The Hindu Business Line : ITC gets Rs 803-cr excise relief

THE Supreme Court, which granted Rs 803-crore excise duty relief on Thursday to ITC Ltd, today reiterated its judgment by quashing the orders passed by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) rejecting the plea of the company.

(CEGAT has been now renamed as Customs, Excise and Service Tax Appellate Tribunal).

A Bench headed by Ms Justice Ruma Pal on Thursday pronounced the judgment allowing the appeals filed by ITC against the CEGAT orders but withdrew its judgment within minutes taking a serious view of the unsigned order having been taken out of the court though it was given to the counsel only to have a look .

Ms Justice Ruma Pal told the counsel that she was reserving the judgment again and indicated that the consequences of the counsel's action would be "very costly".

But today she and Mr Justice P. Venkatarama Reddi pronounced the judgment allowing ITC's appeals and dismissing the appeals filed by the Commissioner of Central Excise. (However, the copy of the judgment was not made available till late in the evening).

Though on Thursday afternoon the counsel tendered an apology in writing, explaining the circumstances in which the order was inadvertently taken out along with the case bundle, there was no mention about it in today's order.

The ITC counsel said it was presumed that the court was satisfied with the company's explanation and had accepted the apology. "Our only concern was the client should not be penalised for the counsel's fault", he said.

The Revenue Department had alleged that ITC had colluded with retailers in selling cigarettes at a price higher than the maximum retail price printed on the package and levied excise duty on the effective price. It was further alleged that the wholesale and secondary dealers' margins were so compressed by the company that the cigarettes had to be necessarily sold at a price higher than the packet price. In view of this, the department was right in imposing the levy on the effective price.

However, ITC maintained that it was not permissible to levy the duty on the basis of MRP. On the allegation that retailers were compelled to sell the goods at a higher price because of the low margin, the company said they could refrain from selling the goods.

The dispute on the levy of excise duty pertained to the period between March 1, 1983 and February 28, 1987. The CEGAT had, in 1998, held that the company had short-paid excise levies during the relevant period, but quashed the penalties on the company and ordered recomputation. The company had paid Rs 350 crore following this order.

The Government and the company filed appeals to the Supreme Court, against those portions of the CEGAT order that went against them. With the apex court allowing ITC's appeals, the company had won the major legal battle and obtained the relief of Rs 803 crore.

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