- (1.) THIS writ petition has been filed by the petitioner challenging the demand notice dated 17.6.2005 whereby it has been directed to pay a sum of Rs.6.89 lacs along with interest.
(2.) THE petitioner is a Public Ltd. company and was suffering losses for many years as a result of which it was declared a sick company under the provisions of the Sick Industrial Companies (Special Provisions) Act 1985, hereinafter referred to as the 'Act'. Its manufacturing activities stopped with effect from 15.5.1989 and in July 1990 it was registered as sick company. In order to rehabilitate and restart the company a draft Rehabilitation Scheme was formulated with notice to concerned parties including the respondent Excise Department. The said Rehabilitation Scheme was formulated under the provisions of the Act and in exercise of power under Section 18 of the Act and after hearing all the parties concerned, the said Scheme was approved on 12.11.2002 (Annexure 2 to the writ petition). The contention of the petitioner is that as per the terms and conditions of the approved Scheme , the company was granted exemption from payment of interest and penalty and further more that excise duty finally payable for pending cases, relief in that regard would be given within a period of two years from the year in which the said amount became payable. We have heard Sri V. K. Upadhayay, learned senior counsel assisted by Sri Ritvik Upadhayay appearing for the petitioner-company, and Sri S. P. Kesarwani, learned counsel for the respondent-department. Sri Upadhaya also stated that reply to the second supplementary counter affidavit is not required.
(3.) IT has been contended by learned counsel appearing for the petitioner that the company had stopped its manufacturing activities w.e.f. 15.5.1989. IT was registered as a sick company in July, 1990 under the provisions of the Act. IT was further submitted that Section 18 of the said Act provides for framing a Scheme in order to secure the rehabilitation of a sick company. Such Rehabilitation Scheme is prepared after due inquiry into working of the sick industrial company as provided in Sections 16 and 17 of the Act. IT was further submitted that in the case of the petitioner-company also after completing the procedure of enquiry contemplated under Sections 16 and 17 of the Act, a Rehabilitation Scheme was drawn up by the Board for Industrial and Financial Reconstruction ( hereinafter referred to as the 'BIFR'). Sri Upadhayay , learned senior counsel has drawn our attention to provisions of sub clause (d) of clause 8.04 of the Scheme which has been filed as Annexure- 2 to the writ petition. Clause 8.04 (d) of the Scheme reads as follows :- "(d) To exempt company from payment of interest, penalty etc. and accept payment of excise duty finally payable in pending cases over a period of 2 years from the year in which such amount becomes payable." A perusal of the said Scheme would show that as per the terms and conditions of the Rehabilitation Scheme it was provided that the respondent-department would grant exemption to the petitioner -company from payment of interest, penalty etc and accept payment of excise duty finally payable in pending cases over a period of 2 years from the year in which such amount becomes payable. IT was contended that in view of the Scheme and the specific provisions contained in clause 8.04 (d), the impugned demand for Rs.6,89,000/ - was absolutely illegal and in violation of the specific terms and conditions of the Rehabilitation Scheme. The further contention of the petitioner was that the same dues had been raised by the Excise Department vide order dated 29.4.2004 as payable by the petitioner -company for the period from 1978 to May, 1989 and an amount of Rs.13,78,000/ - was found to be due and payable by the petitioner -company. On receipt of the Notice dated 29.3.2004 the petitioner -company by the letter dated 19.4.2004 informed the respondent -department that the BIFR had sanctioned the Rehabilitation Scheme and in terms of provisions of clause 8.04 (d) of the said Scheme, the Excise Department was required to grant exemption to the company from payment of interest, penalty etc. and accepted payment of excise duty finally payable in pending cases over a period of 2 years from the year in which such amount becomes payable. However, by the department's letter dated 3.11.2004 the company's request was declined. Therefore, the petitioner submitted representations on 22.11.2004 and 17.1.2005 but instead the respondent issued another notice dated 18/25.1.2005 to recover a sum of Rs.13,78,000. In response, the petitioner again made a request through its letter dated 31.1.2005 wherein a request was made to the Commissioner Central Excise, Kanpur Division requesting for permission to make payment of the differential duty of Rs. 13,78,000/ - without interest, in terms of the orders passed and Rehabilitation Scheme of the Company as proposed by the BIFR on 12.11.2002. However, the petitioner company made a payment of a sum of Rs.6,89,000/ - as part payment being 50% of the payment of the original demand as per their undertaking vide letter dated 31.1.2005 and for the remaining 50 % it was submitted by the company that the same would be paid in the year 2005 -06. The grievance of the petitioner is that in spite of its undertaking given in its letter dated 31.1.2005, a notice dated 11.5.2005 was issued by the Assistant Commissioner, Central Excise, Division III, Kanpur calling upon it to deposit the outstanding remaining dues amounting to Rs.6,89,000/ - along with interest within seven days on receipt of the letter otherwise same will be recovered by the attachment and sale of the property.;