifications referred to above. The balance cargo valued at about Rs. 84,69,430/- was shipped by the vendor from Sweden on 21st February 1989 and a bill of entry was filed on 27th March 1989 at the Port of Bombay claiming benefit of concessional rate of duty as per the exemption Notification No. 208/88-Cus. read with exemption Notification No. 159/88-Cus. The customs authorities, however, declined to clear the goods on payment of concessional duty on the ground that the exemption Notification No. 208/88-Cus. was superseded by Notification No. 59/89-Cus., dated 1st March 1989 and that the Notification No. 159/88-Cus was also rescinded by Customs Notification No. 177/89-Cus., dated 1st March 1989. The petitioner has therefore filed the present petition for a direction to the customs authorities to clear the goods granting benefit to the petitioner of the exemption Notification Nos. 208/88- Cus. and 159/88-Cus.

(3.) Learned counsel for the petitioner submitted that relying upon the representation made by the Central Government in the shape of exemption notifications as above, the petitioner placed orders for importation of the DG sets which attracted concessional rate of customs duty. Clause (2) of the Notification No. 208/88-Cus., dated 29th June 1988 specifically stated that the notification would be valid up to and inclusive of 31st March 1989. The Government was therefore not entitled to withdraw the customs notification before 31st March 1989. Counsel submitted that the doctrine of promissory estoppel applies even in respect of the statutory notifications and therefore the Government was bound by the representation contained in the said notifications on the principle of promissory estoppel. The petitioner had a legitimate expectation that it would be allowed to import the DG sets on the basis of a concessional rate of duty and therefore the respondents were not entitled to withdraw the exemption notifications. In support of his submission, counsel referred to the three decisions of the Supreme Court rendered in (i) Shrijee Sales Corporation V. Union of India, 1997 89 ELT 452, (ii) Dai-ichi Karkaria Ltd . v. Union of India, 2000 119 ELT 516, and (iii) MRF Ltd . v. Assistant Commissioner (Assessment) Sales Tax, 2006 206 ELT 6.