M. S. SHAH, J. ( 1 ) INTHI spetition under Article 226 of the constitution, thefirst petitioner-Company [hereinafter referred toas"thepetitioner"]haschallengedthe amendments/corrections to paragraph 3. 7. 2. 1 of the Export importpolicy[theeximpolicy]by the notifications dated 28. 1. 2004 (para 5)and21. 4. 2004readwiththe notificationdated 23. 4. 2004 issued by the Government of india in exercise of the powers under Section5ofthe foreigntrade (Development and Regulation) Act, 1992 read with para 1. 1 of the Export and Import Policy 2002-07. The petitioner has also challenged paragraphs 1, 2 and3of thepublic notice dated 28. 1. 2004 issued by the Director general of Foreign Trade (DGFT)[thesecondrespondent herein]amendingparagraph3. 2. 6ofthe Hand Book of procedure. The amendments/corrections to the EXIM POLICY and the public notice pertain to Duty Free Import Entitlement for Export Status Holders. In particular, the petitioner has challengedthe aforesaidnotificationsand the public notice in so far asthe amendments/corrections are expressly made applicable tothe exports made from 1. 4. 2003 i. e. prior to the date of the notifications and the public notice. ( 2 ) THE relevant provisions falling for consideration are as under :-2. 1 undertheeximpolicy 2002-07 as introduced on 1. 4. 2002,thecentralgovernmentannounced "special strategicpackageforstatusholders"[hereinafter referred to as "the Specialscheme"or"theincentive scheme"]. Theterm"statusholder"isdefinedby paragraph 9. 53 of the Exim Policy as under :- "9. 53 "status Holder" means an exporter recognized as"exporthouse/tradinghouse"by dgft/developmentcommissionerasstartrading house/super Star Trading Housebythedirector general of Foreign Trade. " asperthe "special Scheme", the status holders are eligible for certain specialfacilities. Forthe purposesofthepresent petition, the other facilities are not relevant, but the Eximpolicyasamendedupto 31. 3. 2003 provided for the following new facility :- " (vi) dutyfreeimport entitlement for status holders having incremental growthofmorethan 25%infobvalueofexports (in free foreign exchange) subject to a minimum export turnover of rs. 25 crore (in free foreign exchange ). The duty free entitlement shall be 10% of theincremental growth inexports. Such entitlement can be used for import of capital goods, office equipment and inputs for their own factory orthefactoryof theassociate/suporting manufacturer/job worker. The entitlement/good shall not be transferable. " (emphasis supplied) [thisclausewasinitially numbered as (vi) in theeximpolicyamendedupto31. 3. 2003 and appearstohave been subsequently renumbered as (vii)] the Specialschemeasamendedupto31. 3. 2003 providedthatonthebasisofthe exports made from 1. 4. 2003 to 31. 3. 2004, duty free import entitlement shall be provided from 1. 4. 2004. 2. 2 bytheimpugnednotificationdated28. 1. The entitlement/good shall not be transferable. " (emphasis supplied) [thisclausewasinitially numbered as (vi) in theeximpolicyamendedupto31. 3. 2003 and appearstohave been subsequently renumbered as (vii)] the Specialschemeasamendedupto31. 3. 2003 providedthatonthebasisofthe exports made from 1. 4. 2003 to 31. 3. 2004, duty free import entitlement shall be provided from 1. 4. 2004. 2. 2 bytheimpugnednotificationdated28. 1. 2004 (ANNEXURE "b"), facility No. (vii) is retained in the same terms, but the following notes are added to the same :- "note1-Forthepurpose of calculating the value of exports, the following exports shall not be taken into account, namely :- (i) Re-exportofimportedunitsoperating undersez/eou/ehtp/stpi Schemes or products manufactured by them and exported through DTA units. (ii) Export turnover of units operatingunder sez/eou/ehtp/stpi Schemesorproducts manufactured by them and exported through dta units. (iii) Deemed exports (evenwhenpaymentsare receivedinfreeforeign Exchange) and payment from EEFC account. (iv) Service exports. (v) Supplies made byonestatusholderto another status holder. (vi) Exportperformancemadebyone status holder on behalf of otherstatusholder willnotbeeligibleforentitlement under the scheme. (vii) Supplies made orexportperformance effected by a non-status holder (Merchant exporter/manufacturerwithany export performance in2003-04)toastatus holder if the applicant aswellasthe non-status holderhavelessthan25 percentincrementalgrowthovertheir respectivepreviousyears direct export turnover. (viii) The exports made by an applicant within a groupandthe group to which it belongs has individuallylessthan25percent incremental growth of export. Note 2 - The incremental growth of exports byan exportershallnot,directly or indirectly, be transferred to any other exporters. Note 3 - Government reserves the right inpublic interest,tospecify the export products, which shallnotbeeligible for calculation of incremental growth/entitlement. Similarly, the government may also notifythelistofgoods, whichshall not be allowed for imports under the scheme. Note4- These guidelines will be applicable to the exports made on or after 1. 4. 2003. Note 5 -The entitlement willbeintermsof duty credit. "2. 3 by the impugnedpublicnoticedated28. 1. 2004 (Annexure"c"),amendmentshavebeen made to the Hand book of Procedure, particularly to paragraphs3. 2. 5and 3. 2. 6 ofthespecialschemefordutyfreeimport entitlement for the status holders. While most ofthose amendmentsareprocedural,thefollowing amendment is significant for the purposes of the present petition:- "2. In terms of para3. 2. 5ofhandbookof procedures (Volume I), the following items would not be takenintoaccountforcomputationof entitlementandexportperformanceunder Duty freecreditentitlement Scheme for Status holders:- a. Rough, uncut and semi polished diamonds. b. Gold,silver in any form including plain jewellery thereof. c. Food grainssourcedfromcentralpool maintained by FCI. d. Items exported under free shipping bills. 2. 3pnintermsofpara3. 2. In terms of para3. 2. 5ofhandbookof procedures (Volume I), the following items would not be takenintoaccountforcomputationof entitlementandexportperformanceunder Duty freecreditentitlement Scheme for Status holders:- a. Rough, uncut and semi polished diamonds. b. Gold,silver in any form including plain jewellery thereof. c. Food grainssourcedfromcentralpool maintained by FCI. d. Items exported under free shipping bills. 2. 3pnintermsofpara3. 2. 5 of Handbook of procedures (Volume I) the followingitemswould not be allowed for imports under Duty Free Credit entitlement Certificate for Status Holders :- a. Agriculturalproductswhichfall under chapters 1024 of ITC (HS)Classification of Export and Import items. " para 3. 2. 5 of the Handbook is in thesameterms as para3. 2. 7. 1. ofthe Exim Policy (as amended upto 31. 3. 2003) plus thepresumptionofthejurisdictional authority, application form fordutyfreecredit entitlement certificate, form of statement of importsto bemadewithin one month from expiry of the validity of duty free entitlement certificate. 2. 4 when the petition was being heardon15. 4. 2004, the learnedaddl. Solicitorgeneralindicatedthat exclusion of exports of the aforesaid four items from the benefits of the Specialschemeandalsoexclusionof importsofagriculturalproductsasprovidedin the dgfts public notice dated 28. 1. 2004 were as contemplated by thegovernmentundernote3and,therefore,the honble Minister for Commerce has rejectedthe petitioners representation dated 11. 2. 2004 andthatto obviate any doubt whetherexclusionofthefour categories of exports andexclusionofimportofthe agriculturalproductswas the decision only of the DGFT or whether it was of the Central Government, thecentral governmentwouldissuenecessarynotification in this behalf. Thereafter, the Governmentissuednotification dated 21. 4. 2004 stating as under :- government OF INDIA ministry OF COMMERCE and INDUSTRY department OF COMMERCE new DELHI notification NO. 38 (RE-2003)/2002-2007 dated : 21st April 2004 S. O. (E) - In exercise of powersconferredunder section5 of the Foreign Trade (Development and regulation) Act, 1992 read with paragraph 1. 1of the Exportandimportpolicy,2002-2007as amended from time to time, the Central Government hereby makes thefollowingcorrectioninexim policy, 2002-07 (as amended upto 31. 3. 2003) 1. Intermsofpara 2 and 3 of the Public notice No. 40 dated 28. 01. 2004, exports of certainproductsfor calculation of entitlement as well as imports of certain productswereexcluded from the purview of the Duty Free Entitlementcertificate for Statusholders. The said provision is hereby inserted in the Exim Policyby correcting Notification No. 28 dated 28. 01. 2004 as under : Inchapter-3,in paragraph 3. 7. 2. 01. 2004, exports of certainproductsfor calculation of entitlement as well as imports of certain productswereexcluded from the purview of the Duty Free Entitlementcertificate for Statusholders. The said provision is hereby inserted in the Exim Policyby correcting Notification No. 28 dated 28. 01. 2004 as under : Inchapter-3,in paragraph 3. 7. 2. 1, after sub-paragraph (vii), thefollowingnoteis inserted after No. 5 namely :- "note 6 - The export ofthefollowingproducts and categories of products would not be permitted forcountingentitlementundertheduty Free entitlement Certificate for Status Holders a. Rough, uncut and semi polished diamonds b. Gold,silver in any form including plain jewellery thereof c. Food grainssourcedfromcentralpool maintained by FCI d. Items exported under free shipping bills Note7 -The following items would not be allowed for imports under Dutyfreecreditentitlement certificate for Status Holders : Agriculturalproducts, which fall under Chapters 1-24 of ITC (HS)Classificationofexportand import items". This issues in Public interest. (L MANSIGH) director General of Foreign Trade anothercorrectionnotification dated 24. 4. 2004 wasissuedwiththesamecontents,but with the description of the author of the notification as Director offoreigntradeand Ex-Officio Secretary to the Central government. Both the notifications dated 21stand24th april2004havealsobeenchallenged by amending the petition which resulted intoanotherhearinggivento both the parties. ( 3 ) THEBASICFACTSAVERREDINTHEMEMOOF the petition andchallengestothenotificationandthe public notice as raised in the petition are as under :-ITISTHECASEOFTHEPETITIONERTHAT from 1. 4. 2003, having regard to the provisions of thespecial scheme, the petitioner exported wide range of products to various countries. Theexports made by the petitioner are either (a) direct exports or (b) third party exports, all of which are recognizedandarereckonedforthe purposesofascertainedexportperformance levels for status holders. The petitionerhasalsorealizedthe saleproceedsofexportsin all cases (except the two categories ofcasesreferredtoinpara12ofthe petition ). This fact is evidencedbythebank realization Certificates (BRC) which areeitherinthe nameofthepetitionerorinthe joint names of the petitioner as well as the supporting manufacturer orthe nominated agencies such as Public Sector Undertaking like the Statetradingcorporationofindialtd. who on behalfofand/orjointlyalongwith the petitioner exported thegoodsas"thirdparty exports". All the goods exported by the petitioner-Company arepermissible forexport and have been exported in accordance with the relevant provisions. In case of all the exports, whether direct or third party exports, shipping billsarefiled indicating the name of the petitioner (singly or jointly) as an exporter. 3. 2 relying on the provisions of the aforesaid scheme and based on the promises and assurances contained in the saidscheme (as amended on 31. 3. 2003), between 1. 4. 2003 and 27. 1. 2004 the petitioner hasexportedgoodsofan aggregatevalueof Rs. 3,429. 3. 2 relying on the provisions of the aforesaid scheme and based on the promises and assurances contained in the saidscheme (as amended on 31. 3. 2003), between 1. 4. 2003 and 27. 1. 2004 the petitioner hasexportedgoodsofan aggregatevalueof Rs. 3,429. 78 Crores, thus achieved an incremental growth of morethan25%overtheexports duringtheyearended31. 3. 2003as prescribed in the scheme. 3. 3 theimpugned notifications and the public notice are also challenged on the ground that they arecontrary to the avowed purpose of the Exim Policy to boost exports and also to render exports competitiveinthe international market. Sincetheprovisions totally negatetheobjectandpurpose to promote exports, the same are arbitraryandunreasonableandviolativeof articles14and 19 (1) (g) of the Constitution conferring thefundamentalrighttocarryonthebusinessof exporting. 3. 4 while challenges levelled against notes1to3 and6to 7 will be enumerated while discussing them, it is necessary to setoutthemostimportantchallenge which is to Note 4 of the notification. Note 4 providing that"these guidelines will be applicable to the exports made on or after 1. 4. 2003" is challengedontheground thatthe same gives retrospective effect to the impugned notification. Section 5 of the Foreign Trade (Developmentand Regulation) Act, 1992 does not confer any power on the Central Government to make amendments to the exim Policy with retroactiveandretrospectiveeffect. The Centralgovernmentisameredelegateofthe legislature and in absence of any power conferred bythe legislature, the power to amend the Exim Policy cannot be exercised retroactively or retrospectively. Notes 1 to 3 and6to7 added by the impugned notifications are not mere guidelines. Theyaresubstantivechangeswhich amounttoinsertingfresh and new conditions under the garb of amendment. Note4isalsoviolativeofthe petitionersfundamentalrightsunderarticles 14 and 19 (1) (g) of the Constitution. 3. 5 thepetitioner-COMPANYHASALSOINVOKED the doctrine of promissory estoppel in the following terms :- "the Company exportedgoodsduringtheperiod from1. 4. 2003 to 27. 1. 2004 based on the promises and assurances and representationscontainedin sub-para (vi) ofparagraphs3. 7. 2. 1. While calculating the cost of exports and the price the company tookintoaccountthe10%dutyfree entitlement. Thecompanysatisfiesallthe conditions contained in sub-para (vii)ofpara 3. 7. 2. 1. The Companyaltereditsposition accordingly. Therespondentsare,therefore, estoppedfromgoingbackonthe promises and assurances contained in para 3. 7. 2. 1 in thesaid exim Policyas amended upto 31. 3. 2003. Applying the principles ofpromissoryestoppelaslaid downbythehonblesupremecourtandthis honble Court, the respondents are estoppedfrom changingthesaidexim Policy to the detriment and prejudice of the petitioners. "paragraphs 2 and 3 of the impugned publicnotice dated28. 1. 7. 2. 1. The Companyaltereditsposition accordingly. Therespondentsare,therefore, estoppedfromgoingbackonthe promises and assurances contained in para 3. 7. 2. 1 in thesaid exim Policyas amended upto 31. 3. 2003. Applying the principles ofpromissoryestoppelaslaid downbythehonblesupremecourtandthis honble Court, the respondents are estoppedfrom changingthesaidexim Policy to the detriment and prejudice of the petitioners. "paragraphs 2 and 3 of the impugned publicnotice dated28. 1. 2004excluding certain export goods from the purview of thespecialschemearechallengedonthe ground thatthedirectorgeneralofforeigntrade (respondent No. 2 herein) cannot usurp thepowerofthe central Government and restrict import or export items by or throughthehandbook. Thesaidparagraphsare, therefore, ab initio void. Exclusion of rough, uncut and semi-finished diamonds and the goods exported underfree shippingbillsarechallenged as going beyond the Exim policy. ( 4 ) AT the first hearingofthepetitionon 10. 2. 2004, while issuing notice for final disposal,this courthadpassedan order permitting the petitioner to make a representationtotherespondentsagainstthe impugnedamendments, particularly with reference to Note 4 stating that the amended guidelines will beapplicable totheexportsmadeonorafter1. 4. 2003,without prejudice to the petitioners right tomakeaseparate representationagainstthechangein policy even with prospective effect. Thiscourthadclarified that pendency of this petition didnotprecludethe respondentsfromconsideringand deciding such a representation. Thepetitioneraccordinglymadethe representation which came to berejectedbytheorder dated 19. 3. 2004. ( 5 ) ON behalf of the respondents, affidavit inreply dated 22. 3. 2004 is filed by the Joint Director General of foreign Trade. Written submissions are also filed. The major defences are -5. 1 theimpugned notifications and the public notice are in the natureofclarificationofthedutyfree credit Entitlement Schemenotifiedbythecentral governmentundertheeximpolicyas amended upto 31. 3. 2003. When the clarification is made in the Scheme, italwaysrelatesbackto the date of issuance of the original scheme and, therefore, it cannotbesaidthat anyretrospectiveeffect has been given by amending the policy. The scheme wasannouncedon31. 3. 2003. The benefitof the scheme is made available with effect from 1. 4. 