The principles of promissory estoppel is applicable to all executive actions of the Government.

Headnote:
EXCISE DUTY - Exemption - Notification No. 107/81-CE dated 24th April, 1981 - Notification No. 88/84-CE dated 6th April, 1984 - Notification No. 159/85-CE dated 15th July, 1985 - Petitioner company established two factories at Kankroli in the district of Udaipur for manufacturing tyres - Petitioner company made huge investment on plant and machinery in pursuance of the exemption by the Notification No. 107/81 dated 24th April, 1981 - Notification No. 107/81 dated 24th April, 1981 was rescinded by Notification No. 267/82-CE dated 13th November, 1982 - Notification No. 268/82-CE dated 13th November, 1982 was issued confining the incentive scheme to new undertakings licenced under Section 11 of the Industries (Development and Regulation) Act, 1951 - Notification No. 268/82-CE dated 13th November, 1982 was rescinded by Notification No. 87/84-CE dated 6th April, 1984 - Notification No. 88/84-CE dated 6th April, 1984 was issued exempting tyres (excluding tubes and flaps) falling under item No. 76 of the First Schedule to the Central Excises and Salt Act, 1944, from so much of the duty of excise leviable thereon under Section 3 of the said Act as is in excess of the amount calculated at the rate of eighty per cent of the rate of duty leviable on such tyres under the said First Schedule, read with any notification issued under Sub-rule (1) of rule 8 of the said rules and in force for the time being - Notification No. 88/84-CE dated 6th April, 1984 was rescinded by Notification No. 159/85-CE dated 15th July, 1985 - Petitioner company challenged the Notification No. 159/85-CE dated 15th July, 1985, contending that the Central Government cannot be allowed to withdraw the excise relief scheme which was issued for a specified period by the Central Government in order to encourage 'the new investment in tyre industry and to partially off-set the high cost of such new investment, because they are estopped from doing so because of promissory estoppel - HELD, allowing the writ petition, that the Central Government cannot revoke the notification by Notification No. 159/85 dated 15th July, 1985, revoking the concession which has been granted to the tyre industries to the petitioner and other industries by the Notification No. 107/81 and 88/84 - The principles of promissory estoppel is fully applicable and the respondent cannot revoke the benefits which have been given by the notification being 88/84 - Therefore, the Notification being NO. 159/85-CE is bad and in violation of the principles of promissory estoppel and same deserves to be quashed.
Fact of the Case:

Petitioner company established two factories at Kankroli in the district of Udaipur for manufacturing tyres - Petitioner company made huge investment on plant and machinery in pursuance of the exemption by the Notification No. 107/81 dated 24th April, 1981 - Notification No. 107/81 dated 24th April, 1981 was rescinded by Notification No. 267/82-CE dated 13th November, 1982 - Notification No. 268/82-CE dated 13th November, 1982 was issued confining the incentive scheme to new undertakings licenced under Section 11 of the Industries (Development and Regulation) Act, 1951 - Notification No. 268/82-CE dated 13th November, 1982 was rescinded by Notification No. 87/84-CE dated 6th April, 1984 - Notification No. 88/84-CE dated 6th April, 1984 was issued exempting tyres (excluding tubes and flaps) falling under item No. 76 of the First Schedule to the Central Excises and Salt Act, 1944, from so much of the duty of excise leviable thereon under Section 3 of the said Act as is in excess of the amount calculated at the rate of eighty per cent of the rate of duty leviable on such tyres under the said First Schedule, read with any notification issued under Sub-rule (1) of rule 8 of the said rules and in force for the time being - Notification No. 88/84-CE dated 6th April, 1984 was rescinded by Notification No. 159/85-CE dated 15th July, 1985 - Petitioner company challenged the Notification No. 159/85-CE dated 15th July, 1985, contending that the Central Government cannot be allowed to withdraw the excise relief scheme which was issued for a specified period by the Central Government in order to encourage 'the new investment in tyre industry and to partially off-set the high cost of such new investment, because they are estopped from doing so because of promissory estoppel
Finding of the Court:

The principles of promissory estoppel is fully applicable and the respondent cannot revoke the benefits which have been given by the notification being 88/84 - Therefore, the Notification being NO. 159/85-CE is bad and in violation of the principles of promissory estoppel and same deserves to be quashed.
Issues: Whether the Central Government can be bound by the principles of promissory estoppel in this case?
Ratio Decidendi: The Central Government cannot revoke the notification by Notification No. 159/85 dated 15th July, 1985, revoking the concession which has been granted to the tyre industries to the petitioner and other industries by the Notification No. 107/81 and 88/84 - The principles of promissory estoppel is fully applicable and the respondent cannot revoke the benefits which have been given by the notification being 88/84 - Therefore, the Notification being NO. 159/85-CE is bad and in violation of the principles of promissory estoppel and same deserves to be quashed.
Final Decision: Writ petition allowed.

