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PETITIONER: S.B.INTERNATIONAL LIMITED ETC.

       Vs.

RESPONDENT: ASSTT. DIRECTOR OF GENERAL OF F.T. & ORS.ETC.

DATE OF JUDGMENT:       24/01/1996

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) KIRPAL B.N. (J)

CITATION:  1996 SCC  (2) 439        JT 1996 (1)   588  1996 SCALE  (1)576

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T B.P.JEEVAN REDDY, J.      Leave granted.      With a  view to  encourage exports,  the Government  of India issued  the "Export and Import Policy (Ist April, 1992 and 31st  March, 1997)"  introducing  inter  alia  a  scheme called "Duty  Exemption Scheme"  contained  in  Chapter-VII. Under this  scheme, imports  of  duty  free  raw  materials, components,  intermediates,   consumables,   parts,   spares including mandatory  spares and  packing materials  required for the  purpose of  export production  could  be  permitted "subject  to   the  fulfillment   of  a  time  bound  export obligation and  value addition as may be specified". Advance licences could  be based on either value or quantity: it was for the  exporter to  apply either for a value based advance licence or  a quantity-based  advance licences [vide Clauses 47  and   48].  Clause   49  in  Chapter-III  sets  out  the particulars to  be mentioned  in the advance licence. One of the particulars  to be  mentioned is "(d) the value addition in accordance with the standard Input-Output norms published by means  of a  public Notice  or, in  respect of  items for which such  norms have not been published, value addition as may be  specified by  the competent  authority."  Clause  52 expressly provides that "the Chief Controller of Imports and Exports may,  on the recommendation of the Advance Licensing Committee (ALC)  modify the  norms or  prescribe  additional norms." Clause  59 prescribes  the eligibility  for applying for an  advance licence.  It says, "any merchant exporter or manufacturer exporter  who holds  an Importer-Exporter  Code number, a specific export order/letter of credit and is in a position to  realise the export proceeds in his own name may apply for  duty free  licences." Clause  60 prescribes  that "value addition  norms, as  specified by  means of  a Public Notice issued  in this  behalf, shall  apply  to  duty  free licences". Clause  63 provides  that a  licence issued under

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the said  scheme shall  specify the  export obligation which has to  be fulfilled  within the  period specified  therein. Clause 66 provides that "Exports/supplies made from the date of receipt  of an  application  under  this  scheme  by  the licensing authority  may be  accepted towards  discharge  of export obligation...".  (Clause 66 has been amended later in 1993 and 1994. We are, however, concerned with the unamended Clause 66.)      On 31st  March, 1992,  a public  notice was  issued, as contemplated by  Clauses 49(d)  and 60  specifying the value addition at  1000 percent  in the  case  of  "frozen  marine products packed in polythene bags". On September 25, 1992, a change was  effected in  the value addition norm- instead of 1000 percent, it became 1900 percent.      The  appellant   (we  shall   be  referring   to   S.B. International Limited  as the  appellant and  the  Assistant Director General  of Foreign  Trade and  Union of  India  as respondents) is engaged in the export of marine products. It entered into  six contracts  with certain  foreign buyers to supply marine products. These contracts were entered into on 27th May, 4th June, 10th June, 22nd June, 26th June and 27th June, 1992.  In respect  of these  export  commitments,  the appellant made five applications for advance licences, i.e., on 29th  May, 18th  June, 24th  June,  24th  June  and  15th September, 1992.  [The last  mentioned application,  we  are told, was  in respect  of Contracts 5 and 6 mentioned above. We are also told that the value of the last two contracts is very substantial  as compared to the value of the first four contracts.] The  appellant says  that by September 25, 1992, the  export   obligation  concerned   in  the   first  three applications was  fully discharged whereas in respect of the fourth application,  it was  fulfilled to  the extent of 81% and in  the case  of the  last mentioned application, it was fulfilled to  the extent  of 21%.  The advance licences were not issued by September 25, 1992. On that date, a change was effected,  as   aforesaid,  in  the  value  addition  norms, enhancing the  value addition norm to 1900 percent from 1000 percent. Licences  were issued  according to  this  enhanced value  addition   norm  in  February,  1993.  The  appellant protested  against  application  of  revised/enhanced  value addition norm  on the  ground that  since it had applied for advance licences  prior to  September 25,  1992, the  change brought about  on and  with effect from the said date has no application and  that its  applications ought to be governed by the  value addition  norm in force prior to September 25, 1992.  Finding   no  response   from  the   authorities,  it approached  the  Calcutta  High  Court  by  way  of  a  writ petition.      A  learned  Single  Judge  allowed  the  writ  petition [Matter No.3152  of 1993]  upholding the  contention of  the appellant. The respondents preferred a Letters Patent Appeal against the  decision  of  the  learned  Single  Judge.  The Division  Bench  dismissed  the  appeal  but  with  a  small alteration in  the relief  granted. The  Division Bench held that the  appellant shall  be entitled  to advance  licences according to  pre-revised norm  with respect  to the  actual exports effected by it before September 25, 1992 but not for the exports  effected thereafter.  Aggrieved by the decision of Division  Bench, both  the appellant  and the  State have filed these  appeals, insofar  as it  went against them. The only question  in the  appeals is  whether the  appellant is entitled to  advance licences  on the  basis  of  the  value addition norm  obtaining prior  to September 25, 1992 on the ground that it had applied therefor prior to the said date.      Sri P.V.Kapoor,  learned  counsel  for  the  appellant,

