Judgment :- D. Murugesan, J. These Writ Appeals are at the instance of Union of India, represented by its Secretary, Ministry of Finance, Department of Revenue against the Order of the learned single Judge of this Court dated 12.03.2003 made in W.P.Nos.4456 to 4463 and 4932 of 1999 setting aside the impugned show cause notices and the final order of adjudication respectively. 2. The Writ Petitions came to be filed by M/s. Goyal Dresses, Chennai, the respondent herein in each of the Writ Appeal. Writ Petition Nos. 4456 to 4463 of 1999 were filed questioning the show cause notices dated 210. 1994; 011. 1994; 011. 1994; 03.07.1995; 06.04.1995; 03.07.1995; 03.07.1995; and 03.07.1995 respectively issued by the Customs Authority, while W.P.No. 4932 of 1999 was filed against the final order of adjudication dated 18.02.1999 made by the Commissioner of Customs (Designated Authority), Customs House, Chennai in terms of Section 87 (m) (ii) (b) of The Finance Act. 3. The following are the few facts leading to the controversy in Writ Appeals:- The first respondent (herein after referred to the petitioner) is engaged in the business of manufacture and export of Ready-made Garments. For the manufacture and export of goods, the petitioner import fabric accessories, consumables and other raw materials. The petitioner filed bills of entry on various dates for clearance of goods and declared the value in each case. Thereafter, investigations were carried. In order to show the bonafide, pending investigation the petitioner had made a sum of Rs.50,000/-on 02.08.1994 and Rs.1,00,00,000/- on 03.08.1994 totalling to Rs.1,50,00,000/- by making clear that the said payment cannot be taken to be as admission of liability. On the ground that the petitioner is entitled to the benefit of Kar Vivad Samadhan Scheme in terms of Section 87 of The Finance Act, 1998, it filed the declarations for the extension of benefit of such scheme. The declarations filed by the petitioner were rejected on the ground that, since the petitioner had made payment of Rs.1,50,00,000/- though made under protest, they were not entitled to the benefit of the scheme in terms of explanation to Section 87 (m) (ii) (b) of the Finance Act, 1998. Individual orders were passed on eight such declarations which were questioned by the petitioner in W.P.Nos. 4456 to 4463 of 1999. Individual orders were passed on eight such declarations which were questioned by the petitioner in W.P.Nos. 4456 to 4463 of 1999. Insofar the show cause notices which ended up in a final adjudication in one matter, the petitioner filed in W.P.No.4932 of 1999 questioning the final order of adjudication dated 18.02.1999. All the Writ Petitions were taken up together and were disposed of by a common order dated 12.03.2003. The learned single Judge found that in as much as the amount of Rs.1,50,00,000/-made even before the demand or show cause notices were issued, the explanation to Section 87 (m) (ii) (b) of The Finance Act, 1998, cannot be made applicable to exclude the petitioner from the benefit of the Scheme. Insofar as the challenge as to the final adjudication, the learned Judge held that in as much as the petitioner is entitled to the benefit of the scheme, the final adjudication proceedings is also to be set aside. Accordingly, the orders impugned in W.P.No. 4932 of 1999 was also set aside. Aggrieved by the above common order, the present appeals have been filed by the Union of India. 4. We have heard Mr. K. Gunasekar, Senior Central Government Standing Counsel for appellants and Mr. Habibulah Basha, senior counsel for Mr. S. Dhayaleswaran, learned counsel on record for the respondent. 5. The learned Mr. K. Gunasekar, Standing Counsel representing on behalf of the appellants would submit that a perusal of Section 87 (m) (ii) (b) of the Finance Act, 1998 coupled with the explanation would go to show that even if an amount representing duty is paid in respect of the subject matter of demand notices or show cause notices: either voluntarily or under protest, such assessee is not entitled to the benefit of the Scheme. He would further submit that the interpretation put by the learned single Judge that the amount paid prior to the demand notice or show cause notice: either voluntarily or under protest, the same cannot be considered to be an amount paid towards demand notice or show cause notice, is contrary to the provisions of the Act. He would also submit that even when the amounts were paid on 08. He would also submit that even when the amounts were paid on 08. 