Endorsed bill of entry can amount to a demand notice under the Kar Vivad Samadhan Scheme when duty liability is clearly asserted.

An endorsed bill of entry that clearly quantifies and asserts customs duty liability can be treated as a demand notice for purposes of the Kar Vivad Samadhan Scheme, even if it is not in a formal demand format. Where that liability remained unpaid on the declaration date, it could constitute a tax arrear within the Scheme. On that reasoning, the exclusion for matters outside the scope of a demand or show-cause notice did not apply, and the claim was treated as eligible for settlement under the Scheme.

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Issues: Whether the endorsement on the bill of entry and the notice dated 28 July 1994 constituted a demand for indirect tax so as to bring the appellant within the definition of "tax arrear" under the Kar Vivad Samadhan Scheme, and whether the case was excluded by Section 95(ii)(b) of the Scheme.

Analysis: The Scheme permitted settlement where duties or other indirect tax dues had been determined or where the subject-matter of a demand notice or show-cause notice issued on or before 31 March 1998 remained unpaid. The endorsements made by the Customs authorities on the bills of entry quantified and asserted the additional duty payable, and the appellant had challenged those endorsements as a demand. The Court treated those endorsements as a demand notice for the purposes of the Scheme. Relying on the earlier interpretation of the Scheme, the Court held that a demand need not be in any particular form if the duty liability had been clearly raised and remained unpaid on the declaration date. Since a demand notice had in substance been issued, the exclusion in Section 95(ii)(b) did not apply.

Conclusion: The appellant's claim fell within Section 87(m)(ii)(b) and was not excluded by Section 95(ii)(b); the appellant was entitled to the benefit of the Scheme.

Ratio Decidendi: For the purposes of the Kar Vivad Samadhan Scheme, an endorsed bill of entry that clearly quantifies and asserts customs duty liability can amount to a demand notice, and such liability constitutes a tax arrear if it remained unpaid on the declaration date.

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