Monday, January 31 2005 16:45 Hrs (IST) - World Time -

New Delhi: In a move that is seen as a major setback to tobacco major ITC, the Government has armed itself through an Ordinance with powers to modify past excise rules in an apparent attempt to recover arrears of Rs 803 crore from the company.

The Ordinance issued on January 25 amends the Central Excise Act empowering Government to make rules retrospectively.

This follows the legal battle between excise department and ITC in Supreme Court, which gave a verdict in favour of the Kolkata-based cigarette maker last year.

The apex Court had quashed an order passed by Customs, Excise and Gold (control) Appellate Tribunal (CEGAT), which had rejected ITC's plea for Rs 803 crore-excise duty relief for the period 1983-87.

Based on information from revenue intelligence, excise department had slapped the duty on the ground that ITC had sold cigarettes at a price higher than the maximum retail price printed on the packets.

Meanwhile, ITC Limited has refused to comment on the Government ordinance to amend the Central Excise Act, 1944 following which the company might have to pay Rs 803.78 crore to the Excise Department.

Though ITC Chairman Y C Deveshwar was not available for comments, the company's spokesperson S H Venkatramani told sources in New Delhi that he was not aware of any such ordinance.

"We have not seen the ordinance and so are not in a position to give our reaction," Venkatramani told when asked about the company's reaction on the development.

Meanwhile, ITC shares dipped sharply during the day's trading at the Stock Exchanges after the reports came in about the ordinance.

The Ordinance issued on January 25 amends the Central Excise Act empowering Government to make rules retrospectively.