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2015 (11) TMI 821 - SUPREME COURT

2015 (11) TMI 821 - SUPREME COURT - 2015 (325) E.L.T. 474 (SC) - Benefit of KVSS - tax arrears - Levy of additional duty of customs - whether the case of the appellant is covered by KVSS and more particularly by Section 87(m)(ii)(b) of the KVSS or it is excluded by the provisions of Section 95(ii)(b) of the said Scheme - Held that:- in those cases where show cause notice had been issued or where the notice of demand for payment of indirect tax had been issued, it was permissible for the declaran .....

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f CIF price but even this additional duty on basic and auxiliary custom duty and landing charges was assessed. It is a different matter that for the sake of convenience and in order to comply with the interim directions of the High Court, insofar as the additional duty on basic and auxiliary custom duty and landing charges is concerned, the same was not actually recovered but was secured by means of bank guarantee. In any case, there were clear endorsements in respect of demand of this additiona .....

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Sr. Adv., Mr. U.A. Rana, Adv., Ms. Mrinal Elkar Mazumdar, Adv., Mr. V. Mohan, Adv. And M/s Gagrat & Co.,Adv. For the Respondent : Mr. A. K. Panda, Sr. Adv., Mr. Arijit Prasad, Adv., Mr. R. S. Jena, Adv. And Mr. B. Krishna Prasad, Adv. ORDER A.K.SIKRI, J. The appellant herein had imported Caprolactum for use in manufacture of Nylon Tyre Cord sometime in May, 1986. The appellant filed the Bill of Entry declaring the value of goods on which the import duty was payable. The Customs Authorities, .....

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h Court of Bombay seeking order restraining Customs Department from levying and/or recovering the additional duty on basic and auxiliary custom duty and landing charges. In this writ petition, interim order dated 02.05.1986 was passed by the Bombay High Court restraining the respondent from recovering and/or levying additional duty under the Customs Tariff Act, 1975 and the import of Caprolactum in future was permitted to be cleared on payment of additional duty on CIF price of goods only. A con .....

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34,87,079/-. The respondents also determined, quantified and endorsed on Bill of Entry the additional duty @ of 15% on aggregate value of CIF price, basic and auxiliary custom duty and landing charges. However, since the matter was pending in the High Court, separate endorsements were also made on the Bills of Entry specifying the differential duty and the goods were allowed to be clared on receiving the bank guarantee for differential duty. Ultimately, the writ petition was dismissed by the Bom .....

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encashing the bank guarantee for the aforesaid amount. The period of ten weeks which was granted by the High Court has also expired in August, 1994 and because of this reason the respondents wrote another communication dated 12.08.1994 to the bank for encashment of the said bank guarantee to recover the outstanding differential duty. In the meantime, order of Bombay High Court was challenged by the appellant by filing special leave petition in this Court. In the said special leave petition inter .....

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e Bill, 1998 and came into effect from 1st March, 1998. Under this Scheme the Government invited the tax payers to settle tax arrears by availing substantial discount and immunity from prosecution. As per Section 88(f) of the Finance Act, 1988, an amount of 50% of the tax dues was payable by the declarant for availing the benefit of the Scheme. The appellant herein with a view to take the benefit of this KVSS, filed its declaration thereunder on 29.12.1998. In this declaration it was stated that .....

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rejected by the respondents on 01.03.1999 on the ground that it was not covered by the KVSS and the case of the appellant fell under the exclusion clause of Section 95(ii)(b) of KVSS inasmuch as there was neither any show cause notice nor a demand notice issued prior to 31.03.1998. This order of rejection was challenged by the appellant by filing writ petition No. 2528 of 1999 in the Bombay High Court. Insofar as the appeal which was filed by the appellant challenging the earlier decision of the .....

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under KVSS? and ii) Whether the notice dated 28th July, 1994 was the demand notice within the meaning of Section 95(ii)(b) of KVSS? On remand the Designated Authority passed an order dated 14th June, 2001 and rejected the application of the appellant once again giving the reason that there were no tax arrears as contemplated by Section 87(m)(ii)(b) of the KVSS and also that the case of the appellant was covered by Section 95(ii)(b) of the said Scheme and, therefore, the appellant was not entitl .....

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provisions of Section 95(ii)(b) of the said Scheme. The aforesaid clauses of the two Sections are re-produced as under: Section 87: xxxxxx xxxxxx (m) tax arrear means,- (i) in relation to direct tax enactment, the amount of tax, penalty or interest determined on or before the 31st day of March, 1998 under that enactment in respect of an assessment year as modified in consequence of giving effect to an appellate order but remaining unpaid on the date of declaration; (ii) in relation to indirect .....

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and notice or a show-case notice issued on or before the 31st day of March, 1998 under that enactment but remaining unpaid on the date of making a declaration under Section 88, but does not include any demand relating to erroneous refund and where a show-cause notice is issued to the declarant in respect of seizure of goods and demand of duties, the tax arrear shall not include the duties on such seized goods where such duties on the seized goods have not been quantified. Explanation.- Where a d .....

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ion 95. Scheme not to apply in certain cases.- the provisions of this Scheme shall not apply- xxxxxx xxxxxx (ii) In respect of tax arrear under any indirect tax enactment,- xxxx (b) In a case where show cause notice or a notice of demand under any indirect tax enactment has not been issued; A plain reading of the aforesaid two provisions would indicate that in those cases where show cause notice had been issued or where the notice of demand for payment of indirect tax had been issued, it was per .....

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lant also cleared subsequently imported goods in future as well on the said basis. The Customs Authority, acting on the order, not only asserted the additional duty @ 15% on aggregate value of CIF price but even this additional duty on basic and auxiliary custom duty and landing charges was assessed. It is a different matter that for the sake of convenience and in order to comply with the interim directions of the High Court, insofar as the additional duty on basic and auxiliary custom duty and .....

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s were discussed in the following manner: 16. In Renuka Datla (Dr.) v. Commissioner of Income Tax, Karnataka[2], this Court widely interpreted the term 'total tax determined and payable' appearing in Section 87(f) of the Scheme holding that no particular process of determination is contemplated. It has to be held that on principle, same meaning is to be accorded to the term 'determined as due or payable' in Section 87(m)(ii)(a) of the Scheme. 17. There is another manner of lookin .....

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