Hc Notices To Banks In Gtc Excise Case

The Delhi High Court on Friday issued notices to the Bank of Tokyo and Canara Bank, ordering them to pay Rs 17 crore against guarantees given by them to the excise department on behalf of GTC Industries.

The department's adjudicating authority had earlier ruled that GTC Industries have to pay Rs 69 crore against excise duty. The Sanjay Dalmia-promoted company has already paid Rs 18 crore of the total outstanding amount as pre-deposit.

With the invoking of the Rs 17-crore bank guarantee, the excise department would be able to recover at least 50 per cent of the total dues. The order was issued in the form of a release issued by the excise department on Friday.

 

The directorate general anti-evasion had earlier filed a petition with the Delhi High Court for instructing three banks, the Punjab & Sind Bank, Canara Bank and the Bank of Tokyo to pay Rs 17 crore against guarantees given by them to the department.

The excise department's move against these banks comes close on the heels of GTC being referred to the Board for Industrial and Financial Reconstruction as a "sick company" which implies that accumulated losses of the firm had surpassed its total net worth.

The Central Excise and Gold Control Appellate Tribunal (Cegat), during a hearing last Tuesday, had dismissed GTC's appeals against the adjudication orders passed by the Commission of Central Excise, Delhi, confirming a central excise duty amounting to Rs 69 crore payable by the company.

According to the release, "earlier when the matter was pending before Cegat, GTC had not taken steps to revalidate bank guarantees and had instead instructed the bankers not to revalidate these guarantees. The matter was referred by Cegat to the Delhi High Court, which later ruled that the guarantees could be accepted and also that the Cegat should hear the appeals filed by GTC.

Both the GTC units at Mumbai and Vadodara, had been charged with excise evasion by the commissioners of the respective cities. The alleged evasion was first uncovered by the director general anti-evasion. Following the probe, show cause-cum-demand notices were asked to be issued to the company. The adjudication of these two cases by the central excise commissioner, Delhi, confirmed excise demands of Rs 50.34 crore and Rs 19 crore against GTC, Mumbai and Vadodara respectively.