CHOWGULE & COMPANY LIMITED versus ASSISTANT DIRECTOR GENERAL OF FOREIGN TRADE & OTHERS on 4 November 2022

CHOWGULE & COMPANY LIMITED

v.

ASSISTANT DIRECTOR GENERAL OF FOREIGN TRADE& OTHERS

(Civil Appeal No. 8225 of 2009)

NOVEMBER 04, 2022

[M. R. SHAH AND KRISHNA MURARI, JJ.]

Export-Import: Indian Foreign Trade Policy – Additionallicence – Benefit of – Appellant-exporter’s claim for grant ofadditional licence under the Exim Policy 1998-91 based on eligibleexport of “processed iron ore” in the years 1990-1991 – Rejectedby the High Court holding that under the amended/new Exim Policy1992-1993, the exported item-“processed iron ore” was an itemspecified in Appendix 12 and as per Appendix 12, the exporteditem “processed iron ore” was ineligible for the purpose of grant ofbenefit of additional licence – On appeal, held: Director Generalof Foreign Trade-DEFT/Union is free to change the Exim Policyand consider from time to time on which items there shall be anincentive and on which items there shall not be any incentive – Togrant the benefit of an incentive is a policy decision which may bevaried and/or even withdrawn – No exporter can claim the incentiveas a matter of right – Under the circumstances, the doctrine ofpromissory estoppel shall not be applicable to such a policy decisionwith respect to incentive – Appellant cannot be allowed the benefitof additional licence on the ground that some others might havebeen granted such benefits de hors the scheme, which otherwise theappellant is not entitled to under the scheme – There cannot be anynegative discrimination which may perpetuate the illegality – Thus,the order passed by the High Court is upheld – Policy decision.

Dismissing the appeal, the Court

HELD: 1.1 The appellant is claiming the benefit of additionallicence on the export of “processed iron ore” exported duringthe Exim Policy 1990-93. It is an admitted position that the“processed iron ore” had been exported during April, 1990 toMarch, 1991. Under the Exim Policy 1990-93, “Minerals andIron Ore” are included in the list of ineligible items. As per Exim

693

A

B

C

DEF

G

H

APolicy 1988-1991, only the export of “unprocessed iron ore” wasineligible to get the benefit of additional licence. However, whenthe new Exim Policy 1990-93 came into existence, the “Mineralsand Iron Ore” are in the list of ineligible items-the appellant hadactually exported “processed iron ore” during the period April,1990 to March, 1991, which was under the regime of new EximBPolicy 1990- 93 and under the new Exim Policy 1990-93, the exportof “Minerals and Iron Ore” are included in the list of ineligibleitems, the appellant has been denied the benefit of additionallicence. At this stage, it is required to be noted that under theExim Policy, the benefit of additional licence which as such wasCin the form of an incentive is available on actual export in thepreceding year and the benefit of such export for the purpose ofadditional licence to the FOB value shall be available in the nextyear. Under the Exim Policy, the benefit of additional licence shallbe available only on actual export in the previous year and thattoo to eligible items only. Under the circumstances, when theDappellant exported the “processed iron ore”, i.e., during theperiod between April, 1990 to March, 1991, the “Minerals andIron Ore” as per Appendix 12 were in the list of ineligible items,the appellant is rightly denied the benefit of additional licence.The appellant had never challenged the new Exim Policy 1990-E93. Therefore, in the absence of any challenge to the new EximPolicy 1990-93 under which on export of “Minerals and Iron Ore”,there shall not be the benefit of additional licence, the new EximPolicy 1990-93 shall be applicable. [Para 5][701-G-H; 702-A-E]

1.2 The appellant is claiming the benefit of additional licence

1.2 The appellant is claiming the benefit of additional licence Funder the Exim Policy 1988-91 on the ground of promissoryestoppel. However, when the new Exim Policy 1990-93 is held tobe applicable under which on export of ‘Minerals and Iron Ore”,there shall not be any benefit of additional licence, the appellantcannot be permitted to claim the benefitof additional licence underthe old Exim Policy, which was not in existence. [Para 6][702-F-GG]

1.3 As regards the submission on behalf of the appellant ondoctrine of promissory estoppel, it is required to be noted thatthe benefit of additional licence was in the form of an incentive.