2004. The export entitlements are tobecalculated for thecurrentfinancialyeari. e. the whole of the financial year 2003-04 andtheclarificationhasbeen made on 28. 1. 2004 prior to the year coming to an end. In thepastalso,theexportand import policy had been amended making amendments therein relating to the current financial year. Theamendmentstothetaxationand fiscal laws are usually made during the current financial year. Thedutyfree import entitlement to be given on and after 1. 4. 2004 is to be calculated only on thebasis of exports made during the current financial year 2003-04 and hence, no retrospective amendment has been made. Theamendmentstothetaxationand fiscal laws are usually made during the current financial year. Thedutyfree import entitlement to be given on and after 1. 4. 2004 is to be calculated only on thebasis of exports made during the current financial year 2003-04 and hence, no retrospective amendment has been made. The governmenthas clarified the term "incremental growth in exports" and the exports of particular naturehavebeen excluded from the purview of the scheme. 5. 2 after giving the background ofthescheme,the respondentshave given justification for clarifications. Since the above mentioned scheme was a new initiative,a largenumber of representations were received from Trade associations/exportpromotioncouncils as well as individualexportersseekingclarifications on various points relating to the implementation of the scheme. At thesame time, the Government received reports that some status holdersweretryingtoincreasetheirexport turnoverbytakingcreditsfortheexport of others without puttinganysignificanteffortinincreasing exports. Such diversion/enhancement of exports merely to increasebenefitsunder the scheme in that manner would not lead to the intendedobjectiveoftheincremental growth inexports. Such transactions amounted to misuse of the scheme. Considering this aspect in mind,certain clarifications were introducedbywayofimpugned notifications and public notice. Duringtheperiodof about6 to 7 months from the date of announcement of the scheme, it was reported by the Department ofrevenueto thedgfton the basis of intelligence gathered that the scheme was being misused by statusholdersbyentering intocontractswithvarious exporters for arrangements showing themselvesasthirdpartyexporters. Such contracts wereexecutedonstamppapers. Ostensibly, such status holders indicated themselves asthirdparty exportershelpingtheotherparty in obtaining export orders,productionofgoods as per international standards etc. These "contracts" were found to have been enteredintobetweenthepartiesasmerelya paper arrangement with a view to claim the benefit of Duty Free credit Entitlement on the export of others. According to the Department of Revenue, status holders were purchasing exports made by other parties at a premium with a view to show incremental growth of 25% or more in exports without having actually achieved such growth. Tocontainthis kindofmisuse, one of the major recommendations of the department of Revenue was to put necessary restriction in the scheme by way of clarification by not allowingthird partyexportsfrombeingcountedforthe purpose of calculating the incremental growth in exports subjectto certain conditions. Theimpugnednotificationsand public notice have been issued with a view to clarify the aspect as to how incremental growth in exportshouldbe reckoned. From Note 1whichwasinsertedafter sub-paragraph (vii) of paragraph 3. 7. 2. 1 in Chapter 3, it is clear beyond doubt that third partyexportsarenot totally excludedfromthescheme. Theimpugnednotificationsand public notice have been issued with a view to clarify the aspect as to how incremental growth in exportshouldbe reckoned. From Note 1whichwasinsertedafter sub-paragraph (vii) of paragraph 3. 7. 2. 1 in Chapter 3, it is clear beyond doubt that third partyexportsarenot totally excludedfromthescheme. Thethirdparty exports are to be excluded for reckoning theincremental growthinexports,ifthesuppliesmadeorexport performance effected byanon-statusholder (merchant exporter/manufacturer exports with any export performance in2003-2004)toastatus holder, if the applicant as well as the non-status holder are havinglessthan25% incrementalgrowthfortheir respective previous years direct export turnover. This clearly indicatesthatby clarificationcertaintypes of exports which are merely paper exports and which do notleadtogenuineexport growthhave been kept outside the purview of the scheme. This has been done in public interest and in exerciseof powersconferredundersection5 of the Foreign Trade (Development and Regulation) Act, 1992, and Export-Import policy. 5. 3 thepetitionersexportperformancewas going down steadily - years rs. (in Crores) 1997-98 1634. 91 1998-99 1109. 24 1999-2000 1171. 06 2000-01987. 98 2001-02869. 98 2002-03377. 43 in the year 2002-03, Indias exports increased by 22%. As compared to the earlier performance, in the year 2003-2004, the petitioners exportssuddenlycatapulted tors. 3,400croresandthattoowithinthe first 9 months. During the period i. e. April-January2003-04, indias export grew by only 7. 11% in rupee terms. 5. 4 the basic objective of the scheme stands defeated unless appropriatesafeguardsarebuiltin. Such safeguardscanbe incorporated only by amendment of the scheme, as would be evidentfromthereportsreceived fromtherevenueintelligenceagency of DOR and other field formations. The matter wasdeliberateduponand afterdetaileddiscussionwithallconcerned, it was decided to impose conditions so that themisuseofthe schemeandundue out go of the Government revenue could be prevented. So unlike other notificationsandpublic notices,inthiscasethesaidnotification and the public notice categoricallystipulatethereasonsfor impositionofall such essential conditions so that the doubts in the mind of the exporters can be clarifiedand themisuseoftheprovisionsofthepolicycan be minimized or stopped altogether. Thishasbeendone solely in the public interest. 5. 5 asregardstherepresentationmade by the petitioneragainstretrospectiveeffect being given to the notification, the respondents have stated as under :- "thepetitionersmadearepresentation to the honble Union Minister for Commerce withacopy tothedirectorgeneralof Foreign Trade, New delhi on 11th February 2004. Therepresentation ofthepetitionerswasconsidered dispassionately. However,therequestofthe petitioners made intherepresentationwas rejected on the grounds set out inthespeaking order dated 19. 3. 2004. "5. 6 as regardspromissoryestoppelandlegitimate expectation,the respondents have stated as under in the reply affidavit :- "theimportand Export Policy can be amended or rescinded by the Central Government atanytime andbyissuanceofexim Policy, no promise is held outbythecentral Government. The petitioners, therefore, cannot invoke the doctrineofpromissoryestoppelagainst the respondents. 3. 2004. "5. 6 as regardspromissoryestoppelandlegitimate expectation,the respondents have stated as under in the reply affidavit :- "theimportand Export Policy can be amended or rescinded by the Central Government atanytime andbyissuanceofexim Policy, no promise is held outbythecentral Government. The petitioners, therefore, cannot invoke the doctrineofpromissoryestoppelagainst the respondents. Without prejudice to the contention thatinthiscasethedoctrine of promissory estoppel does not apply, it is submitted thatto invokethedoctrine of promissory estoppel, the petitionersarerequiredtosatisfy certain requirementsand they have to specifically prove that on the basis of the promise held out bythe government, they have altered their position. In thepresentcase,thepetitionersare in the businessofexportsandareholding Golden superstar Tradinghouse Certificate. The export businessisthe routine business of the petitioners. The petitioners have not given any details in respect of the so-called export growth achievedbythepetitionersandwhat extra effortsthe petitioners have made to achieve the said growth. Unlessthepetitionersestablish that on the basis of some promise the petitioners havealteredtheirposition in such a way that equity requires the other side to be bound by the doctrine of promissory estoppel, thepetitioners cannot be allowed any relief on the basis of that principle. Inthiscase,in absence of such details and proper pleading to thateffect,the court cannot examinethegrievanceofthe petitioners on the basis ofvagueassertionof violationof doctrine of promissory estoppel and legitimate expectation. Even otherwiseassaid above,thisprinciple has no application in the present case. " ( 6 ) THEPETITIONERHASFILEDREJOINDERAFFIDAVIT dated 9. 4. 2004 of its General Manager (Legal) placingon recordthedetailsofthe direct exports, third party exports and total exports madebythepetitionerfrom 1994-95to2002-03 and has further given the details of item-wise exports, both third partyaswellasdirect exports, made duringtheperiodfrom1. 4. 2003to 27. 1. 2004 and the exports madeduringtheentireyear 2003-04. Besidesatthehearing of the petition, the learned counsel has submitted anotetohighlightthe petitioners grievances and also written rejoinder to the written submissions onbehalfoftherespondents. Referencetothismaterial will be made during discussion. ( 7 ) ATTHE hearing of the petition, Mr Dushyant Dave and Mr KB Trivedi, learnedcounselforthepetitioner have raised the following contentions :-7. 1 whattheimpugnednotifications and the public notice have done is not merely to give clarificationsor make corrections but they havemadesubstantive amendments. 7. 2 the amendments made by the impugned notifications are illegal as they go beyond the avowedobjectofthe exim Policyto boost exports. The incentives were given to the exporters to giveafilliptotheexportsby givingincentivesto status holders like the petitioner who has admittedly shown the incremental growthofmore than 25%withan export of more than Rs. 25 crores. The very idea of including third party exportsinthesaid schemeintroducedfrom1. 4. The incentives were given to the exporters to giveafilliptotheexportsby givingincentivesto status holders like the petitioner who has admittedly shown the incremental growthofmore than 25%withan export of more than Rs. 25 crores. The very idea of including third party exportsinthesaid schemeintroducedfrom1. 4. 2003was to help the small units which on their own would never be able totapthe international market. Byexcludingsuchthird party exports,theimpugnednotificationsdefeatthevery object oftheactandtheeximpolicy. Hence, the amendmentsareviolative of Article 14 of the constitution. 7. 3 exclusionofvariousitemsthroughthe trade noticeissuedbythedgftisillegaland without authorityof law as the DGFT cannot amend the policy for whichthecentralgovernmentistheonlycompetent authority. The Central Government not having issued any notification in this behalf till 31. 3. 2004, the DGFThad noauthoritytoexcludeanyitemsfromthe special scheme. The public notice is, therefore, contrary to and inviolationofsection5 (3)oftheforeigntrade (Development and Regulation) Act, 1992. 7. 4 the Government notificationsdated21/24. 4. 2004 seekto give further retrospective effect to Notes 6 and 7 added in para3. 7. 2. 1totheexportsmadebetween 1. 4. 2003 and31. 3. 2004. Sucharetrospective effect cannot be given even by delegated legislation. 7. 5 inanyviewofthematter,relyingonthe provisions of the special scheme which was applicableto the exports madefrom1. 4. 2003to31. 3. 2004,the petitioner had put in extra effortsforthegrowthof exportsbothdirectexportsaswellasthird party exports for various categories of export goods and vested rights had accrued in favour ofthepetitioneronthe basis ofthe special scheme. The impugned notifications in so far as they apply theamendmentstothespecial schemeeventoexportsmade during the period between 1. 4. 2003 to 27. 1. 2004 take away the vested rights ofthe petitioner. 7. 6 thepetitionercanchallenge the retrospective effect giventotheamendmentswhichtakeawaythe petitionersvestedrights,evenwithout invoking the principle ofpromissoryestoppelorthedoctrineof legitimate expectation. Relianceis placed on a large number of authorities to which reference will be madeat an appropriate stage. ( 8 ) ONTHEOTHER hand, Mr Raju Ramchandran, learned additionalsolicitorgeneralinstructedbymr Asim pandya,learnedadditionalstandingcounselforthe central Government for the respondentshasopposedthe petition and has made the following submissions :-8. 1 publicinterestdemandsthatdutiesleviable under the relevant taxing statutes like thecustomsact must belevied. However,inorderto give boost to exports,whenthegovernmentintroduced a special incentiveschemeforgivingduty free entitlements to exporters who achieve incremental growth in exports,the intentionwastohaverealgrowthinexportsand, therefore, when the Government found that the schemewas beingmisused to show paper growth in exports by certain parties solely for thepurposeofclaimingincentives underthespecialscheme,withoutthere being actual growth in real exports, the Government has notonlythe power, but it is duty bound to prevent abuse or misuse of theschemeandforthatpurposetomakenecessary clarifications intheschemeoreventorescindor withdraw theentirescheme. Since such clarifications have been made midstream in January, 2004 [beforeexpiry oftheperiod (2003-04) during which the exports are to be made] and before commencement of the period forwhich duty freeimport entitlements are to be given i. e. from 1. 4. 2004, the impugned notification and the public notice are mere clarifications and are not amendments. 8. 2 eveniftheyaretreated as amendments to the scheme, they are not retrospective because the incentives were nevertobegivenbefore1. 4. 2004andissuing guidelinestopreventmisuseof the scheme before the grant of incentives from 1. 4. 2004 does not amount tothe amendments beinggivenretrospectiveeffect. Itis submitted that the amendments made in January,2004for thepurpose of giving incentives from 1. 4. 2004 may be in relation to the exports made between April 2003 and March 2004. Thatdoesnotamounttogivingretrospective effect,butmeansonlyretroactiveoperationof the clarifications or the amendments. 8. 3 section5oftheforeign Trade (Development and regulation) Act and para 1. 1 of the EXIM POLICYpreserve the right of the Government to amend the policy in public interest. Astatutory power to amend the policy, after noticing the misuse of the policy for purposes forwhich itwasneverintended,can never be frustrated on the plea that the petitioners hadalegitimateexpectation thattheycancontinuetoexploitthepolicy for a purpose totally different from the one for whichitwas intendedandthenexpectthat the Government will not take any action whatsoever. That apart, the doctrineof legitimateexpectationcannevercurtaila statutory provision, far less can it bepressedintoserviceto assailanaction taken entirely to sub-serve the public interest. 8. 4 as per the settled legal position, the writ Court would not sit in appeal over the wisdom of the Government in such economic matters and the Government must have the freedomtoexperimentand must be allowed to adopt the "trial and error method". Thewritcourtwouldnot interferewiththe Governments decision in an economic policy matter merely because another policy decisionmay have beenfairerorwiseror more logical. The Court would notinterfereunlessthedecisionispatently arbitrary, discriminatoryormalafide. Reliance has been placed on alargenumberofdecisionstowhich reference will be made hereafter. 8. 5 any economic decisionascontainedinthe notifications granting monetary benefits can be withdrawn even before expiry of the period for whichsuchbenefit wasoriginallygivenifthegovernments decision is basedonrelevantmaterialjustifyingthe clarification/changeof the policy and it is not for the court to go into the question of sufficiency or otherwise of the material, once there is some relevant materialto justify suchdecision. Strong reliance is placed on the decision in Kasinka Trading, (1995) 1 SCC 274 . 8. Strong reliance is placed on the decision in Kasinka Trading, (1995) 1 SCC 274 . 8. 6 neither in the petition nor in the representation made by the petitioner pursuant to the libertygivenby thiscourtwhileissuingnotice,thepetitioner had placed any material to showthatithassufferedany detrimentbyactingupon the policy which was in force prior to 28. 1. 2004 or that it would suffer anyprejudice aftertheeffect is given to the impugned notifications and public notice dated 28. 1. 