SC modifies arbitration award

LEGAL DIGEST

The Supreme Court last week revised the international arbitration award in the dispute between Numaligarh Refinery Ltd of Assam and Daelim Industrial Company of South Korea.

The public sector refinery, through Engineers India Ltd, invited global tenders for building a captive power plant. The Korean company, with its consortium partner Tubotecnia SPA of Italy, successfully bid the tender.

However, disputes arose between the parties which were arbitrated in Paris. The Indian company was directed to pay a huge sum on several heads. It moved the district judge at Golaghat who set aside the award under the Arbitration and Conciliation Act. The appeal went to the Calcutta High Court which modified the award.

The Supreme Court went into the claims of the Korean company and further reduced the award amount.

CEGAT order set aside

The Supreme Court has set aside the judgment of the Customs, Excise & Gold (Control) Appellate Tribunal on the appeal of the commissioner of excise in his dispute with Ballarpur Industries. The contention of the company was that there was no sale in the relevant transaction, but only stock transfer.

Therefore, Rule 57CC of the Central Excise Rules was not applicable. The company manufactures paper. It also produces pulp, which has no duty. The pulp is captively consumed for the manufacture of paper and a small amount of it is transferred to its sister concern.

The department, however, did not accept this contention and issued show-cause notices demanding duty, taking into consideration comparable prices. The tribunal accepted the argument of the company. Therefore, the department moved the Supreme Court. It remitted the case to the commissioner to rework the duty.

Misuse of motor vehicle insurance

"In order to curb the widespread mischief of getting insurance policies after motor vehicle accidents, it is absolutely imperative to clearly hold that the effectiveness of the insurance policy would start from the time and date specifically incorporated in the policy and not from an earlier point of time," the Supreme Court observed while allowing the appeal of National Insurance Company in some compensation cases.

In these cases, the Guwahati High Court had asked the company to pay the decreed amounts even though the policy was not renewed after a few days of the accident.

The Supreme Court examined the time and date provided in the "motor renewal endorsement" document to see whether the policy was valid at the time of the accident. It was not. Therefore, the high court's judgments were set aside.

Customs duty on laptops

The Supreme Court has set aside the ruling of the Customs, Excise & Service Tax Appellate Tribunal which had held that the software-loaded hard discs are classifiable under heading 85.24 of the first schedule of the Customs Tariff Act, thus allowing duty exemption to Hewlett Packard India Sales Ltd.

The department had demanded customs duty of Rs 6 crore classifying the goods under heading 84.71. Setting aside the tribunal's order on the appeal of the commissioner of Customs, the Supreme Court ruled that the imported laptops were classifiable under 84.71 whereas the operating software recorded on HDD imported, as packaged software were classifiable under 85.24.

Canteen workers not staff

The Supreme Court has held that the canteen workers of Metallurgical Engg Consultants Ltd have no right to claim service benefits granted to the company's employees as there was no master and servant relationship between them and the management.

The canteen workers approached the Supreme Court in 1984 and the court sent back the question to the industrial tribunal. After more than two decades, the issue has been settled in favour of the company.

Dismissing the appeal of the Canteen Mazdoor Sabha against the judgment of the Jharkhand High Court, the Supreme Court said: "It is more than evident that the employees of the canteen are appointed by the welfare committee and not the company. The canteen was not being run either under a statutory obligation or due to an obligation arising out of any standing order or other binding circulars of the company. Providing canteen service was not a part of the service conditions of the employees of the company."