Itc Braces For Outcome Of Excise Case

Even as ITC Ltd's Rs 803.78-crore alleged excise evasion case enters its last lap, the company is gearing up to meet the eventualities that are likely to arise from the case.

With the final verdict from the Customs Excise and Gold (Control) Apellate Tribunal (Cegat) slated to be pronounced on August 17, ITC is mulling over the options of either going in for the new Kar Vivad Samadhan scheme introduced in this year's Union budget or appealing to a higher judicial authority, if the case goes against the company. ITC chairman Y C Deveshwar had made it clear after the company's annual general meeting earlier this week that it would be taking recourse to either of the two options. "Anyway, we have a strong case," he had remarked.

 

The Samadhan scheme will be operational between September 1 and December 31. The amount payable will be 50 per cent of the arrears, including interest payable, fine and penalty levied. The hearing of the case at the Cegat had begun on February 9 this year and concluded on May 21.

The excise department had been represented by former additional solicitor general N Chandra Shekharan, while the company had been represented by Ravinder Narain as its defence counsel. Kapil Sibal had represented J N Sapru, former chairman of ITC, at the case.

The case dates back to 1987, when customs authorities had issued show-cause notices to ITC after search-and-seizure operations for alleged evasion of excise duty between March 1, 1983, to February 20, 1987.

The charge was based on the company premise that had allegedly colluded with retailers in selling cigarettes at a price higher than that printed on the package which was the basis of levying duty during the period. Consequently, by an order dated December 29, 1995, the excise department made a demand of Rs 681.54 crore against the company and also levied a penalty of Rs 66.50 crore on it. Personal penalties aggregating to Rs 3.15 crore were also imposed on six ex-directors of the company. The excise commissioner also confirmed a demand of Rs 118 crore on seven contract manufacturers and levied penalties on them aggregating to Rs 7 crore.

After ITC appealed against the order to the Cegat, the apellate authority passed an order dated March 15, 1996, asking the company to deposit Rs 110 crore on or before April 30, 1996, and a further Rs 240 crore in eight monthly instalments commencing June 1, 1996. This had been paid up by the company on schedule.