H

The DEFT/Union is free to change the Exim Policy and considerfrom time to time on which items there shall be an incentive andon which items there shall not be any incentive. To grant thebenefit of an incentive is a policy decision which may be variedand/or even withdrawn. No exporter can claim the incentive as amatter of right. Under the circumstances, the doctrine ofpromissory estoppel shall not be applicable to such a policydecision with respect to incentive, more particularly when it iswell within the right of DGFT/appropriate authority/Union to comeout with a new Exim Policy. Under the circumstances, thesubmission on behalf of the appellant that as the appellant placedthe order with NKK Corporation, Japan on 7.2.1990 when theExim Policy 1988-91 was in force and therefore the appellantshall be entitled to the benefit of additional licence by applyingthe doctrine of promissory estoppel cannot be accepted. Thepolicy and the incentive scheme are very clear. Incentive in theform of an additional licence is on actual export in the previousyear. Therefore, the relevant date shall be the date on which theexport is made. [Para 7][702-G-H; 703-A-C]

1.4 As regards the submission that in case of some othersimilarly situated exporters, the benefit of additional licence hasbeen granted and therefore the appellant is entitled to the benefitof additional licence on the export made between April, 1990 toMarch, 1991 is concerned, merely because some others aregranted the benefit wrongly, the appellant cannot be permittedto pray for the similar benefits. There cannot be any negativediscrimination which may perpetuate the illegality. The appellantcannot be allowed the benefit of additional licence on the groundthat some others might have been granted such benefits de horsthe scheme, which otherwise the appellant is not entitled to underthe scheme. At this stage, it is required to be noted that in fact inthe impugned judgment and order, the High Court has directedto hold an enquiry how the others were granted the benefit.However, unfortunately no further enquiry is held. It is veryunfortunate that despite the High Court’s order, no further enquiryhas been conducted. Be that as it may, once it is held that theappellant is not entitled to the benefit of additional licence onexport of “Minerals and Iron Ore”, the matter ends there and AB

C

D

E

F

G

H

Athe appellant cannot be allowed such benefit, which otherwisethe appellant is held not entitled to. In view thereof, the HighCourt rightly confirmed the order passed by the authority denyingthe benefit of additional licence to the appellant. [Para 8, 9][703- D-H; 704-A]

BUnion of India & Others v. Chowgule & Co. Ltd. andOthers, (2003) 2 SCC 641 : [2003] 1 SCR 543; MotilalPadampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh,(1979) 2 SCC 409 : [1979] 2 SCR 641 ; Union of Indiaand Others v. Indo-Afghan Agencies Limited, (1968) 2SCR 366 : AIR 1968 SC 718; Union of India & AnotherCv. V.V.F. Limited, (2020) 20 SCC 57; and State of UttarPradesh & Another v. Birla Corporation Limited, (2020)20 SCC 320 – referred to.

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal No.8225of 2009.EFrom the Judgment and Order dated 26.06.2008 of the High Courtof Judicature of Bombay at Goa in Writ Petition No.286 of 1996.

Ravindra Shrivastav, Sr. Adv., Sumit Goel, Tanuj Agarwal, AbhijeetShrivastav for M/s Parekh & Co., Advs. for the Appellant.

N. Venkataraman, ASG, Arijit Prasad, Sr. Adv., H. R. Rao, UdaiFKhanna, Ms. Priyanka Das, S. A. Haseeb, V. C. S. Bharti, Raj BahadurYadav, Advs. for the Respondents.

The Judgment of the Court was delivered by

M. R. SHAH, J.G1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 26.06.2008 passed by the High Court of Judicature ofBombay at Goa in Writ Petition No. 286/1996, by which the DivisionBench of the High Court has dismissed the said writ petition by holdingthat the appellant shall not be entitled to the benefit of additional licenceon the export of processed iron ore during the period April, 1990 toHMarch, 1991, the exporter has preferred the present appeal.

