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TMI Blog2015 (8) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are taken from Civil Appeal No. 7570 of 2004 for the sake of convenience): 2) The appellants carry on the business, inter alia, of importing old ships for the purpose of ship breaking and disposing of the scrap. In 1993, they imported a vessel called M.V. Pablo Metz and for clearance of these goods, filed the Bill of Entry under Section 46 of the Customs Act, 1962. Although the appellants contended that the said import was exempted from levy of 'additional customs duty' under an exemption Notification dated February 28, 1993, the Customs authorities, after hearing the appellants, felt it otherwise. An endorsement on the Bill of Entry was made for payment of additional customs duty of 52,20,000 in addition to the basic customs duty. The said endorsement was made under Section 47 read with Section 153 of the Customs Act and required the appellants to make payment of the amount assessed within 7 days, failing which interest was chargeable. 3) This levy was challenged by the appellants by means of a writ petition before the High Court of Calcutta, which was disposed of by the High Court with a direction to the appellants to submit a bank guarantee for 50% of the disputed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand of duties, the tax arrear shall not include the duties on such seized goods where such duties on the seized gods have not been quantified." 7) The Scheme also provided the procedure to take benefit thereof. It required an assessee to make a declaration to the designated authority in respect of tax arrears and pay the amount payable under the Scheme to conclude in proceeding with respect to the recovery of such tax arrears. For the purpose of taxes payable under indirect tax enactments, the rates at which the settlement would be made are specified in Section 88(f) of the 1998 Act. For our purposes, crucial provision is Section 95(ii) which made the scheme inapplicable, in respect of indirect tax enactments, in the following cases: "(a) In a case where prosecution for any offence punishable under any provisions of any indirect tax enactment has been instituted on or before the date of filing of the declaration under Section 88, in respect of any tax arrears of such case under such indirect tax enactment. (b) In a case where show-cause notice or a notice of demand under any indirect tax enactment has not be issued. (c) In a case where no appeal or reference or writ petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants claimed exemption from payment of additional custom duty. This stand of the appellants was not accepted resulting into an endorsement by the Revenue asking the appellants to pay additional customs duty of 52,20,000. According to the appellants, this amounts to notice of demand within the meaning of clause (b) of Section 95(ii). It is also the case of the appellants that though technically the writ petition filed by the appellants challenging the aforesaid additional customs duty was disposed of by the High Court on July 20, 1993, the order of Court was categorical, namely, the result of the appellants' case was made dependant upon the outcome of the appeal which was preferred by the Revenue in the case of M/s. Amar Steel Industries and in that sense the matter was still pending. 12) On the aforesaid facts, we have to examine whether the case of the appellants is covered by clause (b) and/or clause (c) of Section 95(ii) of the 1998 Act, thereby making them ineligible to utilise the benefit of the Scheme. 13) Insofar as clause (b) of Section 95(ii) is concerned, it is the case of the appellants that endorsement on the Bill of Entry to pay additional customs duty am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid as on March 31, 1998. Moreover, when the Bill of Entry was filed by the appellants, after examining the matter, endorsement was made thereupon that additional duty in the sum of 52,20,000 is payable. The appellants contested the same. The question is whether it amounts to notice of demand. In this behalf, we have to keep in mind that the 1998 Act does not contain any specific provision prescribing the manner in which customs duty would be assessed or demanded in respect of goods imported under a Bill of Entry for home consumption. An endorsement on the Bill of Entry and return thereof to the importer asking the importer to pay the amount therein would amount to issuing a demand. On our specific query to the learned counsel for the Revenue that if the importer does not deposit the amount within the specified time on receiving the endorsement on the Bill of Entry, whether interest thereupon shall start accruing, the learned counsel for the Revenue was candid in answering the said question in the affirmative. In fact, that is the legal position contained in Section 46(1) read with Section 47(2) of the Customs Act. Under Section 46(1) (as it then stood), there was an obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service thereof upon the appellants was a notice of demand. 18) Even, with reference to the provisions of the Scheme, this endorsement shall have to be treated as notice of demand. We have already reproduced the provisions of Section 87(m) of the 1998 Act which defines 'tax arrears'. It, inter alia, includes the amount of dues remaining unpaid as on the date of making a declaration under Section 88 of the 1998 Act. Indubitably, there was an amount of duty payable, which had remained unpaid on the date of making declaration by the appellants under Section 88. It would be absurd to hold that though there is a tax arrear, as the appellants were liable to pay the tax/duty demanded, and still the Scheme is inapplicable. 19) It would also be interesting to note that the Division Bench of the High Court in the impugned judgment has itself recorded that 'duty was assessed' on the Bill of Entry. This is so stated by the Revenue in the counter affidavit filed in the instant proceedings as well. Therefore, endorsement on the Bill of Entry is treated even by the High Court as well as the Department as the assessment. 20) It is necessary to keep in mind the purpose and the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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