Grasim gets relief on penalty, but not on duty

LEGAL DIGEST

The Supreme Court last week quashed the penalty of Rs 10 lakh on Grasim Industries and its subsidiary, Dharani Cement, as they had claimed exemption from excise duty on the basis of erroneous Cegat judgments.

The cement bags carried the words "manufactured by Dharani Cements, a subsidiary of Grasim Industries". According to a 1998 notification, if the product declares such a trade connection, it is not entitled to the exemption.

The Cegat, however, was interpreting the law wrongly and had granted benefits to several companies. In this case, the excise commissioner at Trichy chose to move the apex court, which ruled that such products should not get exemptions.

The court quashed penalty on the company, but ruled that it would not get exemption from duty.

Special Court custodian can auction properties

The Supreme Court has ruled that the custodian set up under the Special Courts (Trial of Offences Relating to Transactions in Securities) Act could conduct public auction of properties of notified parties.

The special court in this case (Cifco Properties Ltd vs Custodian) had directed the receiver of the Bombay High Court to hold the sale.

But when he could not do so because he was overburdened with work, the special court asked the custodian. The company challenged this order arguing that since the custodian played an adversarial role in the special court, it should not conduct the sale. The apex court rejected this view and allowed the auction to go ahead.

No special prices for bulk buyers

A manufacturer cannot distinguish between bulk buyers and other wholesale buyers in pricing for purposes of Section 4(1)(a) of the Central Excise Act, the apex court declared in the Kirloskar Brothers Ltd vs Commissioner case.

The company, which makes compressors, filed two price lists showing lesser price for bulk buyers. This was not allowed by the authorities. This view was upheld by the apex court.

It said classification can be made on the basis of region depending upon the amount of turnover and special factors. "But discount has to be as per the normal practice of the wholesale trade in such goods and it cannot be given on extraneous considerations and has to be founded on some rational basis." Tribunal should deal with arbitration clause

The Supreme Court has said contentious issues like the interpretation of an arbitration clause in a contract should not be gone into by the court at the stage of appointment of an arbitrator and no time should be wasted in such exercise.

The aggrieved party should raise such objections before the tribunal itself, the court said in the Shree Subhlaxmi Fabrics Ltd vs Chand Mal case, while overruling the Calcutta High Court.

The apex court also set aside the injunction passed by the high court against the Hindustan Chambers of Commerce, Mumbai, from proceeding with the arbitration case.

Personal staff as company employee

The head of the investors grievances cell of the Delhi Stock Exchange, who was dismissed for being too strict with brokers, has been awarded Rs 15 lakh compensation by the apex court.

The DSE had found KC Sharma qualified and efficient initially and gave him accelerated increments.

But he stepped on the toes of certain brokers leading to an attempt on his life. Sharma later took on the directors of the DSE themselves. His services were terminated.

When he moved the high court, it awarded him Rs 12 lakh, but no reinstatement. On appeal, the apex court enhanced the amount.