NRC LIMITED Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE brief facts of the case relevant for better appreciation of the issue in dispute are that, the appellants herein who are engaged in the manufacture of rayon yarn, nylon tyre cord fabric etc., imported caprolactam which is the raw material for the manufacture of nylon tyre cord fabric, from May, 1986 to July, 1991. The customs authorities sought to levy countervailing duty (CVD) under the Customs Tariff Act, 1975 on the imported goods, which was challenged by the company by filing Writ Petition No. 1174/1986 questioning the constitutional validity of Section 3(2) of the CTA, 1975 as also levy of additional duty. The petition was admitted on 2nd May, 1986 and by way of interim relief the petitioners were permitted to clear the imported goods on furnishing a bank guarantee towards the disputed amount of countervailing duty. The Hon'ble High Court also directed that in the event of the importers failing in their challenge to the levy of additional duty, they would be liable to pay interest @ 12% per annum on the amount of differential duty. The said order was to apply in respect of caprolactam already imported and yet to be imported, and accordingly the imported caprolactam was cleared from time to time by filing 939 bills of entry and furnishing bank guarantees aggregating to Rs. 6.50 crores. The writ petition was dismissed vide order dated 28 -6 -1994 in view of the Bombay High Court's judgment in the case of Ashok Traders v. UOI reported in : 1987 (32) E.L.T. 262 (Bom.) which was against the petitioners. The matter was carried in appeal to the Apex Court by filing Civil Appeal No. 5974 of 1994 and by order dated 14 -11 -1994, 1995 (76) E.L.T. 8 (S.C.), the Hon'ble Supreme Court permitted the Revenue to encash bank guarantees to the extent of Rs. 3.25 crores and directed the petitioners to keep the bank guarantees alive for the balance amount until the disposal of the appeal and further observed that in the event of appeal being allowed, the Revenue shall refund the amount with interest at the rate of 12% per annum. By letter dated 15 -12 -1994, the importers offered to pay Rs. 3.25 crores instead of the Revenue encashing the bank guarantees and during the period from 20 -2 -1995 to 9 -3 -1995 they paid a sum of Rs. 3,25,40,000/ - to the Revenue and kept alive the bank guarantees for the balance amount of Rs. 3.25 crores.

(2.) DURING the pendency of the above civil appeal, the Central Government introduced the Kar Vivad Samadhan Scheme, 1998 under which tax payers were entitled to file a declaration in respect of tax arrears determined on or before 31 -3 -1998 but which had remained unpaid on the date of declaration. With a view to benefit under the Scheme, the importers filed a declaration before the Designated Authority, which was rejected by an order dated 1 -3 -1999; the dismissal was challenged by filing Writ Petition No. 2528/1999 in the Hon'ble Bombay High Court; during the pendency of the above writ petition, the importers sought to withdraw Civil Appeal No. 5974 of 1994 pending before the Apex Court, and vide order dated 29 -9 -1999 : 1999 (113) E.L.T. 358 (S.C.), the Supreme Court dismissed the civil appeal as withdrawn. Thereafter, Writ Petition No. 2528/1999 was decided by order dated 18 -1 -2000 by remitting the case back to the Commissioner who once again heard the application made under the KVSS and rejected the declaration, by his order dated 14 -6 -2001. The above order was challenged by filing Writ Petition No. 2135/2001 before the Bombay High Court which, while admitting the same on 3 -10 -2001, permitted the Revenue to encash the bank guarantees to the extent of 50% and directed the petitioners to keep the bank guarantees for the balance amount alive till the disposal of the petition. Accordingly, the Revenue encashed the bank guarantees to the extent of Rs. 1,54,73,189/ - and the bank guarantees were kept alive. The writ petition was ultimately dismissed on 31 -3 -2006 confirming the stand of the Revenue that the benefit of the KVSS claimed was not available to the importers.

(3.) WE have heard both sides.