2004. Itis,therefore, submittedthatthe petitioner not having availed of the opportunitytoproducesuchmaterialeitherinthe representationmade before the Government or in the memo of the petition, it is not open to the petitioner to rely upon the material producedalongwiththeaffidavitin rejoinder. ( 9 ) EXAMINING the contentions urged onbehalf of the petitioners for challengingtheimpugned notification and the public notice, itisnecessaryto bearinmindthefollowing caveat sounded by the Apex court in State of MP vs. Nandlal Jaiswal, (1986)4scc 566 (Page605)as to how the Court would deal with the challenge to apolicydecisionofthegovernmentin economic matters, (whichprinciplehasagainbeen reiterated by the Apex Court inbalcoemployeesunion vs. Union of India, (2002) 2 SCC 333 ) :-"wehadoccasiontoconsiderthescope of interferenceby the Court under Article 14 while dealing with laws relating to economic activities in RK Garg vs Union of India, (1981) 4scc675. We pointed out in that case that laws relating to economic activities should be viewed with greater latitudethan laws touching civil rights such as freedom of speech, religion, etc. Weobserved thatthe legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit ofsolutionthrough any doctrinaire or strait-jacket formula and this isparticularlytrueincaseoflegislation dealingwitheconomicmatters,where,having regardto the nature of the problems required to be dealt with, greater play in the joints hasto be allowedtothelegislature. We quoted with approvalthefollowingadmonition given by frankfurter, J. in Morey v. Doud, 343 US 457 = 1 L Ed. 2d 1485 (1957) :- in theutilities,taxandeconomic regulation cases, there are goodreasons for judicial self-restraint ifnot judicial deferencetolegislative judgment. The legislature after all has the affirmativeresponsibility. The courtshaveonlythe power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability toerror, thebewildering conflict of the experts, and the number of times thejudgeshave beenoverruled by events self-limitation can be seen to be thepathtojudicial wisdomandinstitutionalprestigeand stability. Whatwesaidinthatcase in regard to legislationrelatingtoeconomicmatters must apply equally in regard toexecutiveactionin thefieldofeconomicactivities,though the executive decision may not be placed on as high a pedestalaslegislativejudgmentinsofar as judicial deferenceisconcerned. Whatwesaidinthatcase in regard to legislationrelatingtoeconomicmatters must apply equally in regard toexecutiveactionin thefieldofeconomicactivities,though the executive decision may not be placed on as high a pedestalaslegislativejudgmentinsofar as judicial deferenceisconcerned. We must not forget that incomplexeconomicmattersevery decisionisnecessarily empiric and it is based on experimentation or what onemaycalltrial anderrormethodand, therefore, its validity cannotbetestedonanyrigid a priori considerationsorontheapplicationofany strait-jacket formula. Thecourt must while adjudging theconstitutionalvalidityofan executive decision relating toeconomicmatters grantacertainmeasure of freedom or play in the joints to the executive. theproblemsof governmentaspointed out by the Supreme Court of the Unites States inmetropolistheaterco. vs. Stateofchicago, 57 L Ed 730 :228 US 61 (1912) arepracticalones and may justify, if theydonotrequire,rough accommodations, illogical, it may be, and unscientific. Butevensuch criticism should not be hastily expressed. What is best is not discernible,thewisdomof anychoice may be disputed or condemned. Mere errors of Government are not subject to our judicial review. It isonlyits palpably arbitrary exercises which can be declared void. The Government, as was said in Permian Basin Area rate Cases, 20 L Ed 2d 312 :390 US 747 (1968), isentitledto make pragmatic adjustments which may be called forbyparticularcircumstances. Thecourtcannotstrike down a policy decision taken by the State Government merelybecauseit feelsthatanotherpolicydecision would have beenfairerorwiserormorescientificor logical. Thecourtcaninterfere only if the policy decisionispatentlyarbitrary, discriminatory or mala fide. " (emphasis supplied) in Zippers Karamchari Union vs. Union ofindia, (2000)10scc619,theapex Court has reiterated the above principle that in matters of trade and commerceor economicpolicy,thewisdomof the Government must be respected and courts cannot lightlyinterferewiththe sameunless such policy is contrary to the provisions of the Constitution or any law or if such policyiswholly arbitrary. ( 10 ) IN exercise of the powers conferred by Section5 oftheforeigntrade (Developmentand Regulation) Act, 1992, the Central Government has notified the Exportand import Policyfor the period 2002-2007. Para 1. 1 of the policy states that the Centralgovernmentreservesthe rightinpublicinterest to make any amendments to the policy in exercise of the powers conferred bysection5 of theact. Such amendment shall be made by means of a notification published in the Gazette of India. Para 1. 4 of the Policy lays down the principal objectivesofthe policy as under :- "1. 4 theprincipalobjectives of this Policy are : [i] To facilitate sustained growth in exports to attain a share of atleast 1% of global merchandise trade. [ii] To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumablesandcapitalgoods required for augmenting productionandproviding services. [iii] and [iv]. . . . . . . . 4 theprincipalobjectives of this Policy are : [i] To facilitate sustained growth in exports to attain a share of atleast 1% of global merchandise trade. [ii] To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumablesandcapitalgoods required for augmenting productionandproviding services. [iii] and [iv]. . . . . . . . . . . . Para 2. 4 of the Policy provides that the Director general of Foreign Trade may, in anycaseorclassof cases,specifytheproceduretobefollowedbyan exporter or importer for the purpose of implementingthe provisionsoftheact,therules and the Orders made thereunder and the Policy. Suchproceduresshallbe includedinthehandbooksand published by means of a public notice. Such procedures may, in likemanner,be amended fromtimetotime. The Handbook (Vol. I) is a supplement to the Exim Policy. Para2. 5 of the Policy provides that any request for relaxation of the provisions of the Policy or ofany procedure,onthe ground that there is genuine hardship to the applicant or thatastrictapplicationofthe policyortheprocedureislikely to have an adverse impact on trade, may be made to the DGFT for suchrelief as may be necessary and the DGFT may pass orders or grant such relaxation or relief, as he may deem fit and proper. The discretion is also conferred on the DGFT to exempt in publicinterestanypersonorclassorcategory of personsfromanyprovisionofthepolicy or any procedure, subject to such conditions as he may impose. ( 11 ) CHAPTER 3 of the Exim Policy 2002-07asamended upto31. 3. 2003 provided for various promotional measures for encouragingexports. The basic objects of introducingthespecialschemeinthe Exim Policy on 31. 3. 2003werestatedinthecommerce and Industry ministers speech in the following words :-"werecognizethatthestatusholders will continuetoplayasignificant and increasing role in boosting exports, particularlyfromthe smallscalesector,as most of the small scale units will notbeinapositiontodirectly access theinternationalmarkets. Moreover, it willbeourendeavourto facilitate India emerging as a major base for outsourcing products and services fortherestof the world. They are also critical to our strategy for acceleratingtherateof incremental growth of export. Therefore, we intend to giveapremium tothestatusholderswho achieve high growth rate in their exports. It is proposed to givea dutyfreeentitlementtothemforimport of capitalgoods,spares,officeequipmentsand consumables. Thiswillbe available to status holders who achieve a growth rate of 25% ormore in thecurrentyearwithaminimumexport performance ofrs. 25crores. Theywouldbe entitled to a duty free entitlement of 10% of the incrementalgrowth in exports during the current financial year. Thisentitlement would be subjecttoactualusercondition which can be passed on to associate manufacturers. " ( 12 ) PARAGRAPH 3. 7. 2. 1 (the relevant portion ofwhich is already quotedinpara2. 25crores. Theywouldbe entitled to a duty free entitlement of 10% of the incrementalgrowth in exports during the current financial year. Thisentitlement would be subjecttoactualusercondition which can be passed on to associate manufacturers. " ( 12 ) PARAGRAPH 3. 7. 2. 1 (the relevant portion ofwhich is already quotedinpara2. 1ofthisjudgment) enumerates the special facilities forwhichthestatus holdersare eligible, which are again quoted hereinbelow for the sake of convenience :-"3. 7. 2. 1 The status holders shall be eligible forthe following new/special facilities :- [i] to [v]. . . . . . . . . . . . . . . [vi] Dutyfreeimport entitlement for status holders having incremental growth of more than 25% in FOB valueofexports (infreeforeignexchange) subjecttoaminimumexport turnover of Rs. 25 crore (in free foreign exchange ). The dutyfree entitlementshallbe10%oftheincremental growth in exports. Such entitlement can beused for import of capital goods, office equipment and inputsfortheirown factory or the factory of the associate/supporting manufacturer/job worker. The entitlement/goods shall not be transferable. " (emphasis supplied) [this clause was initially numberedas (vi)inthe exim POLICY amended upto 31. 3. 2003 and appears to have been subsequently renumbered as (vii)] theemphasis is not just on increase in exports, but on incremental growth in exports. ( 13 ) TAKING up the challenges for consideration - notes 1 and 2 13. 0 petitioners case13. 1 in the memo of the petition, itisstatedthat "notes1and2"to paragraphs 3. 7. 2. 1 inserted by the impugnednotificationexcludethefollowing exports effected by the petitioner-Company :- (a) Export of goods which have been purchased by the Company from the manufacturers who may also be exporters in their own rights but not status holders. (b) Exportofgoods procured by the Company from the manufacturersthereofwhomay alsobethe status holders in their own rights. (c) Theexportofgoodsprocuredbythe company from EOUs. 13. 2 however,initsnote submitted at the hearing, the petitioner has stated as under :- note1 (to para 3. 7. 2. 1) added by the notificationdated28. 1. 2004,excludes 7 categories of exports. The petitioner has no exports which fallunder clauses (i), (iii), (iv)and (vii)ofnote1. The petitioneris,however,adverselyaffected by the remaining three exclusions which read as under :- (ii) Export turnover of units operatingunder sez/eou/ehtp/stpi Schemesorproducts manufactured by them and exported through dta units. (v) Supplies made byonestatusholderto another status holder. (vi) Exportperformancemadebyone status holder on behalf of otherstatusholder willnotbeeligibleforentitlement under the scheme. 13. The petitioner has no exports which fallunder clauses (i), (iii), (iv)and (vii)ofnote1. The petitioneris,however,adverselyaffected by the remaining three exclusions which read as under :- (ii) Export turnover of units operatingunder sez/eou/ehtp/stpi Schemesorproducts manufactured by them and exported through dta units. (v) Supplies made byonestatusholderto another status holder. (vi) Exportperformancemadebyone status holder on behalf of otherstatusholder willnotbeeligibleforentitlement under the scheme. 13. 3 the thrust of the petitioners contention is that notes1and2are illegal and directly hit "the third party exports"whicharepermissibleundertheexim policyin terms of para 2. 34 read with para 9. 55 and are also recognized for the purposesofcalculatingexport performance for issue ofstatuscertificate. The amendment alsorunscountertothebasicpolicyof facilitatingsustained growth in exports which is one of the principal objects of the Exim Policy. Discussion on Notes 1, 2 and 4 ( 14 ) ITISTRUE,ascontendedonbehalfofthe petitioner,thattheexportpolicyitself recognizes third party exports in paras 2. 34 and 9. 55 of the scheme. 9. 55 "thirdparty exports" means exports made by anexporterormanufactureronbehalfof another exporter (s ). Insuchcases, shipping billsshallindicatethenameofboth the exporter/manufacturer and exporter (s ). General Provisions Regarding Imports and Exports 2. 34 third party exports,asdefinedin paragraph 9. 55 shall be allowed under the Policy. 14. 2 para 5 oftheimpugnednotificationdated 28. 1. 2004 sets outthereasonsformaking clarifications:- "theschemewasannouncedaspart of the initiatives taken in the Exim Policy announced on 31stmarch2003with the specific objective of accelerating the incrementalgrowthinexports andto facilitate India emerging as a major base for sourcing different products and servicesfor the restoftheworld. It was recognized that status holders would continue playing a significantandincreasingroleforboosting exports particularly from the small-scale sector, as most of the small scale units would not bein apositionto directly access the international market. Inviewofthis,dutyfreeimport entitlement@10%of the incremental growth in value of exportswasallowed,subjecttothe condition of eligibility on actual user condition,which could be passed on to supporting/associate manufacturers/job worker for ultimate production. Sincetheschemewas intended to beaspecificincentiveforfast growingstatusholders,thebenefits would be available w. e. f 1st April 2004. Being anewinitiative,alargenumberof representations havebeenreceivedfromtrade associations/exportpromotion councils as well astheindividualexportersseeking clarificationson various points relating to the implementation of the Scheme. At the sametime, governmenthas received reports that some Status holdersaretryingtoincreasetheirexport turnoverbytakingcreditsforthe export of others without putting any significant efforts in increasing exports. Suchdiversion/enhancement ofexports merely to increase benefits under the scheme in thismannerwouldnotleadtothe intendedobjectivesofincrementalgrowthin exports. Such transactions amount tomisuseof the Scheme. Inviewofthis,on both these countsithasbecomeessentialtolaydown specificnormsfortheimplementationof the scheme. "14. 3 whattheimpugnednotification dated 28. 1. At the sametime, governmenthas received reports that some Status holdersaretryingtoincreasetheirexport turnoverbytakingcreditsforthe export of others without putting any significant efforts in increasing exports. Suchdiversion/enhancement ofexports merely to increase benefits under the scheme in thismannerwouldnotleadtothe intendedobjectivesofincrementalgrowthin exports. Such transactions amount tomisuseof the Scheme. Inviewofthis,on both these countsithasbecomeessentialtolaydown specificnormsfortheimplementationof the scheme. "14. 3 whattheimpugnednotification dated 28. 1. 2004 does is not to make"thirdpartyexports"illegalor entirelyineligibleforgettingincentivesunder the special incentive schemeforstatusholders,butthe basicintentionoftheschemewastoencourage the exports of products manufactured by Small Scaleindustry sector who do not have access to the international market becauseoflackofrequiredinternationalmarketing expertise and the optimum resources to havepresencein the international marketing arena. Hence, the scheme was not intended to encourage a status holder-export house to pool theexportsmadeby existing exporters (i. e. who have exported in previous years as well), for the purpose of showing incremental growth in exportsofthestatus holder. Similarly,supplyof goods by a status holder (who are having the requiredmarketingskillandhave beenexportinginpreviousyearsas well) to another status holder does not advance the purpose of the scheme. So also, transferring export turnover ofthe supplier-exporter who is the original export order holder tothestatusholderforartificiallyenhancing the incremental growth of exports of the statusholderwill not further the objectoftheincentivescheme. Therefore, the Government stipulated through the impugned notification dated 28. 1. 2004 that theconditionof25% incrementalgrowthofexportswillapply both to the applicant-status holderaswellastothesupplier, whether the supplier is a status holder or is an existing supplier-exporter ofgoods. The clarifications made by the impugned notification in so far as they providethat theincremental growth of 25% in FOB value of exports is the criterion applicable both to thestatusholdersas wellasto the existing supplier-exporters will have to be treated as clarificatory if the basicobjectofthe incentive schemeis looked at. The object of the scheme was to boost exports in actual terms andnotmerelyto encouragetheexistingexporters to pool their exports for thepurposeofmerelygivingappearanceofthe incremental growth of exports. 14. 4 atthisstage,we may record the clarification made by Mr Raju Ramchandran,learnedaddl. Solicitor general that the manufacturers likesmallscale industries which had notmadeanyexportsbeforethe current year (i. e. 2003-04)andwhohave made such exports for the first time in 2003-04throughastatus holderlikethepetitioner are not required to fulfill the condition of 25% incremental growthinexportsfor thesimple reason that such manufacturers had never made any exports earlier. Of course,theconditionof25% incrementalgrowthofexportswouldapplyto status holders through whom such manufacturers (not havingmade any exports prior to 2003-04) had exported their goods in the year 2003-04. 