M/S. LARSEN & TOUBRO LTD. versus UNION OF INDIA AND ORS.

Citation: [2005] 1 S.C.R. 533 · Decided: 18-01-2005 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Dismissed

Judgment (excerpt)

M/S. LARSEN & TOUBRO LTD. 
A 
v. 
UNION OF INDIA AND ORS. 
JANUARY 18, 2005 
[ASHOK BHAN AND A.K. MATHUR, JJ.] 
B 
c· 
Export contracts-International Price Reimbursement Scheme (IPRS)-
Export Import Policy-Para 190(g)-Unit located at Free Trade Zone (FTZ) 
obtained export order of engineering goods in 1986-Raw Material of steel 
procured from domestic sources at prevailing domestic price-Claim for 
reimbursement of the difference in prices of indigenous steel and imported 
steel as per the terms of IP RS-Entitlement of-Held: IPRS was extended to 
units located in FTZ for the first time in 1991 provided it does mt amount to 
'deemed export'-Further, supplies of raw materials from Domestic Tari.ff 
Area to units in FTZ is 'deemed exports', thus unit cannot claim benefit under D 
IPRS-Furthermore the unit not entitled to invoke promissory estoppel since 
'-
it failed to show that it acted on a representation made by the Government to 
its detriment-Also the unit failed to produce precise data or any data 
whatsoever in support of its plea-Promissory estoppel-Administrative Law. 
Appellants' units are located in the Free Trade Zone (FTZ). It E 
obtained an export order in the year 1986 for construction of two steel 
bridges in Malaysia. Government of India approved the appellant's project 
and fabrication of steel bridges at its unit subject to the condition that 
there should be maximum utilization of indigenous steel as raw material 
and any import of steel was to be done only after taking approval of the F 
working group. Appellant procured its requirement of steel from domestic 
sources at the then prevailing domestic prices determined by Joint Plant 
Committee and fabricated steel bridges at its unit and exported them. 
Appellant then filed a claim for reimbursement of difference in the price 
of indigenous steel and imported steel as per the terms of International 
Price Reimbursement Scheme (IPRS) formulated by Government of India G 
whereby Indian Exporters of engineering goods were to be supplied steel 
required by them for their export contracts at international price w.e.f. 
9.2.1981. Government of India rejected the claim. Appellant filed writ 
petition. Single Judge of High Court allowed the claim. In appeal, the 
533 
H 
+ 
534 
SUPREME COURT REPORTS 
[2005] I S.C.R. 
A Division Bench held that the appellant was not entitled to claim the benefit 
~ 
of reimbursement under IPRS as the raw material procured by appellant 
from domestic sources amounted to 'deemed export'. Hence the present 
appeal. 
B 
Appellant company contended that IPRS was introduced by the 
Government of India to enable the Indian Exporters of engineering goods 
to compete in the global market; that the appellant's claim for such 
reimbursement could not be rejected without valid and proper reasons 
by treating the physical export made by the appellant to Malaysia with 
the input of raw material of steel procured from domestic sources as a 
c "deemed export"; that the concept of "deemed export" was a legal fiction 
incorporated in the Import Export Policy with a view to extend the export 
benefits to the suppliers of indigenous steel to domestic area; that since 
the supplies made from the OT A were not made at international price, 
these units will not be entitled to claim import replenishment benefits for 
such supplies; and that since the appellant had purchased the steel at a 
D higher price from the domestic market at the instance of the Working 
Group and on the assurance given that he would be reimbursed the 
difference between the domestic price and the international price, the 
_, 
Government is estopped from denying the benefit of reimbursement of the 
differential price under IPRS. 
E 
Respondent-Union of India contended that IPRS was extended to the 
units situated in FTZ in year 1991 with the rider that IPRS will not be 
admissible for deemed exports, as such the benefits of IPRS cannot be 
claimed for export effected in 1985-86; that even on assuming that IPRS 
was applicable, it is evident from the terms of the Scheme itself that it 
F did not cover contracts for "deemed exports"; and that the appellant is 
not entitled to invoke the equitable rule of promissory estoppel. 
Dismissing the appeal, the Court 
HELD: I.I. The units located in the Free Trade Zone (FTZ) are 
G entitled to certain facilities and incentives but the International Price 
Reimbursement Scheme (IPRS) was not extended to the units located in 
FTZ. Appell

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