1999 (7) TMI 225 - HC - Central Excise

Summary

Issues Involved:
1. Entitlement to waiver of redemption fine and penalty under the Kar Vivad Samadhan Scheme, 1998.
2. Interpretation of the Scheme's provisions regarding the payment of customs duty, fine, and penalty.
3. Applicability of the Scheme to cases involving arrears of duty, fine, and penalty.
4. Requirement of a dispute or litigation for availing benefits under the Scheme.

Detailed Analysis:

1. Entitlement to Waiver of Redemption Fine and Penalty:
The petitioner claimed that under the Kar Vivad Samadhan Scheme, 1998, on payment of 50% of the duty amount, they were entitled to a waiver of the complete amount of the redemption fine and penalty imposed in respect of the imported goods. The Customs Authorities, however, directed the petitioner to pay the entire amount of duty and 50% of the penalty and redemption fine. This direction was challenged by the petitioner.

2. Interpretation of the Scheme's Provisions:
The petitioner argued that the Scheme's objective was to reduce litigation and recover arrears of revenue. They relied on the language used in Form 2-B and the questions and answers published by the Department of Customs and Central Excise. Specifically, they referred to Answer to Question No. 5, which they interpreted as requiring only 50% payment of the duty amount for cases involving arrears of duty, fine, penalty, etc., with a complete waiver of the remaining amounts.

The respondent countered that the Scheme should be given a purposive interpretation to achieve its objective. They argued that a collective reading of Section 87(m)(ii) and Section 88(f) of the Scheme indicated that the amount of duties, cesses, fine, or penalty must be those determined as of March 31, 1998, and subject to litigation or dispute.

3. Applicability of the Scheme:
The Scheme, contained in Sections 86 to 98 of the Finance Act, 1998, aimed to provide a quick and voluntary settlement of tax dues outstanding and in dispute as of March 31, 1998. The Scheme was not intended to cover cases of mere non-payment or where there was no dispute about the tax arrears. The term "Vivad" (dispute) in the Scheme's name indicated the necessity of a dispute for its applicability.

The petitioner's goods were imported in contravention of law and were liable to confiscation under Section 111(d) of the Customs Act, 1962. The petitioner was given an option to pay redemption fine and penalty in lieu of confiscation. The customs duty payable was never in dispute. Thus, the petitioner's case fell within Section 88(f)(1) of the Scheme, where tax arrears consisted of redemption fine and penalty, and not customs duty.

4. Requirement of Dispute or Litigation:
The Court found that the Scheme required the existence of a dispute concerning the tax arrears. This was reinforced by the definitions in Section 87 and the provisions of Section 95, which excluded cases where no show cause notice or demand notice had been issued, or where no appeal or litigation was pending. The Scheme aimed to settle disputes involving arrears of taxes, not cases of undisputed tax arrears.

The Designated Authority correctly issued the certificate of intimation, requiring the petitioner to pay the full amount of customs duty and 50% of the redemption fine and penalty. The requirement for full payment of customs duty was consistent with Section 125 of the Customs Act and the Scheme's provisions.

The Court dismissed the petitioner's argument that indirect tax enactments did not require arrears to be in dispute. The Scheme's provisions were clear and unambiguous, requiring a dispute for its applicability.

Conclusion:
The writ petitions were dismissed, with the Court finding no merit in the petitioner's contentions. The petitioner was required to pay the full amount of customs duty and 50% of the redemption fine and penalty, as per the Designated Authority's certificate of intimation. The Scheme was interpreted to require a dispute concerning tax arrears, aligning with its objective to settle litigated tax dues.