2. The facts leading to the present appeal in a nutshell are asunder:

That the appellant is engaged inter alia in the export of processediron ore and is a recognised trading house. Under the Indian ForeignTrade Policy (hereinafter referred to as the ‘Exim Policy’) 1988-1991,there was a provision of ‘additional licence’ and a trading house wouldbe eligible to ‘additional licence’ on the basis of the admissible exports inthe preceding licensing year. Para 212 of the Exim Policy, 1988-1991provided that in considering the eligibility of an exporter for recognitionas a trading house based on Net Foreign Exchange (NFE) earningsfrom export of items specified in Appendix 12 shall not qualify. At therelevant time, Appendix 12 provided that export of “Minerals and ores –unprocessed” would be ineligible for considering the grant of additionallicence. In the year 1990, there was a change in the Exim Policy and theDirector General, Foreign Trade came out with a new policy, namely,Exim Policy, 1990-93. There was an amendment in Appendix 12 and thelist of ineligible items which earlier was “Minerals and ores –unprocessed”, in the new Appendix 12, it was stated to be “Mineralsand ores”.

2.1 It is the case on behalf of the appellant that relying upon theoriginal Exim Policy, 1988-91 and acting upon the said policy, the appellantentered into a contract with one NKK Corporation, Japan on 7.2.1990,for export of processed iron ore, which was not an ineligible item inAppendix 12 under the Exim Policy, 1988-91. However, the appellantactually exported the processed iron ore and realized NFE earnings ofRs.52,00,51,848/- for the year 1990-91. The export was made betweenthe period April, 1990 to March, 1991 during the new Exim Policy, 1990-1993. The appellant applied to the Assistant Chief Controller of Importsand Exports for grant of additional licence for value of Rs.6,08,46,000/-against FOB value of export of processed iron ore amounting toRs.52,00,51,848/- for the year 1990-91.

2.2 Vide letter dated 23.7.1992, the application of the appellantfor grant of additional licence came to be rejected by the Assistant ChiefController of Imports and Exports on the ground that there was noprovision for grant of additional licence in the then current policy of1992-97. In an appeal preferred by the appellant, the Joint Director Generalof Foreign Trade remanded the matter to the Assistant Chief Controllerof Imports and Exports for a fresh adjudication. Vide its order dated AB

C

D

EF

GH

A30.04.1993, the Assistant Chief Controller of Imports and Exports againrejected the said application by observing that the item “iron oreprocessed” exported by the appellant during April, 1990 to March 1991is included in the Appendix 12 of the Exim Policy, 1990-93 and thereforethe same is not eligible for additional licence during the correspondinglicensing period, i.e., 1991-92.B

2.3 The appellant preferred an appeal challenging the order dated30.04.1993 before the Joint Director General of Foreign Trade, whichwas rejected on 2.9.1993. The appellant preferred a second appeal beforethe Additional Director General of Foreign Trade. The Additional DirectorGeneral of Foreign Trade by order dated 05.10.1994 rejected the secondCappeal for the reason that the application for additional licence was timebarred. In the writ petition filed by the appellant, by order dated13.09.1995, the High Court remitted the matter to the Additional DirectorGeneral of Foreign Trade to consider the question of the appellant’seligibility for additional licence or in lieu thereof the appellant is entitledDto 20% premium. After remand, the second appellate authority againdismissed the appeal on the ground that the application filed by the appellantfor grant of additional licence was barred by limitation.