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submitted that  the Export  and Import  Policy devising  the Duty Exemption  Scheme is  statutory in  nature, having been issued under  Section 3  of the  Export and Import (Control) Act, 1947.  Applications for  advance licences  can be filed under  this   Scheme  even  before  effecting  the  exports, subject, of  course, to the obligation to effect the exports in  the   prescribed  value.   Once   the   appellant   made applications for  issue of advance licences, a right accrued to it  to obtain  the licences in accordance with the policy in vogue  on that  date. Any subsequent change in the policy cannot defeat  such a  vested right.  Learned  counsel  also relied upon  the rule  of promissory  estoppel. He submitted that the  appellant had entered into export commitments at a particular price  keeping in  view  the  Export  and  Import Policy in  vogue on  that date,  the appellant  knew that as against the  export commitments  undertaken by him, he would be entitled  to duty  free advance  licences of a particular value: the  price agreed  between him  and the foreign buyer was arrived  at bearing  the said  consideration in mind: if the Government  is permitted  to suddenly  change the  value addition norm  to the  prejudice of  the appellant, it would suffer grievous  losses - submitted the learned counsel. Yet another submission  urged by the learned counsel is that the authorities cannot  take advantage of their own wrong, viz., the delay  in issuing  the advance  licences.  If  they  had issued the licences applied for prior to September 25, 1992, the appellant would have obtained licences of a higher value in accordance  with the  then existing  value addition norm. Merely because  the authorities have delayed the issuance of licences,  they   cannot  apply  the  revised  norm  to  the prejudice of the appellant, especially when the appellant is in no  way  responsible  for  the  said  delay.  Sri  Kapoor submitted that  the appellant  should be  held  entitled  to advance licences  not merely for the actual exports effected by it  before September  25, 1992 but for the whole value of the export  contracts entered  into by it. He submitted that the appellant  has since  discharged the  export  obligation under the said six contracts fully.      Sri A.Subba Rao, learned counsel for the Union of India , on  the other  hand, submitted  that  mere  filing  of  an application does  not confer  any right  much less  a vested right upon  the applicant  for the  issuance of  an  advance licence. He submitted that no one has a fundamental right to import and  that the  said right depends upon the policy for the time  being in force. The policy in vogue on the date of issue  of  licences  alone  governs  the  licences.  Learned counsel further  submitted that  there is no allegation much less any  finding either  by the  learned Single Judge or by the Division  Bench that  the authorities  are guilty of any deliberate or  undue delay  in  issuing  the  licences.  The issuance of  these licences  is not a mechanical or a formal matter. The  authorities have  to verify  the correctness of the various facts stated in the application and also have to satisfy  themselves   that  the   applicant  satisfies   the requirements of  the Scheme  and other applicable provisions of law before the licences are issued.      The first question in these appeals is whether a vested right accrued  to the  appellant  for  issuance  of  advance licences as per the value addition norm in vogue on the date of filing  of the said applications the moment it made those applications and  whether any  subsequent change  in  policy effected before  the issuance of licences, is not applicable to such  licences. For  answering this  question, one has to look to  the policy  itself, the  material clauses  of which have already been set out. The said provisions make it clear