1994 and 03.08.1994, the petitioner firm was aware that it was making the payment only towards the duty and therefore, when such payments were made, the petitioner assessee is not entitled to the benefit of the scheme in terms of the provisions of Section 87 (m) (ii) (a) of the Act. 6. Mr. Habibulha Basha, learned Senior counsel for the respondent would on the other hand submit that only in the event payments are made either voluntarily or under protest pursuant to the demand notice or show cause notice, that alone will disentitle an assessee from claiming the benefit of the scheme. Factually, the amount of Rs.1,50,00,000/- was paid prior to the demand notices and therefore, the impugned orders rejecting the declaration are contrary to the very provisions of Section 87 (m) (ii) (b) of the Act. He would further submit that after the payment of the said amount, in fact, barring a sum of Rs.91,62370/-, the remaining amount was adjusted in Kar Vivad Samadhan Scheme in respect of other transactions made by the very same assessee. Having made applicable to the benefit of the scheme in respect of other transactions, the appellants, deprived the benefit of the scheme to the petitioner in respect of show cause notices covered in the writ petition. He would also submit that even otherwise, admittedly, a sum of Rs.91,62,370/- were kept under suspension in the Revenue Account. In the event, duty to be paid is arrived at by the Revenue Department, such amount could be adjusted, as admittedly, a total amount demanded in all the show cause notices is less than Rs.91,62,370/- In such event, there could have been no occasion for the Revenue to issue show cause notices claiming the duty. 7. The rival contentions made on behalf of the respective counsel lead us to the question as to whether the petitioner would be entitled to the benefit of Kar Vivad Samadhan Scheme in terms of Section 87 (m) (ii) (b) of the Act. The said provision reads as under:- "87. Definitions.- In this Scheme, unless the context otherwise requires, - ...... The rival contentions made on behalf of the respective counsel lead us to the question as to whether the petitioner would be entitled to the benefit of Kar Vivad Samadhan Scheme in terms of Section 87 (m) (ii) (b) of the Act. The said provision reads as under:- "87. Definitions.- In this Scheme, unless the context otherwise requires, - ...... .(m) " tax arrear " means .(i) in relation to direct tax enactment, the amount of tax, penalty or interest determined on or before the 31st day of March, 1998 under that enactment in respect of an assessment year as modified consequence of giving effect to an appellate order but remaining unpaid on the date of declaration; .(ii) in relation to in direct tax enactment:- (a) the amount of duties (including drawback of duty, credit of duty or any amount representing duty) cesses, interest, fine or penalty determined as due or payable under that enactment as on the 31st day of March, 1998 but remaining unpaid as on the date of making a declaration under section 88; or .(b) the amount of duties (including drawback of duty, credit of duty or any amount representing duty), cesses, interest, fine or penalty which constitutes the subject matter of a demand notice or a show cause notice issued on or before the 31st day of March, 1998 under that enactment but remaining unpaid on the date of making a declaration under section 88, but does not include any demand relating to erroneous refund and where a show cause notice is issued to the declarant in respect of seizure of goods and demand of duties, the tax arrear shall not include the duties on such seized goods where such duties on the seized goods have not been quantified. Explanation – Where a declarant has already paid either voluntarily or under protest, any amount of duties, cesses, interest, fine or penalty specified in this sub-clause, on or before the date of making a declaration by him under section 88 which includes any deposit made by him pending any appeal or pursuance of a court order in relation to such duties, cesses, interest, find or penalty, such payment shall not be deemed to be the amount unpaid for the purposes of determining tax arrear under this sub-clause; 8. The scheme came into force on 01.09.1998. The scheme came into force on 01.09.1998. If a person intends to avail the benefit of the scheme, he should make a declaration in terms of Section 88 of the Finance Act. Section 88 of the Act deals with the settlement of tax payable. The relevant provisions of the sub section (f) to Section 88 of the Act reads as under:- "Whether the tax arrear is payable under the indirect tax enactment – (i) in a case where the tax arrear comprises fine, penalty or interest but does not include duties (including drawback of duty, credit of duty or any amount representing duty) or cesses, at the rate of fifty per cent of the amount of such fine, penalty or interest, due or payable as on the date of making a declaration under section 88;" 9. The declaration as contemplated under Section 88 of the Act in respect of Tax arrears payable under the indirect tax must be on the basis of an investigation and arrival of quantum of tax arrears followed by demand notice. This is evident from the word employed in clause (b) of sub section (ii) of 87 (m) of the Act, which states that an amount of duty remaining unpaid on the date of declaration under Section 88 of the Act should constitute the subject matter of demand notice or show cause notice. The legislation is, therefore, intended that only in case where duty is paid pursuant to the demand notice or show cause notice issued on or before 31.03.1998, the assessee could be denied