14. Of course,theconditionof25% incrementalgrowthofexportswouldapplyto status holders through whom such manufacturers (not havingmade any exports prior to 2003-04) had exported their goods in the year 2003-04. 14. 5 topreventtransferofexport orders from one group Company to another Company belongingtothesame groupinordertoshow enhanced export performance of such another Company, the incrementalexportgrowthof thegroupasa whole has been made the basic criterion for availingthescheme. Thisisalsoanobvious clarification which does not need any further elucidation. 14. 6 relianceplacedbythepetitioners on the circularno. 16 dated 24. 12. 2002 is of no avail, as the said circular (clarifying that thirdpartyexportsare applicableforalltheexportpromotion schemes) was issued longbeforethespecialincentiveschemewas announced on 31. 3. 2003. Similarly, reliance placed by the learned counsel forthe petitioners on the decision of the Apex Court in k. Gopinathan Nair vs. State of Kerala, (1997) 10 SCC 1 does not carry the petitioners case any furtherasthe said decisionwasrenderedinthecontextofthe controversy under sales-tax law in the background of the provisions of Article 286 of the Constitution which provide that no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place in the courseof theimport of the goods into, or export of the goods out of, the territory of India. To what of kind ofexports, towhatextent and in what manner the incentives should be given for exports isamatteraltogetherdifferent fromsalestaxliabilityonatransaction between a manufacturer-exporter and an export house. 14. 7 on the issue of exports by Domestictariffarea unitsas merchant exporters on behalf of units operating undersez/eou/ehtp/stpischemesandexportsdirectly effectedbytheseunits (theseunitsare set up for manufacturing goods forexportsonly),thegovernment tookadecisionnottotakeinto consideration such exports for the Special Incentiveschemebecausethese unitshavethe flexibility to import any item duty free ab initio and as such they do not require the benefits of dutyfreeimportunderthe Special Scheme under consideration. ( 15 ) OBVIOUSLY, theseprovisionsintheimpugned notificationdated28. 1. 2004areclarifications and cannot betreatedasamendmentstothescheme. We, therefore, hold thatnotes1and2insertedbythe notificationdated28. 1. 2004merelyamplifywhat was implicit in the original scheme. As per the settled legal principle asenunciated in theaforesaiddecisionsin State of MP vs. Nandlal jaiswal, 1986 (4) SCC 566 , it is not forthiscourtto sitinappeal over the wisdom of the Government in such economicmattersandsuch clarificatory amendments cannot, therefore, be treated as arbitrary or unreasonable restrictions on thepetitionersrightto carry onbusiness. In fact, the amendments are to the incentive scheme and they do not impose anyrestrictions onthepetitionersrightto carry on the business of exporting goods. ( 16 ) BUT, as already indicated earlier, the thrustof the petitioners challenge toapplicationofthe clarifications/amendments 1. 4. In fact, the amendments are to the incentive scheme and they do not impose anyrestrictions onthepetitionersrightto carry on the business of exporting goods. ( 16 ) BUT, as already indicated earlier, the thrustof the petitioners challenge toapplicationofthe clarifications/amendments 1. 4. 2003 and 28. 1. 2004 is on the ground that the impugned notificationandpublicnoticetakeawaythe vested rights of the petitioner. The petitioner hasgiventhe chartsinannexure 1 and 3 to their rejoinder affidavit which give the following picture :- it is submitted on the basis of theabovefigures thatit is not for the first time in the year 2003-04 that the petitioner has made third party exports. Earlier also, the petitioner was making such exports, but thisyearthe petitionerputinextraeffortstoboostthird party exports as well as direct exports. ( 17 ) UNDER the policy in forcepriortotheimpugned notificationsandeven thereafter the third party exports are permitted. What was legal earlier is not madeillegal at all. Forinstance,exports of goods manufactured by units ineou/sezzonesthroughstatusholderarenot prohibitedbut such exports even made between 1. 4. 2003 and 27. 1. 2004, are excluded because the benefitofdutyfree importwasalreadyavailed for the export of such goods. Chapter 6 of the Exim Policyrelatestoexportoriented units (EOUs), Electronics Hardware Technology Parks (EHTPs) and Software Technology Parks (STPs ). As provided in paras 6. 1and6. 8of the Exim policy, these units undertake to export theirentireproductionofgoodsandservices, except permissible sales in the Domestic Tariff Area as per the Eximpolicy. Para 6. 2 (b) of the Exim Policy provides that "an EOU/ehtp/stp unit may importwithoutpaymentof dutyalltypesofgoods,includingcapitalgoods, as defined in the Policy, required by it for its activities as mentioned in para 6. 1. . . . . . . . " para 6. 10 reads as under :-"6. 10 aseou/ehtp/stpunitmayexport goods manufactured/softwaredevelopedbyitthrough a merchant exporter/statusholderrecognizedunder this Policy or any other EOU/ehtp/stp/ sez unit. "the amendments do not impinge upon the right of any partytoexportitsgoodsinaccordance with the Exim policy. The clarification only excludes exports which were never intended in the first placetobecoveredbythe special Schemeunderconsideration. ( 18 ) SECONDLY,themisuseof the scheme by mere paper growth in exports is not to be countenanced. Hence, itis butnaturalthatthenotification dated 28. 1. 2004 would apply to the exports made from 1. 4. 2003 onwards. In so far as this Court holds that the Notes 1 and 2 read with Note 4 introduced by the notification dated 28. 1. 2004aremerely clarificatory,theexports made by the petitioner between 1. 4. 2003 and 27. 1. 2003 would certainly becoveredbythe said notes. 1. 2004 would apply to the exports made from 1. 4. 2003 onwards. In so far as this Court holds that the Notes 1 and 2 read with Note 4 introduced by the notification dated 28. 1. 2004aremerely clarificatory,theexports made by the petitioner between 1. 4. 2003 and 27. 1. 2003 would certainly becoveredbythe said notes. Two views were possible about the expression "incremental growth in exports by 25%" andthegovernment adopted the interpretation as reflected in the notification dated28. 1. 2004whichisquiteinconsonance with the object of the Act, Exim Policyandtheincentivescheme rather than the interpretation canvassed by the petitioner. Hence, there is no substance in the challengetonotes1 and 2 read with Note 4. Notes 3 and 6 read with Note 4 ( 19 ) HOWEVER, Notes 3 and 6 added by notifications dated 21. 4. 2004 and23. 4. 2004readwithpublicnoticedated 28. 1. 2004 in so far as they exclude certain export products fromtheincentiveschemecannotbesaidtobe mere clarifications. It may be thatthegovernmentmayhave goodreasonsto justify exclusion of such export products (thejustificationto be examined hereafter), but nonetheless exclusion of those products is in the nature of amendment of the Incentive Scheme. Thequestion, therefore, is whether even after taking out exports covered by Notes 1 and 2, the petitioner hadacquiredanyvested rightsindutyfreeimportentitlementon the exports between 1. 4. 2003 and 27. 1. 2004 ofthecategoryofgoods covered by Notes 3 and 6. ( 20 ) LOOKINGTOTHELANGUAGE of the Special Scheme as contained in the Exim Policyamendedupto31. 3. 2003,it doesappearthat10% duty free credit entitlement was to follow exports covered by the incremental growth of 25% (as explained above ). Under that scheme, it was notamatter ofdiscretionforthedgft to exclude exports of any of those goods merely by stating that rough diamondsorfood items were to be excluded. The business community at large was entitled to proceed on the basis that all categories of goods were covered by the Incentive Scheme. On that basis, contractsmight have been entered into, exports might have been made, goods have physically moved out of thecountry, pricesmighthavebeendeterminedonthatbasisand payments have been made by the buyers to the sellers. The sellers or the export houses would ordinarily and naturally takeintoconsiderationspecialincentiveof duty free imports to the extent of 10% of exportswhiledetermining prices forexportofgoods. It would, therefore, not be possible to saythatthestatusholdersandexporters havingachieved25%incrementalgrowthin exports over previousyears (Rs. 25croresandabove)asexplained earlier - did not get any right at the time of exports made between 1. 4. 2003 and 27. 1. 2004. ( 21 ) BUT Mrramchandran,learnedaddl. It would, therefore, not be possible to saythatthestatusholdersandexporters havingachieved25%incrementalgrowthin exports over previousyears (Rs. 25croresandabove)asexplained earlier - did not get any right at the time of exports made between 1. 4. 2003 and 27. 1. 2004. ( 21 ) BUT Mrramchandran,learnedaddl. Solicitor generalsubmitsthatwhenthegovernmentstepsin to prevent any abuse or misuse of a scheme, itcannotonly makeamendmentsbut can even rescind a scheme or withdraw it altogether. If this can bedone,thegovernmentcan also withdrawtheschemeforsome of the goods. In any case, amendments to the Scheme are not having retrospective effect, asthedutyfreeimportsweretobeginfrom 1. 4. 2004and, therefore, at the most they are retroactive. Hence, none of the principles against retrospectivitywill apply in the instant case. Mr Dave, ontheotherhand,wouldemphatically submitthat such exclusion of goods cannot be made without being stigmatized as arbitrary retrospective actiontaking awayvested rights and, therefore, violative of all canons of constitutional and administrative law. Strongreliance hasbeenplaced by Mr Dave on Bennions Interpretation of statutes and various authorities. Itisalsovehemently submitted on behalf of the petitionerthatthedelegatedlegislationtakingaway vestedrights, without any such authority conferred by the parent legislation, must fall to thegroundasarbitrary and illegal, without any further debate. Notes 3 and6readwithnote4-Retroactiveor retrospective ? ( 22 ) ONE way of dealing with the controversy is tonote thedistinctionbetween vested rights and existing rights and to hold that even if the petitionerhadanyexisting righttoget Duty Fee Import Entitlement with effect from 1. 4. 2004 on the basis of the exports alreadymadebetween 1. 4. 2003 and 27. 1. 2004, the petitioner had no vested right, becausethedutyfreeimportentitlementwasnot yet actuallygrantedwhentheamendments were made on 28. 1. 2004 nor had it been completely and definitely settled in thepetitioner. Referenceistobemadetothe definition of "vested Rights" in Blacks Law Dictionary. In Trimbak Damadhar vs. Assaram Hiraman, AIR1966 sc 1758 (para 9), the Apex Court had held as under :-"it is relevant to distinguish between anexisting right and a vested right. Where a statute operates infuture,itcannot be said to be retrospective merely because within the sweep ofitsoperation, all existing rights are included. " ( 23 ) SINCEIT is contended on behalf of the respondents that a retroactive delegated legislation does nothaveto face any challenge that aretrospectivedelegated legislation has to encounter, it is necessarytolookat thethree categories of cases where such controversies are raised - (I) Where legislation or delegated legislation seeks to takeawayvestedrights-benefitswhichare alreadyobtained by a party are sought to be taken away because oflegislation/delegatedlegislation beinggiveneffectfromthedateprior to its enactment. Forthereasonsto be discussed hereinafter, the Rules of interpretation of statute raiseapresumptionagainstsuchretrospective effect being given to a legislation and Courtsmay strikedown such offending measure as arbitrary on the touchstone of Article 14. (II) Whilein the first category, retrospective delegatedlegislation takesaway rights which are alreadyvested,inthesecondcategory-the principle of promissory estoppelanddoctrineof legitimateexpectationare to be invoked when the legislation/ delegated legislation/ executive instructionstakeawaythe future benefits which wouldhaveotherwisebecomeavailableto the petitionerifexistinglaw/schemehad continued without any amendment. This principle/doctrine are to be invokedincasewhereapersonsfuture rightsaretobeadversely affected when he had planned his present on the basis ofpastpromises or conduct of the authorities. (III) When thelegislation/delegatedlegislationhas retroactiveoperation - the third is the intermediate categorywhereastatutecreates powers exercisable infuturebyreferencetoa continuousperiodoftimeantecedenttotheir exercise and whichcomesintoforcewhilethat period is running [loffice Cherifien vs. Yamashita Ltd. , (1994) 1 All ER 20]. Thefirstcelebratedcaseintheintermediate category is R vs. Inhabitantsofstmary, whitechapel (1848) 12 QB 120 wherein Lord Denman CJ made the following oft quoted observations :- "itwassaidthattheoperation of the statute was confinedtopersonswhohad become widows after the Act was passed, and thatthepresumptionagainsta retrospective statute beingintended supported thisconstruction: but we have before shewn that thestatuteisinits direct operation prospective, as it relates to future removals only, and that it is not properlycalledaretrospectivestatute because a part of therequisitesforits action is drawn from time antecedent to its passing. " (emphasis supplied) whiletheindiancasesinthiscategory are cataloguedin the "principles of Statutory Interpretation" by Justice GP Singh [9th Ed. (2004) Chapter 6page440], itshouldsufficetoreferto the decision of the Apex court in Dilip vs. Mohd. Azizul Haq, 2000 (3)SCC607= air 2000 SC 1976 laying down thattheproblem retrospectivity concerningenactmentsdependsonevents occurring over a period. If the enactment comes into force during a period, it only operates on those events occurring then. Wemustbear in mind that the presumption against retrospective legislation does not necessarily apply toan enactmentmerelybecause a part of the requisites for its action is drawn from time antecedent to its passing. The factthat as from a future date tax is charged on a source of income which has been arranged orprovidedforbefore thedate of the imposition of the tax does not mean that a tax is retrospectively imposed as held in Commissionersof customs and Excise v. Thorn Electrical Industries Ltd. , (1975) 1 WLR 1661. Principles enunciated by House of Lords ( 24 ) THE principles of far reaching importance enunciatedbythehouse of Lords through Lord Mustill in loffice Cherifien (Supra) now need to be quotedintheir entirety,because these weighty principles deserve fullest consideration by the Courts in India. Principles enunciated by House of Lords ( 24 ) THE principles of far reaching importance enunciatedbythehouse of Lords through Lord Mustill in loffice Cherifien (Supra) now need to be quotedintheir entirety,because these weighty principles deserve fullest consideration by the Courts in India. Afterreferringto theprinciples enunciated in Maxwell on The Interpretation of Statutes (12th edn.) andcraiesonstatutelaw (7th edn.) raising a presumption against retrospective operation ofastatute,lordmustill made the following pertinent observations :- "my Lords, it would be impossible now to doubt that the Court isrequiredtoapproachquestionsof statutory interpretation with a disposition, and in somecasesaverystrong disposition, to assume thata statute is not intended to have retrospective effect. Nor indeed would I wish to cast any doubt on the validity of this approach for it ensures that the courts areconstantlyonthe alert for the kind of unfairness which is found in, forexample,thecharacterization as criminal of past conduct which was lawful when ittookplace, orin alterations to the antecedent natural, civil or familial status of individuals. Nevertheless, I must own to reservations about thereliabilityof generalizedpresumptionsand a particular form of words, for they too readily confine the Court toa perspectivewhichtreatsallstatutes,and all situations to which they apply, as if they were the same. This is misleading, forthebasisofthe rule is none more than simple fairness, which ought to bethebasisof every legal rule. True it is that to change the legal characterofapersons acts or omissions after an event will very often be unfair;andsince it is rightly taken for granted that Parliament will rarely wish to actinaway which seems unfair it is sensible to look very hard ata statute which appears to have this effect, to make surethatthisiswhatparliamentreally intended. Thisis,however, no more than common sense, the applicationofwhichmaybeimpeded rather than helped by recourse to formulae which do notadaptthemselves to individual circumstances, and which tend themselves to become the subjectof minuteanalysis, whereas what ought to be analysed is the statute itself. (emphasis supplied) lord Mustill then made reference tothefollowing statementby Staughton LJ in Secretary of State for Social security