On 4th November 2022, the Supreme Court in a Division Bench comprising of Justice M.R. Shah and Justice Krishna Murari observed that to grant the benefit of an incentive is a policy decision which may be varied and/or even withdrawn. No exporter can claim the incentive as a matter of right. (Chowgule & Company Limited Vs. Assistant Director General of Foreign Trade & Others)
Facts of the case:
Relying upon the original Exim Policy, 1988-91 and acting upon the said policy, the appellant, a recognised trading house (processed iron ore exporters), entered into contract with one NKK Corporation, Japan on 7.2.1990, for export of processed iron ore, which was not an ineligible item in Appendix 12 under the Exim Policy, 1988-91. However, the appellant actually exported the processed iron ore and realized NFE earnings of Rs.52,00,51,848/- for the year 1990-91. The export was made between the period April, 1990 to March, 1991 during the new Exim Policy, 1990-1993. The appellant applied to the Assistant Chief Controller of Imports and Exports for grant of additional licence for value of Rs.6,08,46,000/- against FOB value of export of processed iron ore amounting to Rs.52,00,51,848/- for the year 1990-91. But the same was rejected by the Assistant Chief Controller of Imports and Exports on the ground that there was no provision for grant of additional licence in the then current policy of 1992- 97. In an appeal, the Joint Director General of Foreign Trade remanded the matter to the Assistant Chief Controller of Imports and Exports, again rejecting the application. An appeal was filed before the Joint Director General of Foreign Trade, which was rejected. A second appeal was preferred before the Additional Director General of Foreign Trade which was rejected for the reason that the application for additional licence was time barred. Aggrieved by the same a Writ Petition was filed before the HC which was allowed. This judgment was the subject matter of the appeal filed by the respondent herein. The appeal was allowed and the judgment of the HC in the WP was quashed. Aggrieved by the same, present appeal was filed.
Contentions of the Appellant:
The counsel for the appellant submitted that “The appellant acted upon the Exim Policy 1988- 91 and incurred commercial and financial commitments severely altering its position to its serious detriment. Under the changed Exim Policy, in Appendix 12, “Minerals and Ores” are now declared ineligible inter alia for the purpose of additional licence. Applying the doctrine of promissory estoppel, the appellant shall be entitled to the benefit of grant of additional licence on the export of the “processed iron ore”. While negotiating and agreeing for price with the importer, it factored in the price component, the incentive of additional licence which was in force at the time under the prevalent policy. Denying the benefit of additional licence to the appellant on the export of “processed iron ore” can be said to be discriminatory and violative of Article 14 of the Constitution of India.” The cases of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, Union of India and Others v. Indo-Afghan Agencies Limited, Union of India & Another v. V.V.F. Limited, and State of Uttar Pradesh & Another v. Birla Corporation Limited were referred.
Contentions of the Respondents:
The counsel for the respondents submitted that “the denial of the additional licence is absolutely in consonance with the Exim Policy 1990- 93. The e appellant exported the “processed iron ore” during the Exim Policy 1990-93, which was binding upon the appellant. The appellant actually exported the “processed iron ore” post April, 1990. Under the Exim Policy 1990-93, as per Appendix 12, “processed iron ore” was in the excluded category and in the category of ineligible items. As per the Exim Policy, the additional licences were available only on export in the preceding years of eligible items. The benefit of additional licence was in the form of an incentive and the same cannot be claimed as a matter of right. The principle of promissory estoppel shall not be applicable at all, more particularly when the incentive is withdrawn in the subsequent/new policy. Merely because some benefits might have been given wrongly to some other persons/exporters, the appellant cannot claim parity and pray for the similar benefits.”
Observations and Judgment of the Court:
The hon’ble court observed that “under the circumstances, when the appellant exported the “processed iron ore”, i.e., during the period between April, 1990 to March, 1991, the “Minerals and Iron Ore” as per Appendix 12 were in the list of ineligible items, the appellant is rightly denied the benefit of additional licence. The e appellant had never challenged the new Exim Policy 1990-93. Therefore, in the absence of any challenge to the new Exim Policy 1990-93 under which on export of “Minerals and Iron Ore”, there shall not be the benefit of additional licence, the new Exim Policy 1990-93 shall be applicable. When the new Exim Policy 1990-93 is held to be applicable, appellants cannot be permitted to claim the benefit of additional licence under the old Exim Policy, which was not in existence. To grant the benefit of an incentive is a policy decision which may be varied and/or even withdrawn. No exporter can claim the incentive as a matter of right. Under the circumstances, the doctrine of promissory estoppel shall not be applicable to such a policy decision with respect to incentive, more particularly when it is well within the right of DGFT/appropriate authority/Union to come out with a new Exim Policy. The appellant is entitled to the benefit of additional licence, merely because some others are granted the benefit wrongly, the appellant cannot be permitted to pray for the similar benefits.”
The instant appeal was dismissed stating that the High Court has rightly confirmed the order passed by the authority denying the benefit of additional licence to the appellant.
Case: Chowgule & Company Limited Vs. Assistant Director General of Foreign Trade & Others
Citation: Civil Appeal No. 8225 Of 2009
Bench: Justice M.R. Shah and Justice Krishna Murari
Date: November 04, 2022.
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