to the benefit of the Scheme. A combined reading of provisions of Section 87 (m) (ii) (b) and Section 88(f) of the Finance Act, 1998, in our considered view would show that only those payments made either voluntarily or under protest, pursuant to the demand notice or show cause notice would alone be brought under the explanation to the above provisions of the Act. 10. In this Context, we may also refer that the provisions of Section 95 of the Act itself contemplates that the Scheme shall not apply in certain cases. It is not the case of the revenue department that the petitioner will come under any of the categories as enumerated under Section 95 of the Act to disentitle the assessee from claiming the benefit of the Scheme. It is not the case of the revenue department that the petitioner will come under any of the categories as enumerated under Section 95 of the Act to disentitle the assessee from claiming the benefit of the Scheme. That apart, as rightly contended by the learned senior counsel appearing for the petitioner that a sum of Rs.58,37,630/- ( Rs.1,50,00,000/- less Rs.91,62,370/- ) had already been adjusted in Kar Vivad Samadhan Scheme in respect of certain other transactions made by the petitioner. This is evident from the proceedings of the Commissioner of Customs, Customs House, Chennai dated 26.03.1999 which reads as under:- OFFICE FO THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE, CHENNAI-1 File No. Smisc 15/6/99 Dated 26 March, 1999 M/s. GOYALS DRESSES, No.3, Vdyaraghava Road, T.Nagar, Chennai 600 017. Sub: KVS Scheme – KVS/Decla/GOYALS DRESSES98 -Adjustment from Suspense Account – Reg. Please refer to your letter dated 13th March, 1999 regarding adjustment of 46.82 lakhs in KVS Scheme and 13.5 lakhs against personal penalty on M/s. Bharat Goyal on March 13th 1999. In this regard your letter asking for clarification on which account the balance amount of Rs.91,62,370/- being kept is hereby clarified that the original amount of 1.5 crores along with a pay order for Rs.1,95,274/- is converted in to Miscellaneous head of REVENUE DEPOSIT No.286 and kept under suspense account. From this duty amount of Rs.46,82,904/- and penalty amount of Rs.13.5 lakhs which amount to a total of Rs.60,32,904/- has been adjusted in KVS Scheme. The balance amount of Rs.91,62,370/- is kept under the suspense account of Revenue Deposit No.286 dated March 13, 1999." 11. Admittedly, the revenue had adjusted the above amount and given the benefit of KVS Scheme to the very same assessee on certain transactions and in respect of some declarations in question alone the authority had rejected the claim of the assessee. It must be mentioned here that the amount of Rs.1,50,00,000/-was paid by the petitioner prior to show cause notice issued in all the cases covered in Writ Petitions. As already pointed out a sum of Rs.50,00,000/- was paid on 02.08.1994 and Rs.1,00,00,000/-was paid on 03.08.1994 and the show cause notices were issued only after the said payment i.e. 210. 1994; 011. 1994; 011. 1994; 03.07.1995; 06.04.1995; 03.07.1995; 03.07.1995; and 03.07.1995 respectively covered in W.P.Nos.4456 to 4463 of 1999. As already pointed out a sum of Rs.50,00,000/- was paid on 02.08.1994 and Rs.1,00,00,000/-was paid on 03.08.1994 and the show cause notices were issued only after the said payment i.e. 210. 1994; 011. 1994; 011. 1994; 03.07.1995; 06.04.1995; 03.07.1995; 03.07.1995; and 03.07.1995 respectively covered in W.P.Nos.4456 to 4463 of 1999. In this context, it is also referable that when the request of the petitioner for refund of the above said sum of Rs.91,62,370/-was made, it was rejected and at the instance of the petitioner. W.P.No.1575 of 2002 came to be filed and the same was allowed by the learned single Judge by his order dated 12.03.2003 holding that the petitioner was entitled to the benefit of the KVS Scheme. Admittedly, the said order was questioned by the Revenue in W.A.No.2434 of 2003 apprehending that the petitioner may claim interest on the said amount viz., Rs.50,00,000/- and Rs.1,00,00,000/- from the dates when they were made i.e. 02.08.1994 and 03.08.1994 respectively. Admittedly, the finding in respect of the applicability of the Scheme to the petitioner was not questioned by the Revenue in the said Writ Appeal. The provisions of Section 87 (m) (ii) (b) of the Act could be pressed into service only in respect of the amount remaining unpaid pursuant to the demand made by the revenue and what ever the amount paid prior to the show cause notices or demand notices cannot be considered to be one of the amount paid after assessing the indirect tax arrear to be paid by the assessee viz., the writ petitioner. In these circumstances, we are of the considered view that there is no infirmity in the finding of the learned single Judge and consequently allowing the writ petitions. 12. For all the above said reasons, we find no reason to interfere with the order of the learned single Judge dated 12.03.2003 made in W.P.Nos.4456 to 4463 and 4932 of 1999 and the writ appeals are dismissed. No costs. Connected Miscellaneous Petitions are closed.