vs. Tunnicliffe (1991) 2 All ER 712 at 724) :-"inmyjudgmentthetrueprinciple is that parliamentispresumednottohave intended to alterthelawapplicabletopastevents and transactionsina manner which is unfair to those concerned inthem,unlessacontraryintention appears. It is not simplyaquestionof classifying an enactment asretrospectiveornot retrospective. Ratherit may well be a matter of degree the greater the unfairness, the moreitis tobeexpected that Parliament will make it clear if that is intended. It is not simplyaquestionof classifying an enactment asretrospectiveornot retrospective. Ratherit may well be a matter of degree the greater the unfairness, the moreitis tobeexpected that Parliament will make it clear if that is intended. " (emphasis supplied) thereafterthe House of Lords went on to enunciate the following principles in Loffice Cherifien (Supra) :- precisely how the single question of fairness will be answered in respect of a particular statute will dependon the interaction of several factors, each of them capableofvaryingfromcasetocase. Thus, the degree towhichthestatutehas retrospective effect is not a constant. Nor is the value of the rights which the statuteaffects,or theextenttowhichthat value is diminished or extinguished by theretrospectiveeffectofthe statute. Again, theunfairnessofadversely affecting therights,andhencethedegreeof unlikelihood that this is what Parliament intended, will varyfromcasetocase. So also will the clarity of the language used by Parliament, and the lightshedonit by consideration of the circumstances in which the legislation was enacted. Allthesefactorsmustbeweighedtogether to provide a direct answer to the question whether the consequencesofreadingthestatutewith the suggesteddegreeofretrospectivity is so unfair that the words used by Parliament cannot havebeen intended to mean what they might appear to say. " (emphasis supplied) after referring to the above quoted observations of lord Denman CJ inrvsinhabitantsofst. Many, whitechapel (Supra), Lord Mustil in Loffice Cherifien went on to make the following pertinent observations :-"these cases do not point directly to a conclusion, but they do demonstrate that where anintermediate typeof retrospectivity is in issue the purpose of the legislation andthehardshipoftheresult contended for are of particular importance. "the House of Lords also referredtotheorthodox distinction between accrued substantive rightsand proceduralrightsandheldthatsometimesitisnot possible to assign rights under consideration unequivocally toonecategoryratherthananother and that the Court would prefer to look to the practical value andnatureof therightsunderconsiderationasasteptowardsan assessment of the unfairness of taking them away afterthe event. Principles regarding retrospectivity based on public policy ( 25 ) THOUGH the aboveprinciplesmayatfirstblush appear to be a radical departure from the traditional legal principles,theyare quite in conformity with the settled principles as analyzed in theleadingtext-booksonthe subject. 25. 1 maxwell on the Interpretation of Statues states the legal principle in the following emphatic terms:- "itisafundamental rule of English law that no statuteisconstruedtohavea retrospective operationunlesssuch a construction appears very clearly in the termsoftheact,orarisesby necessary and distinct implication. " the principleisfoundedonthemaxim,"lex prospicit non respicit" (law looks forward not back ). As stated by Willesj. 25. 1 maxwell on the Interpretation of Statues states the legal principle in the following emphatic terms:- "itisafundamental rule of English law that no statuteisconstruedtohavea retrospective operationunlesssuch a construction appears very clearly in the termsoftheact,orarisesby necessary and distinct implication. " the principleisfoundedonthemaxim,"lex prospicit non respicit" (law looks forward not back ). As stated by Willesj. in Phillips vs. Eyre (1870) LR 6 QB (at p. 23) "retrospective laws are, no doubt, primafacieof questionablepolicy,andcontrary to the general principle that legislation by which the conductof mankindisto be regulated ought, when introduced for the first time, to deal with futureacts,and ought not to changethecharacterofpast transactions carried on upon the faith of thethen existing law. " article20 (1)oftheconstitution also provides against making of a ex-post factolawmakinganactan offencewhichwasnot so when committed or imposing more severepunishmentthanwasimposedatthe time of commission oftheoffence,otherwisethefundamental principle of the legal system will be violated. The Courts have,however,appliedtheprinciple against retrospectivity more stronglyagainstpenal statutes than statues in the realm of tradeandcommerce. 25. 2 since the entiredebateturnsontwoquestions whetheranyvestedrightshadaccrued in favour of the petitioner and whether suchvestedrightscanbetaken away,itisnecessaryto examine the expression "vested rights". In Blacks Law Dictionary, the expression "vested rights" is defined as under :- "vested rights. In constitutional law, rights- which have so completely and definitely accruedto or settled in a person that theyare not subject to be defeated or canceled by the act of any other private person, and which it is right and equitable that the government should recognize and protect, asbeinglawfulin themselves,andsettledaccordingtothethen current rules of law, and of which the individual could notbedeprived arbitrarily without injustice, or of which he could notjustlybedeprivedotherwisethanbythe established methods of procedure and for the public welfare. Suchinterestsascannotbeinterfered with by retrospective laws; interests whichitisproper forstatetorecognizeand protect and of which individual cannot be deprivedarbitrarilywithout injustice. American States Water Service Co. of california v. Johnson, 31 Cal. App. 2d 606, 88p. 2d 770, 774. Immediate or fixed right to present or future enjoyment and one that does not depend on an event that is uncertain. Arightcompleteand consummated,andof such character that it cannot be divested without the consent ofthepersonto whomitbelongs, and fixed or established, and no longer opentocontroversy. State ex rel. Milligan v. Ritter;s Estate, Ind. App. , 46 N. E. 2d 736, 743. "25. 3 francisbennionsstatutoryinterpretation (Part viii pg. 445)recognizestheprincipleof"publicgood construction" in the following terms:- "public goodconstruction :one of the principles governingstatutoryinterpretationisthatthe constructionadoptedshouldpromotethepublic good. This criterion, like many others, can affect the question ofwhetheranenactmentshouldbe given a retrospective construction. State ex rel. Milligan v. Ritter;s Estate, Ind. App. , 46 N. E. 2d 736, 743. "25. 3 francisbennionsstatutoryinterpretation (Part viii pg. 445)recognizestheprincipleof"publicgood construction" in the following terms:- "public goodconstruction :one of the principles governingstatutoryinterpretationisthatthe constructionadoptedshouldpromotethepublic good. This criterion, like many others, can affect the question ofwhetheranenactmentshouldbe given a retrospective construction. " the learned Author then refers to the following two cases:- in Remonvs. Cityoflondon Real Property Co. Ltd. (1921) 1 KB 49, the Court wasrequiredtoconsider the provisions of Rent and Mortgage Interest (Restrictions) act,1920giving from 2nd July 1920 security of tenure to tenants of council houses. The questionwhether"tenant" wouldinclude person whose tenancy had expired and who had received a notice to quit before the dateofcominginto forceofthe Act - was answered in the affirmative on the ground that the Act was passed to dealwiththecritical housingshortagewhichfollowedthedemobilizationof immense numbers of the armed forces after theendofthe first worldwar. Thecourttooktheviewthatthe legislation was enacted to remedy the crisis and thatsuch a remedial legislation could be given retrospective effect. Again, inlordhowad de Walden vs. IRC, (1942) 1 kb 389 (398), Lord Greene MR had nohesitationingiving retroactiveeffecttothetaxavoidanceprovisions of section 18 ofthefinanceact,1936inthefollowing terms:- "thefactthatthesection has to some extent a retroactive effect appears to us ofnoimportance whenit is realised that the legislation is a move inalongandfiercelycontestedbattlewith individualswhowell understand the vigour of the contest. "25. 4 asstated in Bennions, Interpretation of Statutes - "retrospective operation; delegated powers" (page 450) - "since the principles regarding retrospectivity are based on public policy, it follows that theyapply equally todelegatedlegislation. However, the legislativeintentionneedstobegatheredby considering both the enabling Act and the delegated instrument. If retrospectivity is beyond the power conferredbythe Act, the doctrine of ultra-vires comes into play. " (emphasis supplied)25. 5 itis,thus,clearbothinprincipleandon authority that the PRINCIPLES REGARDING RETROSPECTIVITY ARE based ON PUBLIC POLICY and, therefore, the tests laiddown by the House of Lords in Loffice Cherifien (1994) 1 All ER 20 speaking throughlordmustillareverymuchin consonancewiththesettledlegalprinciplesandare applicabletoall three categories of cases as enumerated in para 23 hereinabove. Classification and consequences - analysis of Principles ( 26 ) FROMTHEFUNDAMENTALPRINCIPLES flowing from various decisions that public interest is a superior equity and,therefore,where the overwhelming public interest so demands, the legislation/subordinate legislationmayhave tobe allowed to take away future benefits promised in the past [m/s Motilal Padampat Sugarmillsco. Classification and consequences - analysis of Principles ( 26 ) FROMTHEFUNDAMENTALPRINCIPLES flowing from various decisions that public interest is a superior equity and,therefore,where the overwhelming public interest so demands, the legislation/subordinate legislationmayhave tobe allowed to take away future benefits promised in the past [m/s Motilal Padampat Sugarmillsco. Ltd. vs. State of UP, (1979) 2 SCC 409 = AIR 1979 SC 621 ] and having regard to theprinciplesenunciatedintheleading text-books as explained inpara25hereinaboveandthe principleslaiddowninloffice Cherifien as quoted in para 24 hereinabove, the following principles emerge :- i when challenge to delegated legislationor executiveorderbringingabout a change in governmentspolicywithprospectiveeffectis examined by the Court on merits, the Court does not sit in appeal over the Governmentdecision. The courtnotonlypresumesthe delegated legislation/executive order tobeconstitutional, butevenwhen the petitioner succeeds in shifting the onus to the Government,afterthegovernment producessomematerialto defend the decision on merits, the Court does not go intosufficiencyor otherwise ofsuchmaterial. The Court will not interfere unless the change in policyismalafide or arbitrary. II It is only when the change hasretroactiveeffect (theintermediatetype of retrospectivity - third category as enumerated inpara23)orthecase fallsin the second category (promissory estoppel) that - (A) the Government has to justify the change in policy by showingoverwhelmingpublic interestwhich,intheopinionofthe court,willoverridethegeneral public interest in seeing that the Government does not commit breach of its promisesorthat the Government does not deny benefits which wouldhaveflowed to the promisee but for the change in policy. (B) When the Government is able to satisfythe court thatthereisoverridingpublic interest to justify thechangeinpolicy which willhavefutureeffect (second category in para 23) or retroactiveeffect (thirdcategory)thatthegovernment is free to change thepolicyandthecourt wouldnothold the Government to be bound by its promise. (C) It is only when the Government is notable toshowsuchoverridingpublic interest that the further question is required to be consideredwhether,afterbreach/ non-fulfilment of thepromisebythe government, thepromiseecanresumehis position. Ifansweris in the negative, the Court would grant appropriate relief in favour of the promisee. (D) Courtismorestrictwhenthestatute inflicts penalty or imposes new liabilities rather than when a remedial statute affects existingrightsinorderto protect the publicinterest[stateof Bombay vs. Vishnuramchandra,air1961 SC 307 (310) and In Remon (1921) 1 KB 49]. III Itisin the case of delegated legislation giving retrospective effecti. e. TAKINGAWAY VESTED rights and, therefore,fallinginthefirst category (enumerated in para 23) that - (i) the Government has firstly tosatisfythe test that theparentlegislationhas expresslyor by necessary intendment empoweredorpermittedthe Government to makedelegatedlegislationwith retrospective effect; (ii) secondlythe Government has to satisfy the tests (a) and (b) as indicated above. III Itisin the case of delegated legislation giving retrospective effecti. e. TAKINGAWAY VESTED rights and, therefore,fallinginthefirst category (enumerated in para 23) that - (i) the Government has firstly tosatisfythe test that theparentlegislationhas expresslyor by necessary intendment empoweredorpermittedthe Government to makedelegatedlegislationwith retrospective effect; (ii) secondlythe Government has to satisfy the tests (a) and (b) as indicated above. (iii) In absence of overwhelmingandoverriding public interest, the Court must strike down thedelegated legislation as arbitrary and violative of Article14withoutapplying test (c) as indicated above. Application of Principles - Notes 3, 6 and 4 ( 27 ) INLIGHTOFTHEAFORESAID discussion, while the court is of the view that thepresentcaseisconcerned withdelegated legislation with retroactive operation and, therefore,belongstothe intermediate category of retrospectivitywherethe duty free import entitlement to be given to the export houses on and from 1. 4. 2004 willbe affectedbythenotificationdated28. 1. 2004 read with publicnoticedated28. 1. 2004andfurther Government notifications dated21/24. 3. 2004coveringtheexports during the entire period from1. 4. 2003to31. 3. 2004and suchnotificationswouldhave effect on the exports made from 1. 4. 2003 to27. 1. 2004also (besidesaffectingthe future exportsfrom28. 1. 2004to31. 3. 2004 ). The next important question is whether it is unfair on thepartof thecentralgovernmenttomake an amendment to the Exim policy by excluding fromthebenefitsoftheincentive schemespecifiedcategoriesof goods exported before the date of notification. ( 28 ) INVIEWOFOUR finding that in so far as Notes 3 and 6 with Note 4 are concerned, the present case fallsin the thirdcategory (i. e. retroactiveoperation of the amendment) and not in the firstcategoryof retrospectivity, itisnotnecessarytoexaminethe question whether the parent Act authorizesthegovernment to giveretrospective effect to delegated legislation. It is, therefore, notnecessarytodealwiththevarious decisionscitedon behalf of the petitioner such as Hukam chand vs. Union of India, AIR 1972 SC 2427 . ( 29 ) AT the firsthearing (whichtookplaceinthe secondweek of April 2004) much had been said on behalf of the petitioner against the publicnoticedated28. 1. 2004 issuedbythe DGFT, particularly the provisions excluding certain categories of exportandimportgoodsfromthe benefits of the Special Scheme under consideration. It was contendedthatthedgfthadno power to amend the EXIM policy. With the issuance of the Governmentnotifications dated21/24thapril2004correctingnotification dated 28. 1. 2004 and adopting those veryclausesofthedgfts publicnoticedated 28. 1. 2004, the petitioners arguments have obviously lost much of their steam. However,inthe amended petition, it is contendedthatgovernment notifications dated 21/24thapril2004areillegaland arbitrarybecausenotes6and 7 are given retrospective effect from 1st April 2003. It was contendedthatthedgfthadno power to amend the EXIM policy. With the issuance of the Governmentnotifications dated21/24thapril2004correctingnotification dated 28. 1. 2004 and adopting those veryclausesofthedgfts publicnoticedated 28. 1. 2004, the petitioners arguments have obviously lost much of their steam. However,inthe amended petition, it is contendedthatgovernment notifications dated 21/24thapril2004areillegaland arbitrarybecausenotes6and 7 are given retrospective effect from 1st April 2003. ( 30 ) WHILE it is usual for anylegislationtoprovide forappointment of a Director General or a Chief Executive officer to carry out the provisions of the Act,section 6 ofthe FTDR Act does not stop there, but proceeds to state thatthedirectorgeneralshalladvise the Central governmentintheformulationofthe export and import policy and shallberesponsibleforcarryingoutthat policy. The Parliament, therefore, recognized the complex nature of the activity of developing and regulating foreign trade. The very nature of this activity oflookingafter developmentandregulation of foreign trade would require the Central Government and the Director General offoreign trade to deal with severalunforeseen,unexpected situations and circumstances which neithertheparliament nor the Central Government nor even the Director General of foreigntradecouldhaveanticipated,contemplatedor visualized while framing a particular policy. Hence,by addingnote3topara3. 