2.4 Aggrieved by the decision of the second appellate authority,the appellant filed a writ petition before the High Court being Writ PetitionENo. 286/1996. The High Court, by judgment and order dated 30.01.2001,allowed the said writ petition and quashed and set aside the order of theAdditional Director General of Foreign Trade dated 12.01.1996 denyingthe benefit of additional licence and directed the department to pay tothe appellant the premium of Rs.1,21,69,200/-. While directing so, theHigh Court observed and held that the appellant was eligible for theFbenefit under the Exim Policy during the period 1991-92 and thereforethere was no justification nor any legal basis for denying the claim on theground of withdrawal of Policy in 1992-93 by public notice dated29.02.1992. In sum and substance, the High Court was of the view thatthe subsequent change in the policy and/or withdrawal of the policy inGthe year 1992-93 shall not be applicable and the appellant shall not bedenied the benefit of additional licence on the aforesaid ground. Thejudgment and order passed by the High Court in Writ Petition No. 286/1996 was the subject matter of appeal before this Court being CivilAppeal No. 5764 of 2001.

H

2.5 By judgment and order dated 04.04.2007, this Court set asidethe order passed by the High Court and remitted the matter to the HighCourt by observing that the point as to whether the appellant was ineligiblefor grant of additional/special licence as per Appendix 12 attached toImport and Export Policy from April 1990 to March 1993 was notexamined either by the High Court or by the first appellate authority andthe high Court failed to consider the effect of Appendix 12 of the Policyof April 1990-March 1993. On remand, the High Court, by the impugnedjudgment and order, has dismissed the writ petition preferred by theappellant by observing that under the amended/new Exim Policy 1992-1993, the exported item – “processed iron ore” was an item specified inAppendix 12 and as per Appendix 12, the exported item “processed ironore” was ineligible for the purpose of grant of benefit of additional licence.

2.6 Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court, the appellant – exported has preferredthe present appeal.

3. Shri Ravindra Shrivastava, learned Senior Advocate hasappeared on behalf of the appellant and Shri N. Venkataraman, learnedAdditional Solicitor General of India has appeared on behalf of therespondents.

3.1 Shri Ravindra Shrivastava, learned counsel appearing on behalfof the appellant has vehemently submitted that the issue essentially iswith regard to the appellant’s claim for grant of additional licence underthe Exim Policy 1998-91 based on eligible export of “processed ironore” in the preceding years.

3.2 It is submitted that the appellant acted upon the Exim Policy1988-91 and incurred commercial and financial commitments severelyaltering its position to its serious detriment. The appellant exported the“processed iron ore” in the year 1989-91.

3.3 It is submitted that as per the decision of this Court in the caseof Union of India & Others v. Chowgule & Co. Ltd. and Others,(2003) 2 SCC 641, the appellant was entitled to grant of additionallicence, vis-à-vis, the export of “processed iron ore” made during theyear 1989-90. It is submitted that however when the appellant wasengaged in making export of “processed iron ore” in the subsequentyear, there was a change in the policy before the expiry of period ofthree years during which 1988-91 policy was solemnly declared to remain A

B

C

D

E

F

G

H

Ain force and the same came to be substituted by Exim Policy 1990-93. Itis submitted that under the changed Exim Policy, in Appendix 12,“Minerals and Ores” are now declared ineligible inter alia for the purposeof additional licence. It is submitted that however as the appellant hadalready acted upon the Exim Policy 1988-91 and on 7.2.1990, it enteredinto an agreement with NKK Corporation, Japan and thereafter itBexported “processed iron ore” worth Rs. 52 crores of foreign exchangeearnings during April, 1990 to March, 1991, the appellant shall be entitledto the benefit of grant of additional licence as claimed under the EximPolicy, 1988-91.

3.4 It is further submitted that applying the doctrine of promissoryCestoppel, the appellant shall be entitled to the benefit of grant of additionallicence on the export of the “processed iron ore”. It is submitted thatwhile negotiating and agreeing for price with the importer, it factored inthe price component, the incentive of additional licence which was inforce at the time under the prevalent policy. It is submitted that thus, allDthe elements for attracting principles of promissory estoppel are present.

