Legal Digest: M J Antony

The Supreme Court last week dismissed the appeal of the commissioner of central excise, Mumbai, and ruled that Bombay Dyeing & Mfg Co Ltd was not liable to pay any duty on grey fabrics produced at its Spring Mills, which has spinning and weaving sections. According to a government notification of 2002, grey fabrics, not subjected to any process, were chargeable to nil rate of duty if the fabrics were made from textile yarn on which excise duty has been paid and no credit for duty paid on inputs had been taken under the Cenvat Credit Rules, 2002. The excise authorities demanded duty at the rate of 12 per cent on the ground that the mill had not fulfilled the two conditions for exemption. The Supreme Court did not agree and asserted that the company was not liable to pay duty on grey fabrics.

Customs to pay interest on restitution

The Supreme Court has directed the Customs authorities to pay interest at the rate of 6 per cent on Rs 55 crore paid by ONGC Ltd by way of restitution. The public sector undertaking obtained the services of Sedco Forex International Drilling Inc for getting information for exploration of oil and gas. The information was recorded in 3-D seismic tapes. The Customs authorities demanded levy on the amount paid for it. This was contested by ONGC which paid the above amount. However, the PSU moved the Supreme Court and the Customs order was set aside. Now it has demanded interest on the amount paid at the rate of 12 per cent. The government resisted it arguing that the company had not invested the amount but expended it on public welfare. The Supreme Court agreed with ONGC and directed the government to pay Rs 10 crore as interest.

Sales tax relief granted to Trutuf

The Supreme Court has set aside the judgment of the Allahabad High Court and allowed the appeal of Trutuf Safety Glass Industries granting sales tax relief to the company. It produces toughened safety glass including wind screens for motor vehicles. The state revenue authorities granted concessional rate on purchase of raw materials. The firm wanted total exemption. When the dispute was taken to the tribunal, it granted total relief to the firm. However, the high court set that order aside. The Supreme Court has now restored the order of the tribunal.

Jay Mahakali's appeal dismissed

The Supreme Court has dismissed the appeal of Jay Mahakali Rolling Mills against the judgment of the Gujarat High Court which had upheld the central excise duty and penalty imposed on it. The revenue authorities had issued show-cause notice to the firm under various provisions of the law for mis-statement and suppression of facts to evade duty. Its plea that it had no ill intention was rejected by all tribunals and courts.

Ruling on sale of sugar stock set aside

The Supreme Court has set aside the order of the Karnataka High Court in the dispute between Central Bank of India and Siriguppa Sugars & Chemicals Ltd over disbursement of amounts realised on sale of stocks of sugar.

The sick mill had pawned its stocks with the bank. When the sale brought in Rs 1.5 crore, the workers and the cane growers also made claims on it. They were supported by orders of the labour commissioner and the cane commissioner.

The high court directed payments to both groups. The bank appealed to the Supreme Court against it, arguing that it had the first charge on it. Agreeing with this contention, the Supreme Court stated that the bank was entitled to the amount in satisfaction of its debt. Only if there was surplus, unsecured claimants would get their share.