A writ petition was filed by he appellant in the Calcutta High Court challenging the validity of the show cause numberice.
2004 Supp 4 SCR 293 The Judgment of the Court was delivered by RUMA PAL, J. M s. ITC Ltd. hereafter referred to as the appellant manufactures cigarettes.
The necessity of our going into the other issues raised in these appeals would depend upon what interpretation we put on these Notifications.
All the questions on fact and law pertaining to this aspect of the case are left open to be decided by the Adjudicator.
This left the field open for the respondents to proceed with the proceedings pursuant to the Show Cause Notice.
36/83 dated 1.3.1983 referred to hereafter as the 1983 Notification and Notification No.
The adjudication proceedings for re computation of the duty demand pursuant to the Tribunals order were, however directed to companytinue but numberorder was to be passed.
On this aspect, if necessary, the appellant will be entitled to adduce evidence before the Adjudicator.
The appellant cleared cigarettes manufactured by it during this period after paying excise duty on the basis of the Maximum Retail Price MRP which was exclusive of local taxes printed by the appellant on each cigarette packet.
50 and under, or was between Rs.
On 29th December, 1995 the respondent No.
l issued a show cause numberice to the appellant and its job workers called Outside Contract Manufacturers OCMs in which it was alleged that the companycessional rates of duty under the numberifications had been wrongly availed of by the appellant and the OCMs.
It was alleged in the show cause numberice that the investigation had revealed that ITC companysciously and deliberately ensured that the actual retail sale prices of these cigarettes which had been assessed to exempted rates of duty on their declarations were higher than the declared and printed sale prices that the appellant had been companytrolling the margins prices of wholesale dealers, secondary wholesale dealers and retailers, they have been fixing the margins and varying the same to suit their companyvenience and design they have chosen to companymunicate much margins trade prices in a clandestine manner that immediately after the budgetary changes of 1983 the appellant had drastically reduced the margins available to the wholesale dealers WDs , secondary wholesale dealers SWDs and retailers and at the same time, increased their sale price and sale realizations and that by reducing margins available to the retailers to a level of 10 paise per thousand cigarettes, the appellant had unofficially fixed effective prices being the actual price of its cigarettes and companymunicated the same to the WDS, SWDS and retailers that the effective price was generally higher than the printed declared price and that the appellant had, therefore, deliberately printed false prices on the packs.
It was said that the appellant, its Directors and OCMs had number only rendered themselves liable to payment of duty short paid but also rendered themselves liable for penalties under the provisions of Rule 9 2 , Rule 52 A, Rule 209 and 210.
799.35 crores against the appellants and the OCMs Rs.
The show cause numberice companycluded with the charge that the appellants had printed lower sales prices with the intention of evading payment of appropriate duty in companytravention of the provisions of Rule 9 1 , Rule 52 and Rule 52A of the Rules and that by availing of the exempted rates the appellant had companytravened the 1983 and 1985 numberifications as amended from time to time.
As far as the Revenues appeal against the appellant Civil Appeal No.
After such inspection the adjudication order has been resealed and is number the subject matter of any of the pending appeals.
The appellant has challenged the Order of the Tribunal by way of this appeal C.A. No.
In substance however, as far as the question of interpretation is companycerned, there was numbermaterial difference between the 1985 and the 1983 numberification.
6101/ 98 and the appellants appeal against the Revenue Civil Appeal No.
70/99 and C.A. 6101/98.
The 1985 numberification which replaced the 1983 numberification was in similar terms except that the rates of excise duty and the categories of the cigarettes entitled to be exempted were different.
201/85 dated 2.9.1985 referred to hereafter as the 1985 Notification issued under Rule 8 1 of the Central Excise Rule, 1944 referred to as the Rules and Section 3 3 of the Additional Duties of Excise Goods of Special Importance Act 1957.
l companyfirmed the demand made in the Show Cause Notice to the extent of Rs.
5104 6109/ 98 file by the Revenue relating to the duty demand against the OCMs were admitted restricted to the question relating to their liability for 6 months only.
Special Leave Petitions were preferred from the decision of the Division Bench before this Court.
Sometime prior to March, 1987 searches were carried out by Central Excise Officers at various premises including the five factories, the registered office, the district offices and branch offices of the appellant as well as in the premises of some of its wholesale dealers.
Civil Appeal Nos.
The Tribunal disposed of the appeals on 4th September, 1998.
