The Supreme Court on Thursday admitted softdrinks major Hindustan Coca-Cola Beverage?s petition against the excise department?s notice asking the firm to pay excise duty of about Rs 2.20 crore.
A bench headed by Justice DK Jain, while admitting the petition, stayed the recovery subject to furnishing of a bank guarantee of the duty amount by the company.
The court had earlier sought a reply from the ministry of finance, the Central Board of Excise & Customs, the commissioner of central excise and others and had also also stayed the Gauhati High Court?s ruling that dismissed the softdrinks major?s plea challenging the department?s notice.
After acquiring a plant at Jorhat in Assam in November 1998, the softdrinks major had undertaken substantial expansion there and had claimed entitlement to excise exemption for it, in accordance with an order by the Centre in 1989. The order said that all goods manufactured in units located in Assam and other North-Eastern states were exempt from excise duty equivalent to the amount paid by the manufacturer from the current account maintained under the Central Excise Rules, 1944. It is entitled to duty refund from the account current under the notification, the softdrinks major said, adding that there was no need for it to first utilise the excise credit received on the purchase of inputs (called set-off) and then pay the balance in cash.
However, additional solicitor-general Harin Raval argued, ?The refund can?t exceed the duty amount paid less the amount of Cenvat credit availed of?. While opposing the staying of the High Court order, he said the company had already passed on the excise burden to the consumers and in view of Section 153(4) of the Finance Act 2003, there was a mandate to recover the wrongly-granted refund.
The company said the notification stipulating the requirement of availing cenvat and paying duty came into force subsequently and can?t be applied retrospectively.