Financial Daily from THE HINDU group of publications
Tuesday, Feb 01, 2005
Financial Daily from THE HINDU group of publications Tuesday, Feb 01, 2005 |
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Cigarettes Government - Policy Industry & Economy - Excise and Customs Corporate - Courts/Legal Issues Govt issues Ordinance to negate excise relief to ITC Our Bureau
New Delhi , Jan. 31 IN what would come as a major blow to ITC Ltd, the Government has adopted the retrospective legislation route to negate the Rs 803-crore excise relief that was granted to the company by the Supreme Court in September last year. A Presidential Ordinance, issued on January 25, has amended the Central Excise Act 1944 to empower the Government to make rules, including rules conferring the power to issue notifications with retrospective effect, to "carry into effect the purposes of this Act". The amendments made through the Ordinance are valid only for the specified period during 1983-87 (March 1, 1983 to February 28, 1987). The Ordinance has amended the definition of "sale price" in various cigarettes related excise notifications issued by the Revenue Department during 1983-87. This would enable the department to recover the disputed excise duty relating to that period. Further, the Ordinance also provides that no claim or challenge can be made in or entertained by any court or tribunal or authority under the ground that the Central Government did not have at the material time the power to amend retrospectively the notifications issued under Rule 8(1) of the Central Excise Rules, 1944. The Revenue Department is understood to have now asked ITC to fork out Rs 450 crore in the next 30 days, after which a penal interest of 15 per cent per annum would also be attracted. The Supreme Court had in September 2004 quashed an order passed by the Customs, Excise and Gold (control) Appellate Tribunal (CEGAT), which had rejected ITC's plea in the Rs 803-crore excise duty case pertaining to the period 1983-87. The CEGAT had in 1998 held that the company had short-paid excise levies during the relevant period (March 1, 1983 to February 28, 1987) even as it quashed the penalties levied on the company by the Revenue Department. The CEGAT (now CESTAT) had then ordered recomputation and the company had paid Rs 350 crore following this order. The Government and the company had filed appeals to the Supreme Court against those portions of the CEGAT order that went against them. The apex court had in September 2004 allowed ITC's appeals and enabled the company to obtain an excise duty relief worth Rs 803 crore. The dispute with ITC pertained to the allegation made by the Revenue Department that the company 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 also 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.
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