Cutting foil is not manufacturing

The Supreme Court has dismissed the appeal of the commissioner of Central Excise and held that the process of unwinding, slitting/cutting of jumbo rolls of tissue paper/aluminium foils into smaller size would not attract excise duty as the process was not "manufacture" under the Central Excise Act.

The revenue authorities had issued show cause notices to SR Tissues Pvt Ltd and several other units demanding 18 per cent duty for the process of cutting and reducing the size of the rolls for domestic and retail purposes.

The companies challenged the demand in Customs, Excise and Gold Control Appellate Tribunal (Cegat) with success. The appeal of the department was dismissed.

As regards the manufacture of wet tissues and fragmented tissues, the dispute was remitted to the commissioner to examine whether the process amounted to manufacture.

IT department's plea dismissed

The Supreme Court last week dismissed the appeal of the commissioner of income tax, Rajkot, against the Gujarat High Court judgment quashing the department's rejection of declarations of Shatrusailya Jadeja under the Kar Vivad Samadhan Scheme of 1998.

The scheme provided that tax arrears could be settled by declaring them and paying the prescribed amount of arrears. It also provided certain immunities and benefits.

According to the department, the assessment in this case had become final in 1992-93 but he filed revision petitions to get the benefit of the recovery scheme. They were time-barred.

He submitted that since the revision petitions were pending with pleas for condonation of delay, his declarations were made on time. Therefore, he was entitled to the benefit of the scheme. The Supreme Court accepted the latter view, while upholding the high court judgment.

At the same time, in a separate judgment, the Supreme Court allowed the appeal of Jadeja challenging the high court order holding that he was liable to pay interest under the scheme on the tax arrears to be determined by the designated authority.

Union's plea referred to industrial tribunal

In a rare instance, the Supreme Court has referred two questions in a labour dispute to the industrial tribunal. Normally, it is for the state government to do so. The Supreme Court did so in Hindustan Steel Works Construction Ltd versus Employees Union.

The dispute was over the withdrawal of construction allowance to the employees. The Andhra Pradesh High Court allowed the writ petition of the workers' union and ruled that the withdrawal of allowance amounted to variation of the terms and conditions of service and, therefore, violated Section 9-A of the Industrial Disputes Act.

On the company's appeal, the Supreme Court disagreed with the high court and asked the state government to refer the main issues to the tribunal.

Ruling on dishonoured cheques quashed

The Supreme Court last week set aside the judgment of the Karnataka High Court, which had quashed a criminal complaint on four dishonoured cheques worth Rs 5 crore.

Cref Finance Ltd appealed against the judgment arguing that the high court had quashed the complaint on the ground that the magistrate had issued process before taking cognisance under Section 138 of the Negotiable Instruments Act.

The managing director of Shree Shanthi Homes Pvt Ltd, who issued the cheques and then stopped payment, argued that the debtor was the company, and not he personally.

The Supreme Court rejected his stand and the high court view. It said that the magistrate had issued process after taking cognisance of the offence. The magistrate was asked to proceed with the prosecution without delay.