APPOLLO TYRES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners seek a writ of mandamus on the respondent to refund the amount of Rs. 30 lakhs to them, together with interest thereon at the rate of 24% per annum from the date of payment by the petitioners, until such refund is given, on the ground that the said amount was furnished by way of cash security in respect of the provisional release of goods and that the said amount not having been adjusted in the determination made under the Kar Vivad Samadhan Scheme, was required to be refunded to the petitioners.

(2.) A demand notice was issued on 6th August, 1996, on the petitioner No.1 company, which culminated in the order dated 12th August, 1998, issued by the Commissioner of Central Excise (Adjudication) Mumbai, by which duty amounting to Rs. 12,68,52,778/- demanded as per paragraph 15(i) of the Show Cause Notice dated 6th August, 1996 was confirmed under Section 11A of the Central Excise Act, 1944, and amount of Rs. 1,15,00,000/already paid by the petitioner company on 8th March, 1996, 19.3.1996 and 5.6.1996 under TR-6 Challan Nos. 290, 300 and 52 respectively, was ordered to be adjusted against the said amount of duty. A penalty amount of Rs. 13 crores was imposed under Rule 173Q of the Central Excise Rules, 1944, read with Section 11AC of the said Act on the petitioner company and a penalty of Rs. 10 lakhs was imposed on the Vice-Chairman and Managing Director of the petitioner company under Rule 209A of the said Rules. Further, penalties of varying amounts were also imposed under Rule 209A of the Rules on other persons of the petitioner company, named in the said order. The goods, namely, 5776 tyres valued at Rs. 1,65,22,470/- seized were ordered to be confiscated by the said order, under the provisions of Rule 9(2) and Rule 173Q of the said Rules.

(3.) In the background of these facts, it was contended on behalf of the petitioners that the petitioner company was entitled to the refund of Rs. 30 lakhs because under the provisions of Section 88(f) of the said Finance Act, which related to settlement of tax, sub-clause (ii) contemplated waiver of fine, penalty and interest on payment of 50 per cent of the amount of duties or cess due or payable on the date of making of the declaration. The learned Counsel appearing for the petitioners contended that since tax arrears on account of fine, penalty or interest were not required to be considered because Section 88(f)(ii) of the Act confined the liability only to 50 percent of the duty amount, the consequence was that the petitioner company stood wholly absolved of the liability on account of fine, penalty and interest payable under the Order-in-Original as if they were never imposed. It was argued that payment of 50% of duty under sub-clause (ii) of Section 88(f) had the effect of the waiver of the entire liability as regards fine, penalty and interest under the Order-in-Original and therefore, the petitioner company was entitled to the refund of Rs. 30 lakhs, even if under the order of the Commissioner it was adjusted towards the fine imposed in lieu of confiscation. It was also contended that just as the amount of duty which was already paid was adjusted as shown in the certificate of determination of liability under the Scheme, even the said amount of Rs. 30 lakhs ought to have been adjusted against the liability determined under the Scheme. It was contended that the amount of Rs. 30 lakhs was given by way of cash security and therefore, it cannot be said that the declarant had voluntarily paid that amount as duties, interest, fine or penalty as contemplated by the Explanation to sub-clause (ii) of Clause (m) of Section 87 which defines "tax arrears."