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that the  object behind the scheme is to enable the exporter to import  raw materials,  components etc.  required for the purpose of  producing goods  for export.  It is  a  facility provided by the Government - an incentive. There is no right to advance  licence apart  from the policy. No citizen has a fundamental right  to import, much less import free of duty. By granting  the advance  licence, the  Licensing  authority tells the  licensee -  "I am  permitting you  to import  raw material, components  etc. of  a particular  value  free  of duties but  you must  export goods  of  a  particular  value [determined as  per value addition norm in vogue on the date of licence]  within a particular date. If you fail to do so, you will  be liable  to levy  of penalties  and other action according to  law." The  duty free  import of  raw materials etc. is  permitted to  enable the exporter to sell his goods abroad  at   a  more  competitive  price,  thereby  fetching precious foreign exchange for the country. Mere making of an application does not create any right in the applicant since he has  no pre-existing  right to such licence. His right is only that  which is given by the Policy. The situation could have been  different if  the Policy  had said  that a person exporting goods  of a  particular value shall be entitled to an import licence of a particular value: in such a case, the export of  goods can  be said  to  create  a  right  in  the applicant to  get an  import licence of the specified value. Here is  a case,  where one has to ask for an import licence promising to  export goods  of a  particular value  within a particular time. It is difficult to appreciate how can it be said in  such a situation that mere filing of an application creates a  vested legal  right to obtain a licence according to the  value addition  norm in  vogue on  the date  of  the application. It  is the date of licence that is relevant and not the date of application therefor. It is obvious that the norm (value  addition norm) in vogue on the date of grant of licence shall  govern the  licence. The  mere fact  that the authorities have  a discretion  to  take  into  account  the exports made  after the  date  of  application  for  advance licences makes  no difference to this position: it is in the nature of  yet another  concession. What is relevant is that the licence  granted under  Chapter-VII of  the Policy is an advance licence. It is granted in advance of export - rather to enable  the export. The theory of a vested right accruing to the  applicant to get a licence as per the norms in force on the  date of  application  is  inconceivable  in  such  a situation - unless, of course, the policy itself says so.      It should be noticed that grant of licence is neither a mechanical exercise  nor a  formality.  On  receipt  of  the application, the  authorities  have  to  satisfy  themselves about the  correctness of  the contents  of the application. They also  have to  satisfy themselves  that the application satisfies all  the requirements  of the scheme and the other applicable provisions  of law,  if any.  In a  country  like ours, where  abuse of such facilities is rampant, reasonable time has  to be  afforded to  the authorities to process the application. [What  is a reasonable time, of course, depends on the  facts of  each case.  No hard  and fast limit can be prescribed.] It  is only after appropriate verification that the licence is granted.      We are,  therefore, of  the opinion that the contention that a  vested right accrues to an applicant for issuance of advance licence  on the  basis of  the norm obtaining on the date of  application is  unacceptable. The  Scheme  and  the context militate  against the  contention. The fact that the policy is statutory in nature (delegated legislation) has no relevance on  the question  at issue.  It would  be wrong to