3.5 It is further submitted that in case of several others similarlysituated exporters, the benefit of additional licence was granted. Thatthe action of Director General of Foreign Trade denying the benefit ofadditional licence to the appellant on the export of “processed iron ore”Ecan be said to be discriminatory and violative of Article 14 of theConstitution of India. Heavy reliance is placed upon the decisions of thisCourt in the case of Motilal Padampat Sugar Mills Co. Ltd. v. Stateof Uttar Pradesh, (1979) 2 SCC 409 (para 24); Union of India andOthers v. Indo-Afghan Agencies Limited, (1968) 2 SCR 366 = AIR1968 SC 718; Union of India & Another v. V.V.F. Limited, (2020)F20 SCC 57; and State of Uttar Pradesh & Another v. BirlaCorporation Limited, (2020) 20 SCC 320 on promissory estoppeland on the submission that no withdrawal is permissible unless it is justified.

4. Shri N. Venkataraman, learned ASG appearing on behalf ofthe respondents, while supporting the impugned judgment and orderGpassed by the High Court and while supporting the orders passed by theDirector General, Foreign Trade, denying the benefit of additional licenceto the appellant, has vehemently submitted that the denial of the additionallicence is absolutely in consonance with the Exim Policy 1990-93. It issubmitted that admittedly the appellant exported the “processed iron ore”Hduring the Exim Policy 1990-93, which was binding upon the appellant.

It is submitted that the appellant actually exported the “processed ironore” post April, 1990. It is submitted that under the Exim Policy 1990-93,as per Appendix 12, “processed iron ore” was in the excluded categoryand in the category of ineligible items. It is submitted that as per theExim Policy, the additional licences were available only on export in thepreceding years of eligible items.

4.1 Now so far as the submission on behalf of the appellant onpromissory estoppel is concerned, it is submitted that the benefit ofadditional licence was in the form of an incentive and the same cannotbe claimed as a matter of right. It is submitted that being a policy decision,it is always open to the Department/DGFT to come out with a modified/fresh/new Exim Policy. It is submitted that therefore the principle ofpromissory estoppel shall not be applicable at all, more particularly whenthe incentive is withdrawn in the subsequent/new policy. It is submittedthat therefore as rightly observed by the High Court, where the appellantis found to be ineligible to get the benefit of additional licence on theexport made during the new Exim Policy, 1990-93, the appellant shallnot be entitled to the benefit of additional licence.

4.2 Now so far as the submission on behalf of the appellant thatsome other similarly situated exporters are granted the benefit of additionallicences is concerned, it is submitted that there cannot be any negativediscrimination pleaded and claimed. It is submitted that merely becausesome benefits might have been given wrongly to some other persons/exporters, the appellant cannot claim parity and pray for the similarbenefits. Once, it is held that the appellant is not entitled to additionallicence on export of “processed iron ore”, the appellant shall not beentitled to the benefit of additional licence as claimed, which otherwiseis not entitled to on merits.

4.3 Making the above submissions, it is prayed to dismissed thepresent appeal.

5. We have heard learned counsel for the respective parties atlength.

At the outset, it is required to be noted that the appellant is claimingthe benefit of additional licence on the export of “processed iron ore”exported during the Exim Policy 1990-93. It is an admitted position thatthe “processed iron ore” had been exported during April, 1990 to March,1991. It is to be noted that under the Exim Policy 1990-93, “Minerals A

B

C

D

E

F

G

H

Aand Iron Ore” are included in the list of ineligible items. As per EximPolicy 1988-1991, only the export of “unprocessed iron ore” was ineligibleto get the benefit of additional licence. However, when the new EximPolicy 1990-93 came into existence, as observed hereinabove, the“Minerals and Iron Ore” are in the list of ineligible items – the appellanthad actually exported “processed iron ore” during the period April, 1990Bto March, 1991, which was under the regime of new Exim Policy 1990-93 and as observed hereinabove under the new Exim Policy 1990-93,the export of “Minerals and Iron Ore” are included in the list of ineligibleitems, the appellant has been denied the benefit of additional licence.

