2007 (4) TMI 533 - AT - Central Excise

Issues Involved:
1. Levy of Countervailing Duty (CVD) on imported caprolactum.
2. Applicability of the Kar Vivad Samadhan Scheme (KVSS), 1998.
3. Provisional assessment and requirement of a show cause notice under Section 11A of the Central Excise Act.
4. Demand for interest on the differential duty.

Detailed Analysis:

1. Levy of Countervailing Duty (CVD) on imported caprolactum:
The appellants, engaged in manufacturing rayon yarn and nylon tyre cord fabric, imported caprolactum between May 1986 and July 1991. The customs authorities levied CVD under the Customs Tariff Act, 1975, which the appellants challenged by filing a writ petition questioning the constitutional validity of Section 3(2) of the CTA, 1975 and the levy of additional duty. The High Court permitted the clearance of goods against a bank guarantee for the disputed amount. The writ petition was dismissed in 1994, and the Supreme Court allowed partial encashment of the bank guarantees while directing the appellants to keep the remaining guarantees alive.

2. Applicability of the Kar Vivad Samadhan Scheme (KVSS), 1998:
During the pendency of the civil appeal, the importers sought to benefit from the KVSS, 1998, which allowed declarations for unpaid tax arrears determined before 31-3-1998. Their declaration was rejected, leading to further writ petitions. The High Court eventually confirmed the Revenue's stance that the benefit of KVSS was not available to the importers.

3. Provisional assessment and requirement of a show cause notice under Section 11A of the Central Excise Act:
The appellants contended that the assessments were provisional and that a show cause notice under Section 11A was required. The High Court, however, found that the endorsements on the bills of entry did not constitute provisional assessment under Section 18 of the Customs Act, 1962, and the quantification of disputed duty was merely to facilitate the issuance of bank guarantees. Consequently, the Tribunal held that there was no need for a Section 11A notice, citing the precedent that demands made consequent to a High Court's direction do not require such notice.

4. Demand for interest on the differential duty:
The Revenue's demand for interest was based on the interim order of the Bombay High Court dated 2-5-1986. However, the Tribunal noted that the final order of the High Court did not mandate the payment of interest, and the Supreme Court only directed interest payment by the Revenue if they lost the appeal. Therefore, the Tribunal set aside the demand for interest, finding no continuation of the interim order for payment of interest in the final order.

Conclusion:
The appeal was partly allowed. The Tribunal upheld the demand for differential duty without the need for a Section 11A notice but set aside the demand for interest, concluding that the final orders of the High Court and Supreme Court did not support such a demand.

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