Case Note & Summary
The case involves a challenge to the amendment of a customs exemption notification. The respondent, ABP Pvt Ltd, imported a high-speed printing machine in October 2003 and claimed concessional duty under Notification No. 86/2003 dated May 28, 2003, which provided a 5% duty on such machines. However, before the import was completed, the government issued Notification No. 164/2003 on November 11, 2003, which amended the earlier notification by narrowing the description of eligible machinery. Consequently, the respondent's machine no longer qualified for the concessional rate, and duty at 39.2% was demanded. The respondent filed a writ petition before the Calcutta High Court, which set aside the amended notification on the ground that there was no intelligible differentia between the machines covered and those excluded. The Division Bench upheld the single judge's order. The Union of India appealed to the Supreme Court. The Supreme Court allowed the appeal, holding that the power to grant exemption under Section 25(1) of the Customs Act, 1962 includes the power to modify or withdraw the exemption. The court emphasized that such notifications are legislative in character and are not subject to strict judicial review on the ground of intelligible differentia unless they are arbitrary or mala fide. The court found that the amendment was made in public interest to encourage domestic manufacturing and that the respondent had no vested right to claim the benefit of the earlier notification. The court also rejected the application of promissory estoppel against a legislative policy. The appeal was allowed, and the impugned judgment of the High Court was set aside.
Headnote
A) Customs Law - Exemption Notification - Power to Modify - Section 25(1) Customs Act, 1962 - The Central Government's power to grant exemption includes the power to modify or withdraw the exemption. The amendment of a notification is a legislative function and not subject to strict judicial scrutiny on the ground of intelligible differentia unless it is arbitrary or mala fide. (Paras 8-15) B) Customs Law - Judicial Review - Public Interest - Section 25(1) Customs Act, 1962 - The court's role is limited to examining whether the modification is in public interest and not arbitrary. In the absence of any material showing arbitrariness, the court cannot substitute its own view. The High Court erred in applying the test of intelligible differentia to a legislative policy decision. (Paras 16-20) C) Customs Law - Promissory Estoppel - No Vested Right - Section 25(1) Customs Act, 1962 - An importer has no vested right to claim exemption under a notification that has been validly amended before the import is completed. The doctrine of promissory estoppel cannot be invoked against a legislative act. (Paras 21-25)
Issue of Consideration
Whether the Central Government's power under Section 25(1) of the Customs Act, 1962 to grant exemption includes the power to modify or withdraw an exemption notification, and whether such modification is subject to judicial review on grounds of intelligible differentia.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned judgment of the Calcutta High Court, and upheld the validity of the amended notification. The court directed that the respondent is liable to pay customs duty at the rate applicable under the amended notification.
Law Points
- Power to grant exemption includes power to modify or withdraw
- Section 25(1) Customs Act
- 1962
- Judicial review limited to arbitrariness
- Public interest is paramount
- No vested right to exemption
- Doctrine of promissory estoppel not applicable against legislative policy