7. 2. 1oftheexim Policy on 28. 1. 2004, the Government madeitsintentionveryclear thatexportsandimportsofcertaingoodswere to be excluded from the benefits of the Special Scheme for status holders. In view of the said Note, Section 6 of the Act andpara3. 2. 5ofthehandbook of Procedures, the DGFT issued the publicnoticedated28. 1. 2004onwhichthe exportersandstatusholdersincludingthepetitioner started acting (for instance the petitioner stoppedexport ofroughdiamondsasstated in the respondents written submissions para 10 ). Thethencommerceministeralso rejectedthepetitionersrepresentation dated 11. 2. 2004 and thereby granted the sealofapprovalonthedgfts publicnoticedated28. 1. 2004excludingcertain export goods from the Special Scheme w. e. f. 1. 4. 2003. Inthis background, once the RETROACTIVE operationofthe government notification dated 28. 1. 2004 (includingnote3 thereof)on exports made from 1. 4. 2003 is upheld as valid, the notifications dated 21/24th April 2004 flowing from the said Note 3 and adopting the contents of the publicnotice dated 28. 1. 2004cannotbefaultedonthegroundof retrospectivity. ( 31 ) THEDECISIONSINUNIONOF India vs Shree Ganesh steel Rolling Mills Ltd. , (1996) 8 SCC 347 and innarendra udeshi vs. Union of India, 2003 (156) ELT 819 (Bom) have been relied upon by the learned counsel for thepetitioner in supportofthecontentionthatintheguiseof clarification the Government cannot amend thepolicywith retrospective effect. 31. 1. 2004cannotbefaultedonthegroundof retrospectivity. ( 31 ) THEDECISIONSINUNIONOF India vs Shree Ganesh steel Rolling Mills Ltd. , (1996) 8 SCC 347 and innarendra udeshi vs. Union of India, 2003 (156) ELT 819 (Bom) have been relied upon by the learned counsel for thepetitioner in supportofthecontentionthatintheguiseof clarification the Government cannot amend thepolicywith retrospective effect. 31. 1 in Ganesh Steel (Supra), the Courtheldthatthe procedure to be followed in the matter of import and export canbespecifiedandeffected only by means of a public notice and the clarification issued bythedgftinthat casenot having been issued by means of any public notice, it cannot be read as amendment to the procedure. Inthe instantcase,the Government notifications and the DGFTs public trade notice are not shown tobevitiatedbyany vice of non-publication. 31. 2 in Narendraudeshi vs. Union of India, 2003 (156) elt 819, the Bombay High Court held thatthedgftcannot issue any public notice which would go beyond the scope and ambitofthepowersvestedinthedgft and would run countertothepolicyofthecentralgovernment as announced in the Exim Policy 2002-07. Thisaspecthasalready been examined in para 30 hereinabove. Case Law on Promissory Estoppel - After Motilal Padampat ( 32 ) BEFORE proceeding to examine whether the amendments made by Notes 3, 6 and 7 with retroactive effect are unfair and if yes, are so UNFAIR that this Court shouldinterfere withthem,we would deal with some of the decisions cited by the learned counsel for the parties so that the tests to be applied for undertaking the above exercise as set out in part II of para 26 become clear:-32. 1 the learned Addl. Solicitor General placedstrong reliance onkasinkatrading vs. Union of India, (1995) 1 scc 274 , wherein the doctrine ofpromissoryestoppelwas invoked in the following set of facts:- undersection25 (1) of the Customs Act, 1962, the government of India issued notification dated 15. 3. 1979in "publicinterest"grantingexemptionfromwhole of the customs duty on import ofpvcresin. Thenotification itself providedthatitshallremaininforceupto 31. 3. 1981. Butbeforeexpiryofthesaidstipulated period, another notification dated 16. 10. 1980 was issued in "publicinterest"withdrawing the exemption and confining the exemption from customs duty as is in excess of40%ad valorem. Theappellant-petitionerbeforetheapexcourt contended that relying on the exemption notificationdated 15. 3. 1979,ithadplacedordersforthe import of PVC resins on the understanding that the commodity wastotally exempt from customs duty, the Government must be held bound bytherepresentation contained in the notification dated 15. 3. 1979 and the Government was estopped on thebasisof promissory estoppel to go back on its promise. Theappellant-petitionerbeforetheapexcourt contended that relying on the exemption notificationdated 15. 3. 1979,ithadplacedordersforthe import of PVC resins on the understanding that the commodity wastotally exempt from customs duty, the Government must be held bound bytherepresentation contained in the notification dated 15. 3. 1979 and the Government was estopped on thebasisof promissory estoppel to go back on its promise. The Government justified the withdrawalof exemption on the groundthatthegovernmenthadissued notification dated 15. 3. 1979 with a view to equalizing sale pricesofthe indigenous and the imported material and to make the commodity available to the consumer atauniform price,keepinginviewthetrends in the supply of the material. Subsequently,it was realized that the internationalpricesoftheproductwerefallingand consequently the import prices had becomelowerthanthe ex-factory pricesoftheindigenous material. Hence, it was decided in "public interest" to withdraw theexemption notification. The Apex Court held that, "the reasons given by the unionofindiajustifyingwithdrawalofthe exemption notification, in our opinion, arenotirrelevanttothe exerciseofthe power in public interest nor are the same shown to be insufficient to support theexerciseofthat power". Thecourt also observed that, the power to grant exemption from payment of duty flows from the provisions of section 25 (1) of the Customs Act. Thepowertoexempt includes the power to modify or withdraw the same. Such an exemptionbyitsverynatureissusceptibleof being revoked or modified or subjected to other conditions. The supersessionor revocation of an exemption notification in the public interest is an exercise of thestatutorypower ofthe State under the law itself as is obvious not merely from the language of Section 25 of the Act, butalsofrom the General Clauses Act under which the authority which has thepowerto issue a notification has the undoubted power to rescind or modify the notification in the like manner. Thecourtalso examined the case of the appellant-petitionersthatrelyingupon the notification dated 15. 3. 1979, they had acted andthegovernmentcould not be permitted to go back on its assurance otherwise they would beputtohugeloss. The Court dealt with this contention in the following words :- "the Courts have to balanceequitiesbetweenthe partiesandindeedthecourtswouldbindthe government byitspromise"topreventmanifest injustice or fraud". Thecourtalso quoted with approval the following observations from Malhotra and Sons vs. Union of India,air 1976 J and K 41 :- Thecourtswillonlybind the Government by its promises to prevent manifest injustice or fraud and will not make the Government a slave of itspolicy foralltimes to come when the Government acts in its governmental, public or sovereign capacity. "32. Thecourtalso quoted with approval the following observations from Malhotra and Sons vs. Union of India,air 1976 J and K 41 :- Thecourtswillonlybind the Government by its promises to prevent manifest injustice or fraud and will not make the Government a slave of itspolicy foralltimes to come when the Government acts in its governmental, public or sovereign capacity. "32. 2 the above decision was followed by theapexcourt in Shrijeesales Corporation vs. Union of India, (1997) 3 scc 398 , where also the same notifications were considered. In that case also, the appellants-petitionershadalleged that they would not have imported the PVC resin without the exemption as that would have been unviable and uneconomical andfurtherthatmany persons took full advantage of the exemption. The Court held that the facts oftheeconomic situationexplainedinthejudgment of Kasinka were not controverted nor was it alleged thatpublicinterestdid notcallforsupersession of the exemption notification. The Court also examined the question whether the factthat thenotificationdated15. 3. 1979mentionedtheperiod during which it was toremaininforcewouldmakeany difference tothesituation. The Court then held that, "once public interest is accepted asthesuperiorequity whichcan override individual equity, the principle should be applicableevenincaseswhereaperiodhasbeen indicated". 32. 3 however,inthesubsequentdecision in Dai-ichi karkaria Ltd. vs. Union of India, (2000) 4 SCC 57 relied upon by Mr Dave for the petitioner, the Court was concerned withacontroversy somewhat similar to the controversy in the above two cases, but on differentfacts. Thecourt held that the Government had failed to discharge the burden of justifyingreductionoftheextent of exemption. By notification dated 10. 9. 1982 (which stated that it would be in force till 10. 9. 1987), the Government of Indiaexempted frompaymentofcustomsduty/additionalduty all raw material and components importedforthemanufactureof goodstobesuppliedtovariousorganizations such as international Development Association. . . . . . ONGC, OIL or gail. Bynotificationdated30. 12. 1986,the Central governmentexemptedraw materials and components required for the manufacture of the goods to be supplied to ONGCor gailfrompaymentofcustomsdutyin excess of 25% ad valorem and the whole of the additional duty. Byanother notificationdated30. 12. 1986,itwas notified that the notification dated 10. 9. 1982 stood amended by omittingthe words"oroilandnaturalgascommission or Oil India limited or Gas Authority of India Limited". Asaresult thereof, the appellant who was manufacturer and supplier of certaingoodstoongcbecameliable to pay duty to the extentof25%fortheperiodbetween30. 12. 1986and 10. 9. 1987. Theapexcourtstruck down the notification dated 30. 12. 1986 reducing the exemption on the groundthat thepolicyofthegovernment of India was to indigenise production as is the policy of the ONGC also to indigenise. Asaresult thereof, the appellant who was manufacturer and supplier of certaingoodstoongcbecameliable to pay duty to the extentof25%fortheperiodbetween30. 12. 1986and 10. 9. 1987. Theapexcourtstruck down the notification dated 30. 12. 1986 reducing the exemption on the groundthat thepolicyofthegovernment of India was to indigenise production as is the policy of the ONGC also to indigenise. The appellanthadsecuredordersforsupplyofgoods against global tenderswhereforeignsuppliersalso participated and in the teeth of international competition, the appellant had been awarded the contracts by ONGC;that pursuanttotheexemptionthathadbeengranted, the appellant had invested since 1983 a large amountofmoney inrespectofitsplantfor manufacture of goods to be supplied to ONGC; that public interest whichpromptedthe governmentofindia to issue exemption notification dated 10. 9. 1982remainedunalteredandno new supervening circumstanceshadjustifiedreversalof the said policy and,infact,suchareversaltoencourage foreign manufacturers at the cost of Indian manufacturers is per se contrary topublicinterestandadrainonforeign exchange. It was in the above set of circumstancesthatthe apexcourtdistinguished the decisions in Kasinka Trading and Shrijee Sales Corporation withoutdifferingfromthe principlelaiddownthereinthatpublicinterest is a superior equity which can overridetheindividualequity and,therefore,the principle would be applicable even in cases where a period has been indicatedforwhichperiod the notification or the policy was to remain in force. Indai-ichikarkaria,thegovernmentfailed to justifytherationalityorreasonablenessofimpugned notification. The Apex Court did not lay down a different principle. 32. 4 ananalysis of the above cases, therefore, clearly indicatesthatifatallthefundamental principles regardingapplicabilityoftheprincipleof promissory estoppel have undergone any change from those enunciated in motilal Padampat Mills case in 1979, it is onlytosoften therigourofburdenofproofonthegovernmentby requiring the petitioner to prove"manifestinjusticeor fraud" andnotmerelycommercial loss. Accordingly, the courts will interfere with changeinpolicywithfuture effectorretroactiveeffectonlyto "prevent manifest injustice or fraud". At the cost of repetition,wewould saythatsuperiorequity of public interest may override individual interest even if the promisee cannot resumehis position. Itisonlywhenthere is no such overriding public interest and the promisee cannot resume his position that the Government would not be allowed to resile from its promise (principleiiinpara25hereinabove ). This fundamentalprinciple of superior public equity is as much applicable to the principleofretroactiveoperationof delegated legislation in economicsphereasitis applicable to the principle of promissoryestoppel. Caselawonretrospectivechangeinpolicy and Vested rights. ( 33 ) WE must point out that the learned counsel forthe petitionercited the following decisions in support of his contentionthatany executive action or delegated legislation or even a legislative enactment has to be stuck down by the Court if it takes away vested rights :- (I) State of MP vs. GS Dallandflourmills, 1992 Supp (1) SCC 150. (ii) Pawanalloysvs. Castings Pvt Ltd. vs. UP state Electricity Board, (1997) 7 SCC 251 . (ii) Pawanalloysvs. Castings Pvt Ltd. vs. UP state Electricity Board, (1997) 7 SCC 251 . (iii) Collectorofcustomsvs. East Punjab traders, 1997 (89) ELT 11 . (iv) In Sonia Fisheries vs. Union of India, 1997 (90) ELT 22. (v) Sakuri vs. Tanaji, AIR 1983 SC 1279 (vi) Bejgam Veerannavenkatanarasimloovs. State of AP, (1998) 1 SCC 563 . (vii) Ex-Capt. KC Arora vs. State of Haryana, AIR 1987 SC 1858 . (viii) P Mahendran vs. Stateofkaranataka, air 1990 SC 405 . (ix) CIT vs. Bazpur Cooperativesugarfactory ltd. , AIR 1988 SC 1263 (x) State of Gujarat vs. Ramanlalkeshavlal soni, AIR 1984 SC 161 . (xi) Kazilhendupdorji vs. CBI, 1994 Supp (2) scc 116. (xii) Adani Exportsvs. Unionof India, 2003 (151)ELT 520 (Mad.) (xiii) K Kapen Chako vs. The Provident Investment co. (P) Ltd. , (1977) 1 SCC 593 . (xiv) SB International Ltd. vs. Asst. DGFT, 1996 (82) ELT 164 it is not necessary to deal with all these cases as in the first place they dealt with notifications which were issued after the concerned petitioners had already obtained the benefits. Thelengthofperiodafterwhichthose benefitsweresoughtto be taken away was also a crucial factor which weighed with the Courts in strikingdownthe offendingexecutiveaction or the legislation and rightly so, becausevestedrights,asdefinedinblackslaw dictionary are those whichhavesocompletelyand definitely settledinapersonthathecouldnotbe arbitrarily deprivedofthem without injustice. Impugned amendments to the Incentive Scheme made midstream can never be compared to those cases. Moreover,innoneofthose cases,thecourtwas persuaded to take the view that the public interest outweighed individual interest. Justto fortifytheaboveanalysis, we would prefer to deal with five out of the aforesaid decisions cited on behalf ofthe petitioner. 33. 1 in Stateofmp vs. GS Dall and Flour Mills, 1992 supp (1) SCC 150, thestateofmpframedanexecutive schemeforthe grant of subsidy/interest free loan to new industries set up in Madhya Pradesh. Theschemeexcluded "traditionalindustries"like dall mills from the benefit of thescheme. The Government thereafter issued notificationdated23. 10. 1981in exercise of power under the MP Sales Tax Actgrantingconcessioninpaymentof sales tax by newindustrialunitswhichcommenced production after 1. 4. 1981. The statutoryschemedidnot exclude "traditional industries" fromthegrantof sales-tax concession. However,bynotification dated 3. 7. 1987, the State Government amended the 1981 notification with retrospective effectsoastoexclude "traditionalindustries"fromthe grant of the sales-tax benefits. The Apex Court held that 1981notificationhad notclearlyenvisagedexclusionofany industry, which fulfils the terms of the notification, from availing of the exemption granted under it, but the 1987 amendment hadthe effect of rescindingtheexemptiongrantedby1981 notification in respect of the traditional industries. However,bynotification dated 3. 7. 