DGFT Can Change Exim Policy ; Exporters Cannot Claim Incentive As A Matter Of Right : Supreme Court

The Supreme Court observed that Director General of Foreign Trade is free to change the Export Import (Exim) Policy and consider from time to time on which items there shall be an incentive.

Under the Indian Foreign Trade Policy 1988-1991, there was a provision of 'additional licence' and a trading house would be eligible to 'additional licence' on the basis of the admissible exports in the preceding licensing year. Chowgule & Company Limited was engaged in the export of processed iron ore and is a recognised trading house. Dismissing the writ petition filed by it, the Bombay High Court (at Goa) held that it was not entitled to the benefit of additional licence on the export of processed iron ore during the period April, 1990 to March, 1991.

Before the Apex Court, the appellant contended that relying upon the original Exim Policy, 1988-91 and acting upon the said policy, it had entered into a contract with one NKK Corporation, Japan. While negotiating and agreeing for price with the importer, it factored in the price component, the incentive of additional licence which was in force at the time under the prevalent policy, it was contended. The appellant relied on the doctrine of promissory estoppel in this regard. On the other hand, the Centre contended 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 of promissory estoppel shall not be applicable at all.

In this context, the bench of Justices MR Shah and Krishna Murari observed

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 To grant the benefit of an incentive is a policy decision which may be varied and/or even withdrawn.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.

The court, while dismissing the appeal, also observed that the appellant cannot be allowed the benefit of additional licence on the ground that some others might have been granted such benefits de hors the scheme. There cannot be any negative discrimination which may perpetuate the illegality, the bench added.

Case details

Chowgule & Company Limited vs Assistant Director General of Foreign Trade | 2022 LiveLaw (SC) 919 | CA 8225 OF 2009 | 4 November 2022 | Justices MR Shah and Krishna Murari

Headnotes

Exim Policy - 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. (Para 7)

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