JUDGMENT

1. - The petitioner by this writ petition has challenged the Notification No. 150/85-CE dated 15th July, 1935 (Annexure-P)." It has further been prayed that the respondents may be directed not to modify or alter the excise duty relief as postulated under Notification No. 107/81-CE and No. 88/84-CE.

2. The petitioner No. 1 is an existing company and it has its registered office at 7, Council House Street, Calcutta. The petitioner established two factories at Kankroli in the district of Udaipur for manufacturing tyres. By this writ petition the principal grievance is the withdrawal of the excise relief scheme which was issued for a specified period by the Central Government in order to encourage 'the new investment in tyre industry and to partially off-set the high cost of such new investment. Mr. Desai, learned counsel for the petitioner made two principal submissions that once the excise relief is given by the Central Government and on that basis the petitioner Company acted and made an investment then the Government cannot be allowed to revoke this excise exemption because they are estopped from doing so because of promissory estoppel. Secondly it has been submitted that once a Notification has been issued then same cannot be retrospectively withdrawn so as to divest the vested right created under the Notification.

3. Mr. Chandrashekhran, appearing for the Union of India submitted that there is no question of estoppel applicable in the matter because the power of exemption was exercised by the Government in the exercise of its legislative function and same have been revoked therefore there cannot be any estoppel against the legislative Act. The learned counsel further submits that the Notification specially cancelling the Notification No. 88/84 dated 6th April, 1984 is not applicable to the petitioner as it has been decided by the authorities and for which a writ petition is already pending before the Delhi High Court. The learned counsel further submits that since the Notification No. 88/84 dated 6th April. 1984 is not applicable to the petitioner, therefore we need not go into the question of promissory estoppel. In the background of these two questions I need to state few facts which are necessary for disposal of the matter.

4. In the end of year 1974 there was an acute shortage of tyres in India. This was on account of the fact that the production of tyres was controlled and confined to only seven old established tyre companies. Out of these old established tyre companies, four of the bigger and major tyre companies belong to Multi National Groups, namely, Dunlop, Fireston, Ceat and Goodyear India Limited. The remaining three companies namely, Madras Rubber Factory (MRF), Primier tyres limited and Inchek Tyres Limited had collaboration with well established companies namely, Mansfield Tyre and Rubber Company, Uni Royal and Foreign Export Corporation of Czechoslovakia.. On account of the limited production of tyre the price of tyres had considerably increased. In order to establish new investment for setting up tyre company huge investment of over 40 crores was required with a capacity of about 5 lakh tyres per annum. This investment was many a times more than the investment initially made by the existing and established companies. In 1976, an excise relief scheme was introduced in order to give incentive to new units and also in order to encourage investment in tyre industries. This incentive scheme was given statutory effect by an exemption notification being No. 198/76 dated 16th June, 1976. As a result of the incentive of the Government, four new companies came into tyre industries, namely, Modi Rubber Limited, Apollo Tyres Limited, Vikrant Tyres Limited and the petitioner Company. The 1976 scheme was modified in 1978 and the said scheme came to an end in February, 1980. With the, end of the scheme, the new tyre companies, who had set up factories at a substantially high investments of over Rs. 30 crores per plan

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1986 Supreme(Raj) 614

RAJASTHAN HIGH COURTA.K.Mathur, J.J.K. Industries Ltd. - AppellantVersusUnion Of India (Uoi) and ors. - RespondentS.B.C.W.P. No. 2012 of 1985.Decided On : 7-08-1986

The principles of promissory estoppel is applicable to all executive actions of the Government.

Cases Referred (3)

RAJASTHAN HIGH COURT
A.K.Mathur, J.
J.K. Industries Ltd. - Appellant
Versus
Union Of India (Uoi) and ors. - Respondent
S.B.C.W.P. No. 2012 of 1985.
Decided On : 7-08-1986