SMS Lifesciences India Limited Vs Director General of Foreign Trade (Madras High Court)
The Madras High Court disposed of two connected writ petitions by a common order, as they arose from the same factual background and raised overlapping legal issues. The dispute traced back to nine Advance Licences (DEEC) granted to an assessee for duty-free import of antibiotic chemicals under Customs Notification No. 149/1995, subject to fulfilment of export obligations. Upon inspection, the Directorate of Revenue Intelligence found discrepancies in the description of imported raw materials and initiated proceedings. This culminated in an Order-in-Original dated 28.03.2000 demanding customs duty of ₹81.60 lakh with penalties under Sections 114A and 112A of the Customs Act, 1962.
An appeal was filed before the CESTAT along with a stay application. The Tribunal, by order dated 09.08.2000, directed a pre-deposit of ₹60 lakh as a condition for stay. The assessee failed to comply and sought modification, which was rejected. Subsequent writ petitions challenging the rejection were dismissed in 2010, though liberty was reserved to pursue remedies against the original pre-deposit order, leading to the present proceedings.
During the pendency of these disputes, the assessee became a sick industrial company and approached the Board for Industrial and Financial Reconstruction (BIFR). A rehabilitation scheme was sanctioned, followed by a Modified Rehabilitation Scheme dated 28.08.2008, which provided for amalgamation of the assessee with another entity. Under this scheme, the transferee company undertook to discharge the liabilities of the transferor.
