SUPREME COURT OBSERVES THAT BENEFIT OF ADDITIONAL LICENSE CANNOT BE ALLOWED TO ILLEGIBLE PERSONS ON THE GROUND OF PARITY
A Two Judge Bench of the Supreme Court presided by Justice MR Shah and Justice Krishna Murari passed a Judgment dated 04.11.2022 in Chowgule & Company Limited Versus Assistant Director General of Foreign Trade & Others in Civil Appeal No. 8225 of 2009 and decided upon whether the Appellant can be allowed the benefit of additional license on the ground that some other person might have been granted such benefits under the Foreign Trade Policy (FTP), which otherwise the Appellant is not entitled to under the said Scheme.
The Appellant, Chowgule & Company Limited is engaged in the export of processed iron ore and is a recognized trading house. Under the Indian Export-Import Policy 1988-1991 (hereinafter referred to as the ‘EXIM Policy’), a trading house would be eligible to an ‘additional license’ based on the admissible exports in the preceding licensing year.
The EXIM Policy provided that while considering the eligibility of an exporter for recognition as a trading house, the Net Foreign Exchange (NFE) earnings from export of items specified in Appendix 12 would not qualify as an eligibility criteria. During the said period, Appendix 12 provided that export of “Minerals and Ores – Unprocessed” would be ineligible for considering the grant of additional license. There was an amendment in Appendix 12 during the year 1992-1993 and the list of ineligible items which earlier was “Minerals and Ores – Unprocessed”, was changed to “Minerals and Ores” in the new Appendix 12.
The Appellant had entered into a Contract with NKK Corporation, Japan for export of processed iron ore, which was not an ineligible item in Appendix 12 under the EXIM Policy 1988-91. The Appellant actually exported the processed iron ore for the year 1990-91. The exports happened during the period of April, 1990 to March, 1991, when the new EXIM Policy, 1990-1993 was already in force. Thus, the Appellant applied to the Assistant Chief Controller of Imports and Exports for grant of additional license for the year 1990-91 which was rejected vide Letter dated 23.7.1992 on the ground that there was no provision for grant of additional license in the then current Policy of 1992- 97.
After a series of round of appeals before different Authorities, the High Court finally heard the matter (on remand) and passed an Order dated 26.06.2008 observing that under the amended EXIM Policy 1990-1993, the exported item – “Processed Iron Ore” was an item specified in Appendix 12 and as per Appendix 12, the exported item “Processed Iron Ore” was not eligible for the purpose of grant of benefit of additional license. Hence, it was held that the Appellant would not be entitled to the benefit of additional license on the export of processed iron ore during the period April, 1990 to March, 1991 in terms of the amended EXIM Policy 1990-1993. Therefore, aggrieved by the said Order, the Appellant preferred an Appeal before the Supreme Court.
Supreme Court Observations:
The Hon’ble Supreme Court observed that under the EXIM Policy, the benefit of additional license which as such was in the form of an incentive is available on actual export in the preceding year and the benefit of such export for the purpose of additional license would be available in the next year. The Apex Court further observed that under the said circumstances, when the Appellant exported the “Processed Iron Ore”, i.e., during the period between April, 1990 to March, 1991, the “Minerals and Iron Ore” as per Appendix 12 were in the list of ineligible items, the Appellant is rightly denied the benefit of additional license. “Therefore, in the absence of any challenge to the new EXIM Policy 1990-93 under export of “Minerals and Iron Ore”, there shall not be the benefit of additional license, the new EXIM Policy 1990-93 shall be applicable”.
On the issue of Promissory Estoppel
The Hon’ble Supreme Court observed that, “The DGFT/Union is free to change the EXIM Policy and consider from time to time on which items there shall be an incentive and on which items there 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 exporter can claim the incentive as a matter of right. Under the circumstances, the doctrine of promissory estoppel shall not be applicable to such a policy decision with respect to incentive, more particularly when it is well within the right of DGFT/appropriate authority/Union to come out with a new EXIM Policy”. Hence, it further observed that the policy and the incentive scheme are very clear. Incentive in the form of an additional license is on actual export in the previous year. Therefore, the relevant date shall be the date on which the export is made.
The Hon’ble Apex Court held that the new EXIM Policy 1990-93 is held to be applicable under which on export of ‘Minerals and Iron Ore”, there shall not be any benefit of additional license, the Appellant cannot be permitted to claim the benefit of additional license under the old EXIM Policy, which was not in existence.
On Issue of similarly situated Exporters-
The Hon’ble Supreme Court held that merely because some others are granted the benefit wrongly, the Appellant cannot be permitted to pray for the similar benefits. There cannot be any negative discrimination which may perpetuate the illegality. “The Appellant cannot be allowed the benefit of additional license on the ground that some others might have been granted such benefits de hors the scheme, which otherwise the Appellant is not entitled to under the scheme”.
Thus, based on the aforesaid reasoning, the Apex Court observed that the High Court vide Order dated 26.06.2008 rightly confirmed the Order passed by the Authority denying the benefit of additional license to the Appellant and accordingly dismissed the Appeal.
The Indian Lawyer