1987, the State Government amended the 1981 notification with retrospective effectsoastoexclude "traditionalindustries"fromthe grant of the sales-tax benefits. The Apex Court held that 1981notificationhad notclearlyenvisagedexclusionofany industry, which fulfils the terms of the notification, from availing of the exemption granted under it, but the 1987 amendment hadthe effect of rescindingtheexemptiongrantedby1981 notification in respect of the traditional industries. The apex Court, therefore, heldthatwhilethenotification grantingthebenefit can be prospective or retrospective, only prospective operation can be given toanotification rescinding anexemptiongrantedearlier. The Court held that the 1987 notification cannot be treated as onemerely clarifyinganambiguityintheearlieroneand hence capable of being retrospective; it enacts the rescission of theearlierexemptionand,hence,can operate only prospectively. It cannot take away the exemption conferred by the earlier notification. The assessee in that case had startedproductionfromjanuary1983 and the Court held that the assessee was covered bythetermsofthe1981 notification and,therefore,hewasentitledtothe exemption till 1987 amendment took away the exemption. In the above case, exemption grantedin1981was sought tobetakenawayafter6yearsandinthe appellants case after 4yearsduringwhichperiodthe benefit of sale tax exemption was already obtained. In the facts oftheinstantcase,however,the amendmentshavebeen introduced midstream during the same financial year to which the exports relate. 33. 2 in Bejgam Veeranna Venkata Narasimloo vs. State of ap, (1998) 1 SCC 563 , the appellantrice-millerssupplied the FCI rice under the Andhra Pradesh Procurement and Price fixation orders. The FCI paid the price fixed by the 1975 order on 3. 11. 1976. Subsequently, bygovernment notificationdated24. 2. 1977,the Government reduced the price of rice with effect from 7. 9. 1976. Thegovernment sought torecover the excess price paid on 3. 11. 1976. The apex Court heldthatthericehadbeensoldundera procurementorderandifthepetitioner supplied goods under that order and if a portion of the price paid bythe fciistakenaway,the appellants will be prejudicially affected. The rice-millers had actuallyreceivedpayment for thericesold. If the rice was delivered without any valid procurement order, the sellerswereevenotherwise entitledto be paid at the market rate in terms of Section 70 of the Contract Act. Theretrospectivenotification dated24. 2. 1977reducingthepricehad tried to take a portion of the money the rice-millers had alreadylawfully obtained. Therefore, the Apex Court interfered. Intheinstant case, the petitioner was not given anyimportentitlementonthedateofthe impugned notification i. e. on28. 1. 2004. The incentive scheme is to come into forcefrom1. 4. 2004onthebasisofthe exports madebetween1. 4. 2003and 31. 3. 2004. Hence, the 0facts in the instant case are entirely different. 33. 3 in State of Gujarat vs. Raman Lal Keshav Lal Soni, air1984sc161,thecourtwasconcernedwith the retrospectiveamendmentstothegujarat Panchayats Act, 1961. Intheinstant case, the petitioner was not given anyimportentitlementonthedateofthe impugned notification i. e. on28. 1. 2004. The incentive scheme is to come into forcefrom1. 4. 2004onthebasisofthe exports madebetween1. 4. 2003and 31. 3. 2004. Hence, the 0facts in the instant case are entirely different. 33. 3 in State of Gujarat vs. Raman Lal Keshav Lal Soni, air1984sc161,thecourtwasconcernedwith the retrospectiveamendmentstothegujarat Panchayats Act, 1961. Theemployeesoftheerstwhile Municipalities converted intopanchayatsweretreatedasgovernment servants under the unamended Act for20years. Bythe impugnedamendedacttheir status as Government servants was sought to be taken away after passage of 20 years. It wasin the context of these facts that the Court held that the law cannot say, 20 years ago the parties had no rights, therefore,therequirementsofconstitution will be satisfied ifthelawisdatedbackby20years. A legislature cannot legislatetodaywithreferencetoa situationthatobtained 20 years ago and ignore the march of events and theconstitutionalrightsaccruedinthe course of the 20 years. Thiscasehasno relevance to the controversy at handwhichisconcernedwithmidstream clarification/amendmenttoeximpolicyinjanuary 2004 about Duty Free Import Entitlement from April 2004onthe basis of exports made between April 2003 and January 2004. 33. 4 in Adani Exports vs. Union ofindia,2003 (151) elt520 (Mad.),themadrashigh Court held that in the passbook scheme under the Eximpolicy,creditshouldbe calculated on the basis of the exports made and, therefore, the credits have to be calculated on the basis of the norms as theywereexistingon the date of exports. The Court held that the credit is not to be calculatedinlightof thenew norms particularly when in the new policy there is no scope or mention or reference to the passbook schemeat all. Itisthus clear that what weighed with the Court was that since the passbook scheme was conspicuously absent in the new policy, one fails to understand astohowthe authoritiescouldbeallowedtocalculatethe credits payable totheexporterunderanon-existentpassbook scheme. Therefore,onthebasis of the language of the scheme, the Court held that there was no scope to hold that the subsequent norms could govern the earlier exports. In the instant case, however,aspointedoutbythe respondents, the expression "incremental growth of 25%" was required to be clarified by the impugned notification dated 28. 1. 2004andoverwhelmingpublic interest warranted exclusionofcertainexportitems. 33. 5 in SB International Ltd. vs. Asst. DGFT, 1996 (82)ELT164,theapexcourtwasconcernedwithan applicationforadvancelicenseforimportgranted in advance of export. The observations madethereininthe contextofahypotheticalargumentdo not refer to any vestedright,butatthemostanexistingrightas discussed in para 22 hereinabove. 33. 6 thus in all theabovecasesthegovernmenthad eithernotpleaded,or failed to discharge the burden of showing, overwhelming public interest whichcouldjustify the change in Government policy with retrospective effect. Examiningchallenge to retroactive operation of Notes 3, 6 and 7 on merits. DGFT, 1996 (82)ELT164,theapexcourtwasconcernedwithan applicationforadvancelicenseforimportgranted in advance of export. The observations madethereininthe contextofahypotheticalargumentdo not refer to any vestedright,butatthemostanexistingrightas discussed in para 22 hereinabove. 33. 6 thus in all theabovecasesthegovernmenthad eithernotpleaded,or failed to discharge the burden of showing, overwhelming public interest whichcouldjustify the change in Government policy with retrospective effect. Examiningchallenge to retroactive operation of Notes 3, 6 and 7 on merits. ( 34 ) APPLYING the aforesaid tests, now we take upnotes 3, 6 and 7 in the notification dated 21/24th April 2004 and the public notice dated 28. 1. 2004 which read as under :- Note3-Government reserves the right in public interest, to specifytheexportproducts,which shall not be eligible for calculationof incremental growth/entitlement. Similarly, the government may also notify the list of goods, which shall not be allowed for imports under the scheme. Note 6 - The export of the followingproductsand categoriesofproducts would not be permitted for counting entitlement under the Dutyfree entitlement Certificate for Status Holders a. Rough, uncut and semi polished diamonds b. Gold,silver in any form including plain jewellery thereof c. Food grainssourcedfromcentralpool maintained by FCI d. Items exported under free shipping bills Note7 -The following items would not be allowed for imports under Dutyfreecreditentitlement certificate for Status Holders : Agriculturalproducts,whichfall under Chapters 1-24 ofitc (HS)Classificationofexportand import items. ( 35 ) EXCLUSIONOFROUGH, UNCUT AND SEMI-POLISHED diamonds,intheirnotesubmittedatthehearing, the petitioners stated as under :- (i) Rough Diamonds export isrs. 751. 96crores and Rs. 1719. 49 crores is export of polished diamonds. (ii) These exports have beenmade/effectiveby the petitioners under Para 2. 36 and 2. 39 of the Exim Policy. (iii) The petitioners have not imported the rough diamondsbut have exported after procuring the same from local suppliers. (iv) Exportofdiamondsiscovered by Thrust section in para 3. 10 (d) of Exim Policy. (v) The petitioners have also referred to paras 2. 36and2. 39oftheexim Policy under whichthediamondswerenotrestricted items for imports or exports. 35. 2 in their written submissions, the respondents case is - ". . . . . . rough diamonds constitute less than 5% of diamond exports and only the export of rough and semi-polished diamonds was restricted to be counted as growthturnover. Restof the categories includingpolisheddiamondswhich constitute the major percentageofexportswerefullyallowed under thescheme. The petitioner has claimed to export diamonds worth Rs. 2400croresoutofits turn over ofrs. 4000croresinthecurrent financial year. Diamonds are lowdutyitemsand roundtripping was reported in the National Press. Rough diamonds are not producedinindia (except for atrickle from Panna ). Restof the categories includingpolisheddiamondswhich constitute the major percentageofexportswerefullyallowed under thescheme. The petitioner has claimed to export diamonds worth Rs. 2400croresoutofits turn over ofrs. 4000croresinthecurrent financial year. Diamonds are lowdutyitemsand roundtripping was reported in the National Press. Rough diamonds are not producedinindia (except for atrickle from Panna ). Its a low volume high value, zero customs duty item. The petitionerhas indicatedthatithaspurchasedrough diamonds locally and exported it. Itdoesnotdefythe logicthatsuchitemsareexported from India. India is not a rough diamond exporting countryand onlythoserough diamonds that are unsuitable for cutting in India arere-exported. According to gemsandjewelleryfigures,petitioners M/s Adani exportslimitedhaveexported 143. 13 million dollarsworthof diamonds during January-December 2003. The fact that the petitioners were exporting rough diamonds merely to take the benefits ofdefc scheme is proved beyond doubt by the fact that firm stopped exporting the rough diamonds the moment the notificationwasissuedin January 2004 and have not exported anyroughdiamondsduring january-March 2004. Themajoritemsof exports are such that the petitioners cannot use their entitlementunder theschemewithout violating the basic conditions leading to huge loss of revenuewhichwouldhave otherwise come into the public exchequer. " (emphasis supplied)35. 3 applyingthetestwhethertherespondents have shown overridingpublicinterestinexcludingdiamonds exported from 1. 4. 2003 to 27. 1. 2004 from the benefit of the specialscheme,weareoftheviewthatsince rough diamonds could be imported without payment of duty andthe materialavailabletothegovernmentintheformof intelligence report revealed that there was roundtripping of diamonds (rough diamonds imported without any payment of dutyandthereaftersuccessivestages through which the diamonds wereprocessedforenhancingtheexportturn over),thegovernmentwasjustifiedinexcludingthe exports of rough, uncut and semi-polished diamonds from the special scheme. Itispertinenttonote that the governmenthasnot excluded exports of polished diamonds, but hasexcludedonlyrough,uncutandsemipolished diamonds from the benefits under the special scheme. Paras 2. 36and 2. 39 of the Exim Policy only provide for legality of exports of all categories of diamonds, but that does not necessarily mean that exports of all goodsdeservetobe rewarded with the benefits of the special scheme. Asregardsexportsofdiamondsbeing in Thrust section inpara3. 10 (d)oftheeximpolicy,itis pertinenttonotethatwhatisexcluded in only rough diamonds and not polished diamonds. Itisnecessaryto notethat while issuing the remedial notifications and the publicnotice,thegovernmentwasdealing with the internationaltradeatlargeandnotmerelywith the petitionersand,therefore,thecontention that the petitionershavenotimportedroughdiamonds, but have exported after procuringthesamefromlocalsuppliers cannothave any bearing on the justification for exclusion of rough, uncut and semi-polished diamonds from the special scheme. Thegovernmentcannotbe expected to go to the localsupplierstofindouthowtheygottherough diamonds. Even otherwise, when the petitionershadexported polisheddiamonds of Rs. 1719. 49 crores, which are eligible for the benefits under the Special Schemeevenafterthe amendmentandthepetitionersarenot going to get the benefit of export on rough diamonds of Rs. 751. Thegovernmentcannotbe expected to go to the localsupplierstofindouthowtheygottherough diamonds. Even otherwise, when the petitionershadexported polisheddiamonds of Rs. 1719. 49 crores, which are eligible for the benefits under the Special Schemeevenafterthe amendmentandthepetitionersarenot going to get the benefit of export on rough diamonds of Rs. 751. 96 Crores, it cannot be saidthattheimpugnednotificationsareso unfairtothepetitionersorthatthe petitioners are subjected to such "manifest injustice or fraud"thatthis court should interfere. ( 36 ) EXCLUSION OF GOLD, SILVER INCLUDING PLAIN JEWELLERY -36. 1 thepetitionershavestatedintheirnoteas under:- "exportsofplainjewellery amounts to Rs. 157. 73 crores upto 31st March 2004. Exportofjewellery iscoveredbythrustsector in para 3. 10 (d) of exim Policy. "36. 2 the Government has dealt with the sameinwritten submissions as under :- ". . . . . . the Exim Policy has special facilities as contained in para 4. 4 of the Policyforpromoting export ofgemandjewellery. Similarly, special facilitieshavebeenprovidedfor export of gold/silverandplatinumjewellery in para 4. 4. 3 for the exporters to import their essentialinputs aswellasdiamonds,precious and semi-previous stones in accordance with theprocedurespecified for thepurpose. In view of this, the petitioners will have no necessity to utilize their entitlement for import of rough or semi-polisheddiamondsfor useeitherintheir own units or in the units of associate manufacturers for the productionofcut andpolisheddiamondsorfor studded jewellery. Obviously, they cannot import, syntheticyarnfor utilizationin these units because there is no way such unitscanmanufactureanythingotherthan polished diamonds or jewellery. " paras 4. 4 and 4. 4. 3 oftheeximpolicyreadas under :- "4. 4 exporters of gem and jewellery are eligible toimporttheir inputs by obtaining Replenishment (REP) Licences from thelicensingauthoritiesin accordancewiththeprocedurespecified in this behalf. 4. 4. 3 exporters of gold/silver/platinum jewellery and articles thereofmayimporttheiressential inputssuchas gold, silver, platinum, mountings, findings, rough gems,preciousandsemi-precious stones,syntheticstonesandunprocessed pearls etc. in accordance with the procedure specified in this behalf. "36. 3 inviewofthejustification given by the government,itdoesnotappeartobeunfairtothe petitioners if export of gold, silverincludingjewellery doesnotentitlethemtoimportanyinputs under the special Scheme. However, clause (vi) inpara3. 7. 2. 1of the said Special Scheme provides as under :- "such entitlement can be used for import of capital goods, office equipment and inputsfortheirown factoryor the factory of the associate/supporting manufacturer/job worker. The entitlement/goods shall not be transferable. " (emphasis supplied) if,therefore,theexporterorthesupporting manufacturer is desirous ofusingthedutyfreeimport entitlement for import ofcapitalgoodsoroffice equipment, para 4. 4. 3 will notbeofanyavailtothe exporter ortotheassociate/supportingmanufacturer. Hence, it is for the petitionerstodecidewhetherthey would like to make any duty free import of capital goods or officeequipmentforthefactoryoftheir associate/supporting manufacturer/jobworker. The entitlement/goods shall not be transferable. " (emphasis supplied) if,therefore,theexporterorthesupporting manufacturer is desirous ofusingthedutyfreeimport entitlement for import ofcapitalgoodsoroffice equipment, para 4. 4. 3 will notbeofanyavailtothe exporter ortotheassociate/supportingmanufacturer. Hence, it is for the petitionerstodecidewhetherthey would like to make any duty free import of capital goods or officeequipmentforthefactoryoftheir associate/supporting manufacturer/jobworker. The exclusion of gold, silver, jewellery from the benefit under thespecialschemewill,therefore,have to held to be unjustifiedtothelimitedextentthat association/supportingmanufacturer/jobworker whose gold and silver, jewellery havebeenexportedtill27. 1. 2004 through astatusholder (providedboththeexisting exporter and the status holder have shown25%incremental growthinexports)is excluded from the benefits of duty free import of capital goods and office equipment. ( 37 ) EXCLUSION of FOODGRAINS i. e. foodgrainssourced fromcentralpoolmaintainedby the Food Corporation of india -,37. 1 thepetitionerscaseinthenote with the rejoinder affidavit is as under:- (i) Out of total agroexportsofrs. 1,126. 99 crores until 31st March, 2004,the petitioners have exported food grains worth rs. 239. 08 crores upto 31st March, 2004. (ii) These exports are third party exports where the export order from the foreign buyer was received by the petitioner. The petitioner exportsgoodsasthird party exports throughstc,pecltd. ,which are public sector undertakings. (iii) Thecontentioninthecounter affidavit (pg. 80) thatexportsoffoodgrainsis subsidized isnotcorrect. The stock in the central pool reached a record level and maintainingsuchhigherlevelofstock carried averyheavyprice. Hence, FCI encouraged export of foodgrains byselling the goods forexportataprevalent international price. 