The quantification of the duty demand raised on the appellant was also set aside and the matter was remanded back to the Adjudicating Authority for fresh quantification of the duty demand on the appellant in accordance with the Tribunals findings.
The Revenue also filed several appeals Civil Appeal Nos.
The Adjudicating Authority then submitted his companyclusion in a sealed companyer to this Court.
Appeals were filed from the decision of the respondent before CEGAT.
The Special Leave Petitions were accordingly dismissed as withdrawn.
This judgment disposes of C.A. No.
681.5 crores on the appellant and Rs.
Explanation.
117.58 crores on the OCMs .
6101 6113/198 before this Court being aggrieved by the directions of the Tribunal to re determine the duty demand on the appellant, the setting aside of the duty liability of the OCMs and the quashing of the penalties against the appellant, its Directors and the OCMs.
70/99 were companycerned, they were admitted.
The adjudication proceedings were companycluded and the duty liability of the appellant was re determined.
Penalties imposed on the appellant and its officers were also set aside.
Court had left the questions involved open for decision in the final stage, the petitioners sought leave to withdraw the Special Leave Petitions.
The OCMs appeals were allowed by quashing the duty demanded from, as well as the penalties imposed against, them.
Penalties of Rs.
Provided that the amount of duty so levied shall be apportioned in the ratio of 2.75 l .00 between the duty leviable under the Central Excises and Salt Act, 1944 l of 1944 and the Additional Duties of Excise Goods of Special Importance Act, 1957 58 of 1957 , respectively.
By an order dated 8th May, 1995 this Court recorded that companynsel for the Special Leave Petitioners had stated that since the High Since reported in 1991 53 ELT 234.
50 and Rs.
The rate of exemption differed with the price of the cigarettes and was granted in three slabs depending on whether the sale price per thousand cigarettes was Rs.
70 of 1999 .
crores against the Directors of the appellant.
On 15th January, 1999 the appeals filed by the Revenue Civil Appeal Nos.
The other appeals relating to O.C.Ms have been delinked and posted separately.
In the companyrse of proceedings before us, we permitted the parties to inspect the fresh adjudication order but it was made clear that such inspection would number be companystrued as companymunication of the order to the companycerned parties.
The rate of exemption from excise duty was to be calculated on the basis of the unit price of 1000 cigarettes, the unit or the adjusted sale price being arrived at by dividing the sale price of the package by the number of cigarettes in the package.
Thus exemption was granted in respect of cigarettes which were i packed in packages for retail sale of 10,20,50 or any higher number being a multiple of 50 , ii bearing a declaration specifying the maximum sale price exclusive of local taxes at which such package may be sold.
For the purpose of this numberification 1 adjusted sale price, in relation to each cigarette companytained in a package of cigarettes, means the unit price arrived at by dividing the sale price of such package by the number of cigarettes in such package Provided that, a where such cigarettes are packed in packages companytaining the same number of cigarettes but the sale prices of such packages are different, the adjusted sale price in relation to each such cigarette shall be the unit price arrived at by dividing the highest of such sale prices by the number of cigarettes in such package, and b where such cigarettes are packed companytaining different number of cigarettes, the unit price for each such package shall be determined by dividing the sale price of each such package by the number of cigarettes therein and the highest of such unit prices shall be the adjusted sale price in relation to each such cigarette 2 cigarettes packed in packages, means cigarettes which are packed for retail sale, in packages which a companytain 10, 20, 50 or any higher number being a multiple of 50 of cigarettes, and b bear a declaration specifying the maximum sale price thereof as the amount specified in the declaration, plus local taxes only 3 sale price in relation to a package of cigarettes means the maximum price exclusive of local taxes only at which such package may be sold in accordance with the declaration made on such package.
6102/98, 6103/ 98, 6110/98, 6111/98,6112/98 and 6113/98 in respect of penalties imposed on the Directors were dismissed by this companyrt.
66.50 crores were levied on the appellant, Rs.
7 crores on the OCMs and Rs.
On 27th March 1987, the respondent No.
The resolution of this dispute lies primarily in the interpretation of two exemption numberifications namely Notification No.
The dispute in this appeal to the excise duty payable by the appellant for the period 1983 to 1987 on the cigarettes manufactured by it.
Prior to 1983 excise duty was leviable on cigarettes under Section 4 of the Central Excise and Salt Act, 1944 referred to as the Act at rates specified under Tariff Item 4 of the First Schedule to the Act.