At this stage, it is required to be noted that under the Exim Policy,Cthe benefit of additional licence which as such was in the form of anincentive is available on actual export in the preceding year and thebenefit of such export for the purpose of additional licence to the FOBvalue shall be available in the next year. Under the Exim Policy, thebenefit of additional licence shall be available only on actual export inDthe previous year and that too to eligible items only. Under thecircumstances, when the appellant exported the “processed iron ore”,i.e., during the period between April, 1990 to March, 1991, the “Mineralsand Iron Ore” as per Appendix 12 were in the list of ineligible items, theappellant is rightly denied the benefit of additional licence. At this stage,it is required to be noted that the appellant had never challenged the newEExim Policy 1990-93. Therefore, in the absence of any challenge to thenew Exim Policy 1990-93 under which on export of “Minerals and IronOre”, there shall not be the benefit of additional licence, the new EximPolicy 1990-93 shall be applicable.

6. The appellant is claiming the benefit of additional licence underFthe Exim Policy 1988-91 on the ground of promissory estoppel. However,when the new Exim Policy 1990-93 is held to be applicable under whichon export of ‘Minerals and Iron Ore”, there shall not be any benefit ofadditional licence, the appellant cannot be permitted to claim the benefitof additional licence under the old Exim Policy, which was not in existence.G

7. Now so far as the submission on behalf of the appellant ondoctrine of promissory estoppel is concerned, it is required to be notedthat the benefit of additional licence was in the form of an incentive. TheDEFT/Union is free to change the Exim Policy and consider from timeto time on which items there shall be an incentive and on which itemsHthere shall not be any incentive. To grant the benefit of an incentive is a policy decision which may be varied and/or even withdrawn. No exportercan claim the incentive as a matter of right. Under the circumstances,the doctrine of promissory estoppel shall not be applicable to such apolicy decision with respect to incentive, more particularly when it iswell within the right of DGFT/appropriate authority/Union to come outwith a new Exim Policy. Under the circumstances, the submission onbehalf of the appellant that as the appellant placed the order with NKKCorporation, Japan on 7.2.1990 when the Exim Policy 1988-91 was inforce and therefore the appellant shall be entitled to the benefit ofadditional licence by applying the doctrine of promissory estoppel cannotbe accepted. The policy and the incentive scheme are very clear.Incentive in the form of an additional licence is on actual export in theprevious year. Therefore, the relevant date shall be the date on whichthe export is made. Under the circumstances, the decisions relied uponon behalf of the appellants on the principle of promissory estoppel shallnot be of any assistance to the appellant and shall not be applicable at allon the facts of the case on hand.

8. Now so far as the submission on behalf of the appellant that incase of some other similarly situated exporters, the benefit of additionallicence has been granted and therefore the appellant is entitled to thebenefit of additional licence on the export made between April, 1990 toMarch, 1991 is concerned, merely because some others are granted thebenefit wrongly, the appellant cannot be permitted to pray for the similarbenefits. There cannot be any negative discrimination which mayperpetuate the illegality. The appellant cannot be allowed the benefit ofadditional licence on the ground that some others might have been grantedsuch benefits de hors the scheme, which otherwise the appellant is notentitled to under the scheme. At this stage, it is required to be noted thatin fact in the impugned judgment and order, the High Court has directedto hold an enquiry how the others were granted the benefit. However,unfortunately no further enquiry is held. It is very unfortunate that despitethe High Court’s order, no further enquiry has been conducted. Be thatas it may, once it is held that the appellant is not entitled to the benefit ofadditional licence on export of “Minerals and Iron Ore”, the matter endsthere and the appellant cannot be allowed such benefit, which otherwisethe appellant is held not entitled to.

9. In view of the above and for the reasons stated above, theHigh Court has rightly confirmed the order passed by the authority AB

C

D

E

F

G

H

Adenying the benefit of additional licence to the appellant. We are incomplete agreement with the view taken by the High Court. The appealdeserves to be dismissed and is accordingly dismissed. No order as tocosts.

BNidhi Jain

Appeal dismissed.

C

D

E

F

G

H