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equate the filing of an application for advance licence with the filing  of a  suit where  it is held that appeal being a substantive right, the right of appeal inhering in the party on the  date of filing of the suit cannot be taken away by a subsequent change in law.      So far  as  the  argument  of  promissory  estoppel  is concerned, it  is equally  unsustainable in  the  facts  and circumstances of  the case.  Having regard  to the nature of the advance  licence - import first and export later - there is no room for this argument. The discretion inhering in the authority to  take into  consideration the  exports effected after the  date of  filing of  the application  for  advance licence does  not detract  from its  essential character, as explained hereinabove.  We may  also mention that no precise date has  been furnished  by the appellant in support of the said plea.  In  the  absence  of  such  date,  the  plea  of promissory estoppel  is misconceived.  The appellant  has to establish  the   various  ingredients   of  this   rule,  as enumerated by  this Court  in Motilal  Padampat Sugar  Mills Co.Ltd. v.  State of  Uttar Pradesh (1979 (2) S.C.R.641) and other subsequent  decisions. It  is not  a pure  question of law.      Now, coming  to the  argument of the authorities taking advantage of  their own  wrong, viz.,  delay in  issuing the advance licences,  it  may  be  noticed  that  there  is  no allegation/averment  in   the   writ   petition   that   the authorities have  deliberately delayed  the issuance  of the advance  licences.   We  have  mentioned  hereinbefore  that issuance of  these licences  is not  a formality  nor a mere ministerial function  but that  it requires due verification and formation  of satisfaction as to compliance with all the relevant provisions.  In this  case,  the  applications  for advance licence  were made on 29th May, 18th June, 24th June (two applications) and 15th September, 1992. The application of 15th  September, 1992  relates to  two contracts  of much higher value.  The change  in policy  was on  September  25, 1992, i.e.,  within a  few days  of  the  last  application. Without a  doubt, these  applications have to be disposed of within a  reasonable time  - indeed with due expedition. But in the  absence of  any plea  in  this  behalf,  it  is  not possible to  hold that  there  has  been  any  undue  delay, procrastination  or   deliberateness  on  the  part  of  the authorities in  issuing the  licences. There  is no  finding either by  the leaned  Single Judge or the Division Bench to this effect.  In such  a situation,  the mere  fact that the appellant is  likely to  suffer some  loss  or  prejudice  - assuming that  the said plea is factually true - cannot be a ground either  for invoking  the rule of promissory estoppel or to  otherwise bind  the Government to apply and adopt the value addition  norm in force on the date of application. In this context,  the observations of this Court in Pankaj Jain Agencies v.  Union  of  India  (1994  (5)  S.C.C.  198)  are apposite. M.N.  Venkatachaliah, CJ., speaking for the Court, held :      "The third  and the  last submission  is      that the  sudden and  sharp increase  of      duty steeply  puts up  the  petitioner’s      liability  from   Rs.  1,84,341  to  Rs.      6,42,065  on   these  consignments   and      constitutes an  unreasonable restriction      on the  petitioner’s fundamental  rights      under   Article    19(1)(g)    of    the      Constitution. A  tax, in  particular, in      the nature  of duties  of customs is not      per se  violative of  Article  19(1)(g).

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    Mere excessiveness  of a  tax is not, by      itself, violative  of Article  19(1)(g).      This question  cannot be  divorced  from      the nature of the right to import. There      is  no   absolute  right   much  less  a      fundamental  right   to  import.   [See:      Deputy   Assistant    Iron   and   Steel      Controller    v.     L.     Manickchand,      Proprietor,   Katrella   metal   Corpn.,      Madras (1972  (3) S.C.C.324)  and Andhra      Industrial Works  v. Chief Controller of      Imports  (1974   (2)  S.C.C.   348);  J.      Fernandes  &   Co.   v.   Deputy   Chief      Controller of  Imports and  Exports 1975      (1) S.C.C.  716). That apart, no factual      foundations are  laid to demonstrate how      this  impost   has  had  the  effect  of      destroying  the  petitioner’s  right  to      carry  on  a  trade  or  business.  This      contention also has no merit."      Sri A.  Subba Rao,  learned counsel  for the  Union  of India, brought  to our  notice certain  decisions to which a brief reference  would be in order. In Deputy Assistant Iron and Steel Controller v. L. Manickchand, Proprietor, Katrella Metal  Corporation,   Madras  (1972  (3)  S.C.C.  324),  the respondent applied  for an  import licence in December, 1968 for importing stainless steel for the licensing period 1968- 69. His  registration certificate showed that he was engaged in the  manufacture of hospital and surgical instruments and household utensils  or stainless steel. In view of the large number of  applications for  import licences  for  stainless steel,  instructions  were  issued  in  January,  1969  that applications should  be scrutinized  carefully after  asking for relevant  information from  the   applicants as  to  the details of  end products  to be  manufactured by  them.  The respondent  supplied  information  in  May,  1969  that  the hospital requisites  proposed to be manufactured by him were surgical bowls,  spittoons and  trays. The Chief Controller, Exports Imports,  however,  issued  instructions  that  only "medical and  surgical equipment and appliances" should have priority and  not other types of hospital equipment, such as bowls, trays, jugs, etc. In April 1970, the Chief Controller issued instructions to consider the respondent’s application in terms  of the Licensing Policy of 1970-71. The respondent thereupon filed a writ petition in the High Court contending that his  application having  been filed  when  the  1968-69 Import  Policy   was  in   vogue  should  be  considered  in accordance with  that Import  Policy alone  and not  in  the light of  or under  the Import  Licensing Policy in vogue in 1970-71. The  High Court  allowed the  writ petition but was reversed by  this Court on appeal. This Court held, "no case has been  made out  on the  present record for a mandamus to the department  to consider the respondent’s application for import licence  in  terms  of  1968-69  policy.  It  is  not possible on  the existing  material  to  conclude  that  the department is guilty of any undue laches or delay in dealing with the  respondent’s application  which would  justify the Court in granting the mandamus prayed for." It was also held that keeping  the  respondent’s  application  pending  until completion of  its examination  in the  light of  policy  in vogue cannot  be said  to be  unreasonable nor  can the time taken in  that behalf be characterized as undue delay. Above all,  it  was  held,  while  emphasising  the  necessity  of disposing of such applications with due expedition, that "an applicant has  no absolute vested right to an import licence

