1999 (3) TMI 184 - HC - Indian Laws

Summary

Issues:
1. Import of machinery with commitments for installation certificates and export commitments.
2. Demand for payment of duty saved amount.
3. Kar Vivad Samadhan Scheme application.
4. Acceptance of 50% duty payment.
5. Interpretation of demand within the meaning of relevant sections.
6. Granting interim order for payment.
7. Stay of impugned order and lapse of bank guarantees.

Analysis:
1. The petitioner imported machinery from Germany with commitments for installation certificates and export obligations for five years. However, the machinery did not function as expected, leading to export defaults in the initial years following the import in 1995.

2. Subsequently, the Assistant Commissioner of Customs demanded a payment of the full duty saved amount of Rs. 3,22,01,357.00 on 31-3-1998, due to the issues faced with the imported machinery.

3. In response, the petitioner resorted to the Kar Vivad Samadhan Scheme under the Finance No. 2 Act, 1998, filing a necessary declaration under Section 88 of the said Act and having bank guarantees covering 50% of the duty in operation.

4. The petitioner sought permission to pay 50% of the demanded duty to the designated authority, with the intention that such payment be treated as one made under Section 90 sub-section (2) of the Act, relieving them from further liability if the writ succeeds.

5. The authorities did not accept the 50% payment, indicating that the case may not fall within the ambit of the Samadhan Scheme. The interpretation of the demand made on 31-3-1998 within the relevant sections was crucial for determining the validity of the Samadhan declaration.

6. Despite opposition, the Court held the power to grant an interim order allowing the petitioner to make the 50% payment, considering it as a provisional adjudication under Section 90(1) until the designated authority pronounces an adjudication.

7. The interim order granted stayed the impugned order dated 10-2-1999 upon payment of Rs. 1,61,00,679/- by the petitioner within the current month, with the bank guarantees lapsing thereafter. Failure to make the payment would result in the rejection of the writ application and automatic vacation of interim orders.