37. 2 the Governments reply in their written submissions is as under :- "theother major exports claimed by the petitioner is intheagrosectoramountingtors. 1126. 99 crores. Apartfromthefact that the export of these products is subsidized and do not require any processing,itmaybepointedoutthat this entitlementcannotbe used for import of any agro or dairy products because of therestrictionvide customsnotification No. 53/2003 dated 1. 4. 2003 and circular No. 25/2003 dated 1. 4. 2003. As such, there is no case for any retrospective application in the restrictions imposed on agroanddairyproducts. Thedgftsnotificationandpublic notice dated 28. 1. 2004onlyreflectwhathadalready been decidedthroughthecustoms notifications at the time of introduction of the scheme. Evenifthis restriction was not there in thecustoms notification,thepetitionerscannotusetheir entitlementinthissectorasno processing is involved. The same argument holds well in the case of clinkers and iron ore also. "37. 3 whilethejustificationgivenby the Government that the export of the foodgrains is already subsidized may not by itself be a sufficientgroundforexcludingwith retroactiveeffectfoodgrainsprocuredfrom the central pool of FCI, the saidjustificationtakenalongwiththe otherjustification (that the entitlement on the basis of exports of foodgrains cannot be used for import of any agro ordairyproductsbecauseof the restriction vide notificationno. 53/2003dated1. 4. "37. 3 whilethejustificationgivenby the Government that the export of the foodgrains is already subsidized may not by itself be a sufficientgroundforexcludingwith retroactiveeffectfoodgrainsprocuredfrom the central pool of FCI, the saidjustificationtakenalongwiththe otherjustification (that the entitlement on the basis of exports of foodgrains cannot be used for import of any agro ordairyproductsbecauseof the restriction vide notificationno. 53/2003dated1. 4. 2003and circular No. 25/2003 dated1. 4. 2003 which where thus issued asfarback ason1. 4. 2003 when the special scheme was introduced) is sufficient to hold that it is not unfair on the part of the government to exclude the exportoffoodgrainsfromthe benefits of the Special Scheme. There is also considerable substance in thesubmissionmadeonbehalfofthe government that there is noretrospectiveorretroactive applicationinthe restrictions imposed on agro and dairy products. The Customs Department notification No. 53/2003 dated 1. 4. 2003 is issued under Section 25 (1) of the Customs act, 1962 exempting the following"goods"whenimported, interalia,intoindia against the duty free entitlement credit certificate ("said certificate") issuedunderpara 3. 7. 2. 1 (vi) of the Exim Policy - (a), (b) and (c) fromthewholeofthedutyof customs, additionalduty,special additionaldutyleviablethereon under the Customs Tariff Act, 1975. Explanation :-In this notification,- (i) "capitalgoods"hasthesame meaning as assigned to it inparagraph9. 10ofthe export and Import Policy,- (ii) "goods" means,- (a) capital Goods; (b) officeequipment (including Computer systems, Software, Fax/machine, Telephone); and (c) raw materials,components,intermediates, consumablesandpartsother than agricultural and dairy products; thenotification does not exclude capital goods or office equipment from the benefit of dutyfreeimportof goods. However, only procedural safeguards are prescribed in respect of duty free import of capital goods. Customs Circularno. 25/2003dated1. 4. 2003also providesfor procedural safeguards for duty free import of goods under para 3. 7. 2. 1 (vi) of the Exim Policy. 37. 4 inview of the above notification and circular, it is clear that what is prohibited is onlyagriculturaland dairy products as raw materials, components, intermediates, consumables and parts and such notification/circular do not prohibitdutyfreeimportofcapitalgoods and office equipment under clause (vi) [now renumberedas (vii)]in para 3. 7. 2. 1oftheeximpolicy. However,since the foodgrains are sourced from the central pool of FCI, itis forthefcitotakeupthematterwiththe Central government and the DGFT if they aredesirousofclaiming anyduty free import of capital goods and office equipment for the FCI on the strength of theexportsoffoodgrains madebetween 1. 4. 2003 to 27. 1. 2004 from out of the central pool maintained by thefci. 7. 2. 1oftheeximpolicy. However,since the foodgrains are sourced from the central pool of FCI, itis forthefcitotakeupthematterwiththe Central government and the DGFT if they aredesirousofclaiming anyduty free import of capital goods and office equipment for the FCI on the strength of theexportsoffoodgrains madebetween 1. 4. 2003 to 27. 1. 2004 from out of the central pool maintained by thefci. Sinceitisastatutory corporationunderthefciact,itis open to the said corporationtoseekitsremedies from the Central government,ifatall it is desirous of seeking any such benefits available to it under the Special Scheme. ( 38 ) LASTLY, coming to exclusion of items exported under free shipping bills-,38. 1 the petitioners have stated as under :- (i) There isnothingsuchasfreeshipping bills. Thecustomsactprescribes the following as Shipping Bills :- (a) Shipping bill for duty free goods. (b) Shippingbillfor duty free goods ex-bond. (c) Shippingbillforexportsunder drawback. (d) Shippingbillforexportsunder depb. (e) Shippingbillforexportsunder deec (Advance License) (f) Shipping bill for dutiable goods. (ii) All goods which areexported,otherthan thoseexportedunderclause (c)to (f) above, areexportedundershippingbill which fallunderclause (a) above. This includes exports under EPCGofpara2. 39 mentioned above. The form of shipping bill does not and cannot be determinative of the substantive rights available to an exporter under a particular scheme. This is more so when there is no such restriction contained in the Exim policy. (iii) Noexportincentives/benefits are availed in respect of goods exported under Shipping bill at (a) and (b) above,unlikeinthe case ofdrawback,depb,etc. There is, therefore, all themorenojustification forexcluding exports under these shipping bills from the benefit of the scheme. 38. 2 the Governments reply in their written submissions is as under :- "onthe issue of the shipment effected under white shipping bills, it was decided not to allow exports effected against such shipping billsfor entitlementundertheschemebecausefor white shipping bill, the exports effectedaregenerally withoutverification of the FOB value (so declared by the firm in the shipping bill)bythecustoms authoritiesasper their Circular No. 6/2002 dated 23. 1. 2002. Further,since the Exporters are entitledforduty exemption/remission against the exports effected,theexporterwouldbefiling white shipping billonlyinrarecases. Any sudden diversion from the pattern reflects that the exporter is looking for some undue advantage. "38. 3 section50of the Customs Act, 1962 provides that the exporter of anygoodsshallmakeentrythereofby presenting to the proper officer in the case of goods to be exportedinavessel,ashippingbill,andthat the exporter while presenting a shipping bill shall at the foot thereof make and subscribe to a declaration as to the truth of its contents. "38. 3 section50of the Customs Act, 1962 provides that the exporter of anygoodsshallmakeentrythereofby presenting to the proper officer in the case of goods to be exportedinavessel,ashippingbill,andthat the exporter while presenting a shipping bill shall at the foot thereof make and subscribe to a declaration as to the truth of its contents. Section 51 provides that where the proper officer is satisfied that any goods entered for exportare not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under the Act inrespectofthesame,the proper officer may make an order permitting clearance and loadingofthegoodsfor exportation. Inexerciseofthepowersconferredby section 157 read with Sections 50 and60ofthecustoms act,thecentralgovernment has framed Shipping Bill and bill of Export (Form) Regulations, 1991 and Rule 2thereof reads as under :- "2. Shippingbill.-Ashippingbill to be presentedbyan exporter of goods shall be in the form specified in Annexure I, Annexure II, Annexure ii or Annexure IV (See Forms 93, 94, 95, and 96in part5),asthecasemay be, appended to these regulations. " form 93 is a shippingbillforexportofgoods under claimfordutydrawback. Form 94 is the form for shipping bill for export of dutiable goods and Form95is theformfor shipping bill for export of duty free goods. Form 96 is the form for shipping bill forexportofduty free goods ex-bond. Each of these Forms is to be submitted in triplicate and one of the copies bears the title "export promotion Copy". Eachoftheseformsalso contains a column "value FOB"ofthegoodsbeingexportedanda declaration that the particulars given in the Form are true and correct. Theaforesaidformsread in conjunction with the definition of "third party exports" make it clear thatthe proceduralsafeguardthattheexportsmade by a status holder on behalf of any party like manufacturerwillhave tobesupportedbycontemporaneousevidencelikethe shipping bill because the shipping bill has to indicate the names of both theexporter/manufacturerandexporteras willbe clear from the definition of "third party exports" in para 9. 55 of the Exim Policy. 9. 55 "third party exports" means exports made by anexporterormanufacturer on behalf of another exporter (s ). In such cases, shippingbillsshall indicate the name of both the exporter/manufacturer and exporter (s ). Apart from the fact that Circular No. 6/2002 dated 23. 1. 2002 is not on record, such a circular issued prior to the announcement of thespecialincentiveschemecannot negatethe effect of substantive provisions of a Scheme in the Exim Policy. The learned Additional Solicitorgeneral wasnotinapositiontoofferany justification for exclusion of free shipping bills other than reading out the above para from the reply affidavit. 38. 1. 2002 is not on record, such a circular issued prior to the announcement of thespecialincentiveschemecannot negatethe effect of substantive provisions of a Scheme in the Exim Policy. The learned Additional Solicitorgeneral wasnotinapositiontoofferany justification for exclusion of free shipping bills other than reading out the above para from the reply affidavit. 38. 4 we are not satisfied that the Government hasshown any overwhelmingpublicinterestwhichwouldjustify exclusion of the items exported under freeshippingbills from thebenefitsof the Special Scheme. We have already held earlier that the Government wasjustifiedingiving clarificationof the expression "the incremental growth in exports" so as to cover the incremental growth of more than 25% in FOB value of exports both of the statusholderand ofthe existing exporters who had made exports in the year 2002-03 and we have already held thatthegovernmentwas justified in excluding certain exports as provided in Notes 1 and2tothenotificationdated28. 1. 2004. We have further held that the Government was justified in excluding export of rough,uncutandsemipolisheddiamondsand exports offoodgrainssourcedfromthecentralpool maintained by the FCI fromthebenefitsofthespecial schemeeven if such exports were made between 1. 4. 2003 and 27. 1. 2004. Once theseclarificationsmadeandremedial measuresinsertedby the Government through notifications dated 28. 1. 2004 and21/24. 4. 2004andthedgftspublic noticedated28. 1. 2004have been upheld, we do not think that theothersubstantiverightsavailableunderthe specialschemeforstatusholderscan be allowed to be whittled down by exclusion ofitemsexportedunderfree shipping bills. 38. 5 in Omprakash Bhatia vs. Commissioner of Customs, delhi, 2003 (155) ELT 423 , the Apex Court hadanoccasion todealwiththequestionofvalue of export goods as contained in Section 2 (41) and Section 14ofthecustoms act, 1962. After referring to the aforesaid Sections, the apex Court held that even though on export of goods no duty is payable under any Act, for determining the exportvalue ofthegoods, the provisions of Section 2 (41) and Section 14 are very much applicable and, therefore, even if no duty is leviable, the mode for determining the true value of the goods sought to be exported provided undersection14is required tobefollowed. The Court further observed that for finding out whether the export value is truly stated in the shipping bill, it can be referredtofordetermining the true export value of the goods sought to be exported. Eventhedutyfreeimport entitlement under the special Scheme is to be worked out at the rateof10%of theincrementalgrowthinexports (subjectto minimum export turn over ofrs. 25crores)andsuchincremental growthhas to be at more than 25% in FOB value of exports. Eventhedutyfreeimport entitlement under the special Scheme is to be worked out at the rateof10%of theincrementalgrowthinexports (subjectto minimum export turn over ofrs. 25crores)andsuchincremental growthhas to be at more than 25% in FOB value of exports. The Government has not placed anymaterialtoshowthat when any items are exported under what the Government calls "freeshippingbills",thefobvalue of exports is not indicated in such bills. Of course, the factwhetherany exportshave actually taken place and whether the shipping bills reflect the correct FOB value of exports couldbea matterofscrutinyorverification, but in the guise of procedural safeguards, the Central Government orthedgft cannottakeawaythe substantive rights available to the exporters/status holder under a particularscheme. Only those procedural safeguards whicharerelevantfor verificationofgenuinenessoftheexports and for determiningfobvalueofthegoodsandwhichare in conformity with the substantive provisions ofthespecial schemeasamendedbytheimpugnednotifications dated 28. 1. 2004 and 21/24. 4. 2004 can be appliedtotheexports madeduring the period between 1. 4. 2003 and 31. 3. 2004, but items exported under "free Shipping Bills" per se cannot be treated as ineligibleexportsforthepurposesofthe incentive Scheme under consideration. ( 39 ) AS far as challenge to Note 7 excludingimportof agriculturalproductsisconcerned, the petitioners have challengedthesameonlyontheground of alleged retrospectivity. Asalreadyheldearlierthe impugned amendments are either clarificatory (Notes 1, 2 and5)or havingretroactiveoperation (Notes3 and 6) because by virtue of Note 4theyallaffectexportsalreadymade between 1. 4. 2003and 27. 1. 2004. As far as restrictions on imports under the Special Scheme areconcerned,theyare yetto be made and, therefore, insertion of Note 7 is with prospective effect. Moreover,thecustomsnotification dated1. 4. 2003discussed earlier in para 37. 3 hereinabove had already prohibited importsofagriculturalproducts. Inthisviewof the matter also, the challenge to Note 7 must fail. ( 40 ) THE publicnoticedated28. 1. 2004ofthedgft makingtherelevant procedural amendments to the Handbook of Procedures (Vol. I) shall also have to be read in light oftheforegoingobservationsinparas38. 3to38. 5 hereinabove. ( 41 ) INVIEWOF the above discussion, this petition is onlypartlyallowedinso far asnote6topara 3. 7. 2. 1oftheexim Policy as inserted by the Government notifications dated21/24thapril2004andthedgfts public notice dated 28. 1. 2004 exclude the following exports fromthebenefits of the duty free import entitlement for the export status holders as contained in para3. 7. 2. 1of the Exim Policy 2002-07 :- (i) Items exported under freeshippingbills. [paras 38. 3 to 38. 5] (ii) Gold,silverinany form including plain jewellery thereof, in so far as theimport ofcapitalgoods and office equipment for thefactoryoftheassociate/supporting manufacturer/jobworkerof the petitioner company is concerned. [para 36. 7. 2. 1of the Exim Policy 2002-07 :- (i) Items exported under freeshippingbills. [paras 38. 3 to 38. 5] (ii) Gold,silverinany form including plain jewellery thereof, in so far as theimport ofcapitalgoods and office equipment for thefactoryoftheassociate/supporting manufacturer/jobworkerof the petitioner company is concerned. [para 36. 3] wealsorecord the clarification that the exports effectedbyanonstatusholder (withoutanyexport performanceintheyearpreviousto 2003-04) through a status holder [with 25% incremental growth of exports]are eligible for thebenefitsunderthespecialscheme irrespective of the fact that such exporters didnothave anyincrementalgrowthin exports obviously because they had made no exports in thepreviousyearsinthefirst place. [para14. 4]. We also reiterate the clarifications made in paras 37. 4 and 40 of this judgment. ( 42 ) SUBJECTTOTHEABOVE findings and clarifications given in this judgement, the rest of theprayersmadeby the petitioners are hereby rejected. ( 43 ) RULE is made absolute only to the aforesaid limited extent as indicated above. For rest of theprayers,rule is discharged. There shall be no order as to costs. .