- (1.) The appellant herein had imported Caprolactum for use in manufacture of Nylon Tyre Cord sometime in May, 1986. The appellant filed the Bill of Entry declaring the value of goods on which the import duty was payable. The Customs Authorities, however, took the view that in addition to normal duty, additional duty under the Customs Tariffs Act, 1975 @ of 15% ad valorem on CIF price and also on the basic and auxiliary custom duty and landing charges on goods imported by the appellant was also payable. The appellant, on the other hand, took the position that the additional duty was payable only on CIF value of goods.
(2.) The decision of the Customs Authority was challenged by the appellant by filing writ petition No. 1174 of 1986 in the High Court of Bombay seeking order restraining Customs Department from levying and/or recovering the additional duty on basic and auxiliary custom duty and landing charges. In this writ petition, interim order dated 02.05.1986 was passed by the Bombay High Court restraining the respondent from recovering and/or levying additional duty under the Customs Tariff Act, 1975 and the import of Caprolactum in future was permitted to be cleared on payment of additional duty on CIF price of goods only. A condition was, however, put directing the appellant to furnish a bank guarantee of nationalised bank in favour of the respondent for 100% of the differential duty. Such a guarantee was furnished by the appellant to comply with the condition contained in the interim order passed by the High Court. On that basis, between May, 1986 to July, 1991, the appellant imported several consignments and furnished bank guarantees from time to time and the amount of these bank guarantees in all came to L 6,34,87,079/-. The respondents also determined, quantified and endorsed on Bill of Entry the additional duty @ of 15% on aggregate value of CIF price, basic and auxiliary custom duty and landing charges. However, since the matter was pending in the High Court, separate endorsements were also made on the Bills of Entry specifying the differential duty and the goods were allowed to be clared on receiving the bank guarantee for differential duty. Ultimately, the writ petition was dismissed by the Bombay High Court on 28.06.1994. Insofar as the stay order which was operating during the pendency of the writ petition is concerned, it was extended for a period of ten weeks.
(3.) On 28.07.1994, respondent no. 3 issued demand notice in respect of Bill of Entry No. 1175/164 dated 28.05.1986 calling upon the appellant herein to pay a sum of L 5,08,300/- along with interest @ of 12% i.e. L 5,03,008/-. A copy of this notice was sent to the Bank of Baroda which has furnished bank guarantee for encashing the bank guarantee for the aforesaid amount. The period of ten weeks which was granted by the High Court has also expired in August, 1994 and because of this reason the respondents wrote another communication dated 12.08.1994 to the bank for encashment of the said bank guarantee to recover the outstanding differential duty. In the meantime, order of Bombay High Court was challenged by the appellant by filing special leave petition in this Court. In the said special leave petition interim order dated 14.11.1994 was passed by this Court permitting the respondent to encash the bank guarantees to the extent of half the duty due, i.e. up to L 3.25 crores. It was also directed that the remaining bank guarantees would be kept alive till the disposal of the said matter in this Court. In this special leave petition leave was granted by this Court. While the said appeal was still pending the Government came out with Kar Vivadh Samadhan Scheme (KVSS) which was introduced by Finance Bill, 1998 and came into effect from 1st March, 1998. Under this Scheme the Government invited the tax payers to settle tax arrears by availing substantial discount and immunity from prosecution. As per Section 88(f) of the Finance Act, 1988, an amount of 50% of the tax dues was payable by the declarant for availing the benefit of the Scheme. The appellant herein with a view to take the benefit of this KVSS, filed its declaration thereunder on 29.12.1998. In this declaration it was stated that the total demand of differential duty was in the sum of L 6,34,87,079/-. As against this the Government had already realised L 3,25,40,000/- by invoking the bank guarantees as directed by this Court vide order dated 14.11.1994. It was thus stated that the balance amount of arrears which was payable by the appellant was L 3,09,47,079/- and the appellant was ready to pay 50% thereof in terms of the KVSS i.e. L 1,54,73,540/-.;