Goodyear had contested the diktat to pay Rs 12.5 crore as additional excise duty and a penalty of an equal amount for alleged duty-evasion on rubberised tyre-cord fabrics manufactured and captively used by it during April 1, 1995 and July 31, 1997.

Department sources said the company was issued a showcause notice in September 1997, and upon adjudication of the case earlier this year, ordered to pay the amount.

The date for the next hearing has not been fixed. Excise on rubberised tyre cord was abolished in the 1998-99 union budget. Goodyear was procuring unprocessed tyre-cord fabrics on payment of basic excise duty and additional excise duty. The fabric was processed and finally used in the manufacture of tyres within the factory.

The company had contended before thedepartment that processing of tyre cord fabrics within the factory was exempt from basic excise duty and additional excise duty under separate notifications.

The department had, however, rejected the plea on the ground that the notification, which exempted additional excise duty, was revoked effective March 16, 1995. In effect, the processed tyre-cord fabrics became liable to additional excise duty.

During April 1 1995-July 31, 1997, the company removed processed tyre-cord fabrics of assessable value of over Rs 250 crore resulting in short payment of additional excise duty of about Rs 12.51 crore.

Sources said Goodyear was producing such fabrics and the same was cpatively used in the manufacture of tyres, but the fact was not brought to the department's notice.

During the two-year period, the company did not even disclose the item in their classification declaration. They had also not filed any price declaration as required under the central-excise rules during the relevant period, indicating pricedetails of the product which had come into existence during the period.

Goodyear had recorded an increase in its net profit at Rs 3.76 crore for the first quarter ended June 30, 1998 compared with Rs 1.58 crore for the previous corresponding period. The company's total income increased to Rs 131.21 crore from Rs 128.01 crore last year. The tyre major registered a turnover of Rs 537.89 crore for the year ended December 31, 1997 with a net profit of Rs 10.32 crore.