Introduction

The case of S.B International Ltd. And Others v. Asstt. Director General Of Foreign Trade And Others before the Supreme Court of India in 1996 addresses a critical issue concerning the entitlement of exporters to advance duty-free import licences under the Government of India's Duty Exemption Scheme. The appellant, S.B International Ltd., engaged in the export of marine products, contended that it should be granted advance licences based on the value addition norms existing at the time of application, despite subsequent policy changes. The respondents, representing the Assistant Director General of Foreign Trade and the Union of India, argued against the appellant's entitlement to such licences under the new norms. The central question before the Court was whether an exporter accrues a vested right to import licences based on the value addition norms at the time of application, irrespective of later policy modifications.

Summary of the Judgment

The Supreme Court, with Justice B.P. Jeevan Reddy presiding, dismissed the appeals filed by both the appellant and the respondents. The Court held that the mere application for advance licences does not confer any vested right to the applicant based on the norms in force at the time of application. Instead, the value addition norms applicable are those prevailing at the time of licence issuance. The Court emphasized that the Duty Exemption Scheme is a governmental policy aimed at facilitating exports by allowing duty-free imports of raw materials and components, subject to specific export obligations. Since the policy can be amended, as it was in this case (changing the value addition norm from 1000% to 1900%), applicants must adhere to the current norms at the time of licence grant. The appellant's arguments based on promissory estoppel and the alleged delay in licence issuance were also dismissed due to lack of substantial evidence and applicability.

Analysis

Precedents Cited

The Court referenced several key precedents that underscore the non-entitlement of applicants to licences based solely on prior policy norms. Notably:

• Dy. Asstt. Iron and Steel Controller v. L. Manickchand, Proprietor, Katrella Metal Corpn. (1972) 3 SCC 324: Established that an application for import licences does not create a vested right to such licences under the policy at the time of application.
• Andhra Industrial Works v. Chief Controller of Exports (1974) 2 SCC 348, (1975) 1 SCR 321: Reinforced that import policies are administrative and non-statutory, and changes therein do not confer enforceable rights to applicants.
• Pankaj Jain Agencies v. Union of India (1994) 5 SCC 198: Highlighted that sudden policy changes affecting duty rates do not violate fundamental rights in the context of import licences.
• Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P (1979) 2 SCC 409: Outlined the requirements for establishing promissory estoppel, which were not met in the present case.

These precedents collectively support the Court's stance that policy changes can be implemented without infringing upon applicants' rights, as licences are granted based on prevailing policies at the time of issuance, not at the time of application.

Legal Reasoning

The Court's reasoning hinged on the interpretation of the Duty Exemption Scheme's provisions. It was clarified that:

• The scheme is an incentive provided by the Government and does not constitute a right to duty-free imports beyond the policy's scope.
• Advance licences are subject to the norms in force at the time of licence grant, not at the time of application.
• The discretionary power of the licensing authorities to verify applications ensures that licences are granted only when criteria are satisfactorily met.
• The policies governing such schemes are inherently subject to change to adapt to economic needs and regulatory frameworks.

The Court dismissed the appellant's reliance on promissory estoppel, noting the absence of concrete evidence demonstrating reliance on the initial policy or undue delay by authorities. Additionally, the comparison with granting licences based on policies at the time of application rather than at issuance was deemed incongruent with the nature of licences as contingent administrative approvals.

Impact

This judgment reinforces the principle that governmental policies, especially those related to trade and import-export regulations, possess inherent flexibility. Applicants cannot claim rights based on earlier policy standards once amendments have been made. This decision provides clarity on the non-vested nature of licences under such schemes, ensuring that export incentives remain aligned with current economic and regulatory objectives. Future cases involving similar disputes will likely reference this judgment to assert that policy changes prevail over applicants' expectations based on past norms.

Complex Concepts Simplified

Duty Exemption Scheme

A Government initiative aimed at promoting exports by allowing exporters to import raw materials and components without paying import duties, provided they fulfill specific export obligations within a set timeframe.

Value Addition Norm

A requirement specifying the percentage by which the value of imported raw materials must be enhanced through processing or manufacturing before being exported. This ensures that sufficient economic activity occurs domestically.

Advance Licence

An import licence granted in anticipation of future export activities, allowing importers to bring in raw materials without immediate duty payments, contingent upon meeting export commitments.

Promissory Estoppel

A legal principle preventing a party from reneging on a promise if the other party has relied on that promise to their detriment. In this context, the appellant argued that the government's promise of licences based on existing norms should prevent the imposition of new norms.

Vested Right

A right that has crystallized to the extent that it cannot be taken away or altered by any future event or action. The appellant contended that submitting licence applications created a vested right to import according to the norms at the time of application.

Conclusion

The Supreme Court's decision in S.B International Ltd. And Others v. Asstt. Director General Of Foreign Trade And Others underscores the principle that governmental policies, especially those regulating import-export activities, are subject to change and do not confer unassailable rights upon applicants. The judgment clarifies that advance licences are administrative approvals contingent upon current norms and policies, and prior applications do not guarantee adherence to outdated standards. By rejecting the notions of vested rights and promissory estoppel in this context, the Court ensures that export policies remain adaptable and responsive to evolving economic landscapes. This decision serves as a key reference point for similar cases, affirming the supremacy of current policy frameworks over applicants' expectations based on previous norms.