Case Note & Summary
The petitioner, a manufacturer of processed fabrics, filed a writ petition before the Bombay High Court challenging the rejection of its declaration under the Kar Vivad Samadhan Scheme, 1998. The petitioner had been engaged in a long-standing dispute with the Central Excise authorities regarding additional excise duty under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Earlier, the petitioner had filed a writ petition before the Delhi High Court challenging the constitutional validity of the levy; that petition was dismissed on 9 July 1991, upholding the validity and directing payment of duty with interest. During the pendency of that petition, the petitioner had paid 50% of the disputed duty and furnished bank guarantees for the balance. After dismissal, the excise authorities assessed the RT-12 returns for August 1990 to July 1991 and demanded differential duty of Rs. 35,44,614.55. The petitioner sought to prevent encashment of the bank guarantees by filing a civil suit, and obtained a restraint order from the District Court, Thane. The Revenue challenged that order in a separate writ petition before the Bombay High Court. In 1998, the government introduced the Kar Vivad Samadhan Scheme to settle tax arrears. The petitioner filed a declaration under the scheme on 24 November 1998, but it was rejected on 24 February 1999 by the Assistant Commissioner on the ground that no show cause notice had been issued to the petitioner. The petitioner contended that the endorsements on the RT-12 returns, which specifically quantified and demanded the differential duty, constituted a valid notice of demand under the scheme. It relied on Rule 173I of the Central Excise Rules, 1944, arguing that an assessment thereunder is final and no separate notice under Section 11A of the Central Excise Act, 1944 is necessary. The judgment text provided is incomplete and does not contain the Court's analysis or final decision.
Headnote
A) Excise Law - Kar Vivad Samadhan Scheme - Notice of Demand - Finance (No.2) Act, 1998, Sections 87(m), 95(ii)(b); Central Excise Rules, 1944, Rule 173-I - The petitioner contended that endorsement on RT-12 return quantifying differential duty and demanding payment constitutes a valid notice of demand under the KVS Scheme, fulfilling eligibility conditions. The designated authority rejected the declaration on the ground that no show cause notice was issued. The Bombay High Court's judgment is incomplete in the extracted text; no final decision is included (Paras 15-21).
Issue of Consideration
Whether the endorsement on RT-12 return demanding differential duty constitutes a notice of demand under the Kar Vivad Samadhan Scheme, 1998, and if the rejection of petitioner's declaration under the scheme on the ground that no show cause notice was issued is legally valid.
Law Points
- Endorsement on RT-12 return demanding differential duty may constitute a notice of demand under the Kar Vivad Samadhan Scheme
- 1998
- Assessment under Rule 173I of Central Excise Rules
- 1944 is final and no separate show cause notice under Section 11A of Central Excise Act
- 1944 is required
- Conditions under Section 87(m) of Finance (No.2) Act
- 1998 for KVS Scheme eligibility
Case Details
2005 LawText (BOM) (05) 215
Writ Petition No. 5412 of 1999
Mr. Shridharan with Prakash Shah for petitioner; Mrs. S.V. Bharucha for respondents
Sharda Synthetics Bombay P.Ltd.
Union of India; The Commissioner of Central Excise, Mumbai-III; The Asstt. Commissioner (KVSS) Central Excise, Mumbai
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging the rejection of a declaration filed under the Kar Vivad Samadhan Scheme, 1998.
Remedy Sought
Petitioner sought quashing of the rejection order dated 24 February 1999 and a direction to accept the declaration under the KVS Scheme.
Filing Reason
The petitioner's declaration under the KVS Scheme was rejected on the ground that no show cause notice had been issued, despite the existence of assessments and demand endorsements on RT-12 returns.
Previous Decisions
Delhi High Court dismissed the petitioner's earlier writ petition challenging constitutional validity of additional duty levy on 9 July 1991; the Civil Court at Thane refused an injunction against encashment of bank guarantees on 23 October 1991; the District Court, Thane granted an injunction restraining encashment on 30 April 1991 (sic); the Bombay High Court admitted the Revenue's writ petition No. 4072 of 1992 against the District Court order.
Issues
Whether the endorsement on RT-12 return demanding differential duty constitutes a notice of demand under the Kar Vivad Samadhan Scheme, 1998?
Whether the rejection of the petitioner's declaration under KVS Scheme on the ground that no show cause notice was issued is legally proper?
Submissions/Arguments
The endorsement on the RT-12 return quantifying differential duty and calling for payment amounts to a notice of demand under the KVS Scheme.
Under Rule 173I of the Central Excise Rules, 1944, the assessment order is final and no separate notice under Section 11A of the Central Excise Act, 1944 is required.
The petitioner satisfied the conditions of Section 87(m) of the Finance (No.2) Act, 1998 as there was a pending demand on the date of declaration.
The rejection erroneously applied Section 95(ii)(b) overlooking the existing demand created by the endorsement.
Judgment Excerpts
Total duty comes to Rs.33,608/- while you have paid duty of Rs.18,804/-. Please pay the differential duty and intimate this office accordingly as per Delhi High Court decision.
The proper officer shall on the basis of the information contained in the return filed by the assessee under sub-rule (3) of rule 173G and after such further inquiry as he may consider necessary, assess the duty due on the goods removed and complete the assessment memorandum on the return.
If the authorities, have inspite of this issued notices also under section 11A for the recovery of the amount due under the said assessment orders, they have indulged in an exercise not warranted by law.
Procedural History
1. Petitioner filed Writ Petition No.2447 of 1990 before Delhi High Court challenging levy of additional excise duty; interim relief granted on payment of 50% duty and bank guarantee for balance. 2. Delhi High Court dismissed petition on 9-7-1991, upholding constitutional validity and directing encashment of bank guarantees and payment of interest at 17.5% p.a. 3. Excise authorities assessed RT-12 returns for August 1990 to July 1991, demanding Rs.35,44,614.55. 4. Petitioner filed Regular Civil Suit No.649 of 1991 in Thane Civil Court to restrain bank guarantee encashment; interim injunction refused on 23-10-1991. 5. Petitioner's appeal allowed by District Court, Thane on 30-4-1991 (sic), restraining encashment till assessment as per Ujagar Prints. 6. Revenue filed Writ Petition No.4072 of 1992 in Bombay High Court against said order. 7. Kar Vivad Samadhan Scheme introduced; petitioner filed declaration on 24-11-1998. 8. Asst. Commissioner rejected declaration on 24-2-1999. 9. Petitioner filed present writ petition under Article 226.
Acts & Sections
- Additional Duties of Excise (Goods of Special Importance) Act, 1957:
- Central Excise Act, 1944: 11A
- Central Excise Rules, 1944: 173I
- Finance (No.2) Act, 1998: 87(m), 95(ii)(b)
- Constitution of India: 226, 246, 274, 366(29A)
