Pointing out that Section 124(1)(c) of the Finance Act cannot be made applicable to the pending demand that is not crystallised pursuant to its adjudication, the Bombay High Court granted relief to the air conditioner condensers manufacturer (petitioner), to the extent of 70% of the tax dues/duty demand.
The Court ruled that since the issue of re-quantification of the excise duty as demanded in the show cause notice has remained pending without it being finally quantified, the petitioner’s case would clearly fall under the Litigation category under the SVLDRS scheme
While emphasising that the Arrears category would be one where the tax/duty amount is not pending but confirmed, as payable, the Court clarified that the proceedings related to the adjustment of the pre-deposit under the SVLDRS Scheme in the present case would fall in the Litigation category, as the amount of tax/duty has not been confirmed and has not attained finality.
The Division Bench comprising Justice Advait M. Sethna and Justice M.S. Sonak observed that the proceedings regarding the quantification of duty as imposed vide show cause notice did not attain finality, as even though the duty demand to the extent of Rs. 7.19 lacs was ultimately set aside by the CESTAT, the quantification issue of duty and penalty remained pending.
The Bench noted that the CESTAT’s findings imposing the burden on the manufacturer, i.e., the petitioner, to show that the price charged by them included the duty element on the air conditioners manufactured, was subject to the opinion that such burden should be discharged by the manufacturer before the lower/adjudicating authority, which became the basis of remanding the matter for quantification of the duty amount.
The Bench also perused the challans, which inspire confidence in the contentions of the petitioner that the sum of Rs. 10 lacs paid as pre-deposit was adjusted by the respondents in computing the duty demand when it issued the form SVLDRS-2 to the petitioner.
Accordingly, the Bench quashed the Form SVLDRS 3 and directed the Designated Committee to determine the correct amount, considering the declaration filed under the Litigation category, within two months.
Briefly, the petitioner, a proprietor engaged in the manufacturing of condensers and cooling coils, was issued an SCN demanding Central Excise duty of Rs. 39.53 lacs, in addition to the levy of a penalty of Rs. 50 lacs and a fine of Rs. 30 lacs under Rule 173Q read with 9(2), 52A, 209A, 210 and 226 of the erstwhile Central Excise Rules, 1944. This was confirmed by the adjudicating authority. Later on, after the petitioner furnished a pre-deposit of Rs. 10 lacs, the CESTAT remanded the proceedings for re-quantification of the amount of duty.
The petitioner then filed a declaration in Form SVLDRS-1 under the Litigation category as per Section 124(1)(a) of the Finance Act, and the Designated Authority issued Form SVLDRS-2 under the Arrears category, and estimated the amount of duty payable at Rs. 8.93 lacs, after adjusting Rs. 10 lacs towards the pre-deposit. Subsequently, after a disagreement, the Designated Authority quantified the tax/duty payable by the petitioner under the Arrears category, at an estimate of Rs. 12.93 lacs, after giving tax reliefs of Rs. 19.40 lacs, i.e., 60% as stipulated under Section 124(1)(c) of the Finance Act.
Appearances:
Advocate Kiran Doiphode, for the Petitioner/ Taxpayer
Advocates Karan Adik and S. D. Deshpande, for the Respondent/ Revenue
