Tobacco giant ITC Ltd on Friday won a big relief in the Supreme Court which set aside a demand of Rs 803 crore (Rs 8.03 billion) slapped on the cigarette manufacturers by the government on account of alleged evasion of excise duty.
ITC had, in fact, won the case on Thursday but to its dismay, found the order withdrawn by the court within minutes of pronouncing the judgement as the court took serious exception to the manner in which the unsigned copy of the judgement was taken out of the court room by a counsel without permission.
A two-judge Bench headed by Justice Ruma Pal, which had warned on Thursday that taking the judgement out of the courtroom would prove costly, on Friday came and pronounced the judgement allowing ITC's petition and dismissing the petition filed by the Commissioner of Central Excise.
No mention was made by the Bench, of which Justice Reddi was also part, about the application filed by the concerned advocate requesting the Bench to accept his sincere apologies and not to penalise the client for his 'inadvertent' mistake in taking the judgement out of the courtroom.
The Apex Court upheld the appeal of ITC challenging an order of the Central Excise, Gold Control Appellate Tribunal (CEGAT) upholding the Excise Department's demand except relief given to the cigarette manufacturer.
The department had alleged that the additional excise duty of Rs 803 crore was liable to be paid by the ITC Ltd as its cigarettes were sold at a price higher than the maximum retail price printed on the cigarette packets.
The department had said that the wholesale and secondary dealers margin were so compressed by ITC that the cigarettes had to be sold by the retailers at a price higher than the MRP printed on the packets.
ITC had failed in its appeal challenging the demand of the Department before the Collector (Adjudication) but had got some relief before the CEGAT.
Both ITC and the Excise Department had challenged the CEGAT order before the apex Court. ITC had questioned the demand upheld by the CEGAT, while the department had challenged the relief given to ITC by the Tribunal.
ITC had termed the demand as based on something over which the company had no control.
It said that in India, 70 per cent of the cigarettes were sold on stick-basis and not on packet basis and due to the currency problem, the retailer most of the time sold the cigarette sticks at a slightly higher rate than the MRP.
Giving an example, it said if a cigarette packet for 10 sticks was priced at Rs 28, invariably the retailers sold it at Rs 3 per stick as consumers found it difficult to tender exact change of Rs 2.80.
Saying that the additional money earned by the retailers were not within the domain of its control, ITC had contended that it was unfair on the part of the department to levy excise not on the MRP but on the price at which the retailers sold the sticks.