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in terms  of  the  policy  in  force  at  the  time  of  his application because  from the  very nature  of things at the time of  granting the  licence the  authority concerned  may often be  in a  better position  to have a clearer over- all picture of the various factors having an important impact on the final  decision of  the allotment of import quota to the various applicants".This  decision rendered  by a  Bench  of four learned  Judges of  this Court  clearly  negatives  the contention of a vested right urged by Sri Kapoor.      The proposition  in Manickchand  was  reiterated  by  a Constitution Bench  in  Andhra  Industrial  Works  v.  Chief Controller of  Exports (1975 (1) S.C.R.321). While observing that the  import Control  Policy statement contained in what was known  as  "Red  Book"  was  not  statutory,  the  Court observed, "no  person can  merely on  the basis  of  such  a Statement claim  a right  to the grant of an import licence, enforceable at  law. Moreover, such a policy can be changed, rescinded,  altered   by  mere   administrative  orders   or executive instructions  issued at  any time". The Court held further:      "From  the  counter-affidavit  filed  on      behalf of  the Respondents,  it is clear      that the  Import  Trade  Control  policy      (Red Book  Vol.I) had  been amended  and      the import  of the materials in question      for utilization  in the  end products of      most ’automobile  parts’ was  prohibited      as per  instructions conveyed  by  Chief      Controller of  Imports &  Exports in his      letter No.IPC (Gen.33)/73/72/3499, dated      September  29,   1972  although  general      notice of  this amendment  was published      later on  august 18, 1973 (Vide Annexure      R-5). The  result was that in accordance      with the  amended Import  Trade  Control      Policy, the  Respondent  could  not,  in      November, grant the licences applied for      to the  petitioners in  respect  of  the      past period, April 1969-March 1970."      The Court  reiterated the  proposition  in  Manickchand that "on  the basis  of an  Import Trade policy an applicant has no  absolute right, much less a fundamental right to the grant of  an import licence". It is true that both decisions in Manickchand  and Andhra  Industrial Works  dealt with the Import policy  which was  not statutory  in  nature  but  as explained by  us hereinabove  because of the very nature and contents of  the scheme,  the theory  of a  vested right  is misconceived and out of place.      On the  question of  Promissory estoppel, Sri Subba Rao cited the  decisions in  D.Navinchandra & Co., Bombay & Anr. v. Union  of India  & Ors. 1987 (2) S.C.R.989), Collector of Customs,  Calcutta   v.  M/s.M.Shashikant   &  Co.(1992  (2) Supp.S.C.C.306) and  Kasinka Trading v. Union Of India (1995 (1) S.C.C.274). On the basis of these decisions, the learned counsel submitted  that any change in policy or rate of duty between the  date of  placing the  order for  import and the actual import  import applies to the imported goods and that the theory  of promissory estoppel cannot be invoked in such a situation.  We do  not think  it necessary  to dilate upon these decisions  in view of our holding that in the light of the Scheme  concerned herein,  there is no room for nay such plea. For  the same  reason, it is also not necessary for us to deal  with the  decision in  Union of  India  v.  Kanunga Industries (J.T.1990 (3) S.C.723) relied upon by the learned counsel for the appellant.

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    Accordingly, the  appeal  arising  from  Special  Leave Petition (C)  No.607 of 1995 [preferred by the appellant] is dismissed and the appeal arising from Special Leave Petition (C)  No.23900   of  1995   [preferred  by  the  respondents- authorities] is allowed. No costs.