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Govt-ITC settlement as per SC proposal

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April 05, 2005 16:33 IST

The settlement reached between government and cigarette major ITC over Rs 803 crore (Rs 8.03 billion) excise dispute was in accordance with the 'suggestion' from the Supreme Court, Finance Minister P Chidambaram said on Tuesday.

"With the settlement, we are happy a long pending dispute has been resolved and doubly happy we have been able to resolve it in accordance with the suggestion that fell from the Supreme Court," he told reporters.

He said following the Cabinet decision of March 16, "We told ITC that we are willing to accept the offer, provided they go through the process of recording the settlement in proper form."

He was happy to report that it has been done and a memorandum of settlement has been signed between the revenue secretary and ITC.

That settlement has been filed before the adjudication officer, who would be passing the order today accepting the settlement, Chidambaram said.

As per the settlement, government would give up claims for additional Rs 450 crore (Rs 4.50 billion) excise and the company will not seek a refund of Rs 350 crore (Rs 3.50 billion) which it had already paid to the tax department as interim deposit pending settlement of the Rs 803 crore excise dispute.

During the hearings of the case in 2003-04, the Supreme Court had suggested settlement between the excise department and the ITC on the demand for Rs 803 crore duty. But the court later decided in favour of ITC following which the government promulgated an ordinance on January 25 seeking to override the court order.

With the settlement, the proceedings by the excise department, which got revived under the Ordinance, get dropped, Chidambaram said, adding, "It is being done in a proper legal manner."

Though the Supreme court had suggested settlement of the long-pending dispute during the hearing of the case, the ministry apparently was unable to take a view at that time, he said.

CBEC seemed to have reiterated the view that it was a very good case for government and "we should request the court pronounce judgement on the matter," he said.

Even while reserving a judgement on the case in early 2004, the apex court had suggested this was a case for settlement. Then again the CBEC had held the view that "we should receive a judgement and was unable to take a view on a settlement."

Since the judgement in favour of ITC in September, 2004 proceeded on a technical ground, government then was advised to retrospectively amend the excise notification through an Ordinance and validate the levy of the duty.

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