2008 (6) TMI 547 - HC - Central Excise

Kar Vivad Samadhan Scheme - certificate dated February 26, 1999 issued under sub-section (1) of Section 90 of The Finance (No. 2) Act, 1998 determining the amount payable by the petitioner-company to settle this case at ₹ 3,63,920.09P. challenged - Held that - The impugned certificate dated February 26, 1999 issued by the respondent no. 1 is quashed and set aside. The petitioner-company be refunded the sum of ₹ 1,19,962/- so deposited with the Registrar, Original Side, together with interest as accrued thereon. I find that the respondent no. 1 was entitled to claim ₹ 2,43,957.30p. under the Kar Vivad Samadhan Scheme, 1998. The above amount already paid to the respondent-authority in terms of the order dated March 17, 1999 be treated as payment towards revenue in full and final settlement under the Kar Vivad Samadhan Scheme, 1998.

Issues Involved:
1. Validity of the certificate issued under Section 90(1) of The Finance (No. 2) Act, 1998.
2. Correctness of the amount assessed under the Kar Vivad Samadhan Scheme, 1998.
3. Interpretation of Section 88 and Section 87 of The Finance (No. 2) Act, 1998.
4. Whether the appeal was pending despite non-payment of the amount determined by the Appellate Authority.
5. Applicability of precedents and previous judgments.

Issue-wise Detailed Analysis:

1. Validity of the certificate issued under Section 90(1) of The Finance (No. 2) Act, 1998:
The petitioner challenged the certificate dated February 26, 1999, which determined the amount payable by the petitioner-company to settle the case at Rs. 3,63,920.09. The petitioner argued that this amount was not correctly assessed under the Kar Vivad Samadhan Scheme, 1998.

2. Correctness of the amount assessed under the Kar Vivad Samadhan Scheme, 1998:
The petitioner contended that under Clause-(ii) of sub-section (f) of Section 88, they were required to pay only 50% of the arrears of duties. However, the respondent calculated the amount by considering the Appellate Authority's direction to pay Rs. 2,39,925.60 along with 50% of the remaining amount. The petitioner argued that no amount had been deposited by them in terms of the Appellate Authority's order, and thus, the direction could not be considered as the amount already paid.

3. Interpretation of Section 88 and Section 87 of The Finance (No. 2) Act, 1998:
The court examined the Explanation to Clause (m)(ii)(b) of Section 87, which states that any amount paid voluntarily or under protest should not be deemed as unpaid for determining tax arrear. The petitioner had not deposited any amount as directed by the Appellate Authority, so the directions could not be considered as the amount already paid.

4. Whether the appeal was pending despite non-payment of the amount determined by the Appellate Authority:
The court referred to Section 35F of the Central Excise Act, 1944, which does not make the deposit of the amount a condition precedent for admitting an appeal. The court found that the appeal was pending despite the non-payment of the amount determined by the Appellate Authority.

5. Applicability of precedents and previous judgments:
The court relied on a Division Bench's decision in Sunny Detergent Pvt. Ltd. & Anr. v. Commissioner of Central Excise & Ors., which held that the entire adjudication by the Commissioner was pending in appeal and could not be segregated. The court also considered the Supreme Court's decision in Dr. Mrs. Renuka Datla & Ors. v. Commissioner of Income Tax, which supported the view that the appeal was pending and the unpaid amount should be considered under the scheme.

Conclusion:
The court concluded that the impugned certificate dated February 26, 1999, was quashed and set aside. The petitioner-company was entitled to a refund of the sum deposited with the Registrar, Original Side, together with interest. The amount already paid to the respondent authority was to be treated as payment towards revenue in full and final settlement under the Kar Vivad Samadhan Scheme, 1998. The writ application was disposed of without any order as to costs.

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