DAL-ICHI KARKARIA LTD. versus UNION OF INDIA AND ORS.

Citation: [2000] 2 S.C.R. 1254 · Decided: 11-04-2000 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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DAl-ICHI KARKARIALTD. 
v. 
UNION OF INDIA AND ORS. 
APRIL 11, 2000 
[S. RAJENDRA BABU AND R.C. LAHOTI, JJ.] 
Customs Act, 1962 : 
Sections 12 and 25( 1 )-Exemption Notification-Withdrawal of-Before 
period of expiry-Judicial rnview of-Notification No. 210182 dated 10.9.1982 
(as amended on 20.9.1983) exempted all raw materials and components im-
parted for manufacture of goads to be supplied ta ONGC from payment of 
customs duty and additional duty up ta 10.9.1987. However, Notification No. 
513186 dated 30.12.1986 rnstricted such exemption only to the extent in excess 
of25% ad valarnm-Validity of-Held: Such rnduction is not based on relevant 
factors and does not sub-serve public policy-Hence, Notification No. 210182 
is effective till 10.9.1987. 
Section 25( 1 )-Exemption Notification-Withdrawal of-In public in-
terest-Beforn period of expiry-Doctrine of promissory estappel-Applica-
bility "of-Held : Nat applicable if the change of Government policy is made 
in public interest. 
Section 159-Notification-Laying of-Before Parliament-Judicial 
rnview-Scope of-Held : Does not make any substantial differnnce ta the 
judicial rnview of the notification. 
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Administrative Law : 
Administrative actian-Discrntianary power-Exercise of-Jn public 
internst-Held: Should be exercised in a rnasonable way in accordance with 
the spirit of the Constitution-Constitution of India, 19 50. Art. 14. 
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Doctrines : 
Doctrine of Promissory Estoppel-Applicability of 
Respondent by Notification No. 210/82 date 10.9.1982 (as amended 
by Public Notice dated 20.9.1983) issued under Section 25(1) of the Cus-
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toms Act, 1962 exempted from payment of customs duty and additional 
. 
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DAI-ICHI KARKARIA LTD. v. U.O.I. 
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duty of customs up to 10.9.1987 on all raw materials and components 
imported for the manufacture of goods to be supplied to various organisa-
tions including ONGC. The respondent by another Notification No. 513/86 
dated 30.12.1986 exempted raw materials and components required for 
the manufacture of the goods to be supplied to ONGC from customs duty 
in excess of 25 % ad valorem subject to certain conditions. ONGC and 
certain other organisations. were omitted from Notification No. 210/82 
dated 10.9.1982 by a Notification No. 517/86 dated 30.12.1986. As a result 
thereof the appellant who was a manufacturer and supplier of certain 
goods to ONGC in connection with oil exploration viz. Flow Improver 
under the trade name ''Daitrolite" became liable to pay duty to the extent 
of 25% for the period between 30.12.1986 and 10.3.1987. The appellant's 
writ petition challenging the action of the respondent was dismissed by the 
High Court. Hence this appeal. 
On behalf of the appellant-assessee it was contended that public 
interest did not demand the variation during the period the exemption was 
in force by Notification No. 210/82. 
On behalf of the respondent-Revenue it was contended that imposi-
tion of a nil rate of duty on the import of raw materials and components 
could lead to misuse thereof; that the administrative requirements as also 
the cost of the saving/earning of foreign exchange in the economy (which 
was about 35 % ) were also taken consideration; and that it was felt neces-
sary to exclude ONGC from the scope of Notification No. 210/82 and to 
prescribe a separate slab of duty of 25 % in respect of such imports in 
terms of Notification No. 513/86. 
Allowing the appeal, this Court 
HELD : 1.1. The law is now well settled that even in respect of 
exemptions that may have been made by the Government the doctrine of 
promissory estoppel will not be applicable if the change in the stand of the 
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Government is made on account of public policy. [1260-C-D] 
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Kasinka Trading v. Union of India, (1995] 1 SCC 27 4 and Shrijee Sales 
Corpn. v. Union of India, [1997) 3 SCC 398, relied on. 
1.2. In the present case, the only public interest disclosed by the 
Revenue cannot stand close scrutiny because the appeJlant could not 
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SUPREME COURT REPORTS 
[2000] 2 S.C.R. 
misutilise the exemption granted inasmuch as the appellant is obliged only 
to import goods for the purpose of supplying them to O.N.G.C. and the 
licence issued under the policy also clearly reflects the export obligation 
imposed on the appellant and the finished product Daitrolite manufac-
tured. From raw materials imported under the licence is a highly special-
ised product and could be sold
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