Company, excise dept rapped

LEGAL DIGEST

The Supreme Court last week indicted both Sharp Industries Ltd and the excise department in the company's appeal on duty on aluminium foil.

The department, said Justice S N Variava, was negligent in not citing the judgment which decided the law correctly when the case was being heard by the tribunal. It cited wrong judgments delivered later.

The company, on the other hand, has been "dishonest inasmuch as it did not point out to the tribunal that in its own case, and for the same period, it has already been held by the tribunal that the product was classifiable under Tariff 39.20. This conduct has to be deprecated in no uncertain terms."

The department compounded its negligence by not pointing out the correct position regarding the company before the tribunal. The company's appeal was dismissed.

Writ petition not the first recourse

When remedies under the Industrial Disputes Act are available to an employee, he cannot move a writ petition in the high court, the Supreme Court has ruled in UP State Spinning Co Ltd v R S Pandey. In this case, some employees of the company moved the Allahabad High Court through a writ petition alleging illegal termination and discrimination in the wage structure.

The single-judge bench, and later the division bench of the high court, held that the complaint in the writ petition was maintainable. The company moved the Supreme Court challenging the high court stand. The Supreme Court held that the high court was wrong. It said though normally it is reluctant to interfere in the high court order once a writ petition is admitted, in this case its interference is called for.

It then reversed the high court order, after citing several judgments, including the recent one in State of Himachal Pradesh vs Gujarat Ambuja Cement Ltd.

Cegat ruling on dummy units upheld

The Supreme Court last week dismissed the appeal of the Commissioner of Central Excise against the ruling of the Cegat in favour of Aldec Corporation.

The corporation fragmented its activities among itself, Vitthaleshwara Painting Industries and Srinivasa Rolling & Engineering Works. It bought aluminium sheets from Hindalco Industries and paints from Goodlass Nerolac Paints Ltd and forwarded them to the two other units.

One of them slit the sheets into smaller slats and the other painted them. Then the slats were returned to Aldec. The revenue authorities maintained that Aldec set up the two dummy units to evade excise duty, as aluminium sheets were turned into venetian blinds and a new product was manufactured. The Cegat ruled that the process done by the subsidiary units did not amount to manufacture.

UP excise plea allowed

The Supreme Court last week set aside the judgment of the Allahabad High Court in favour of Swadeshi Polytax Ltd and allowed the appeal of the UP Commissioner of Central Excise.

The company collected from its customers tax in excess of what was prescribed in relation to polyester staples fibre it manufactured. The amount was deposited with the government.

Later, it successfully challenged the assessment and the assessing officer passed an order of refund, but directed that the amount be deposited in the treasury according to Section 29-A of the UP Trade Tax Act.

The trade tax tribunal reversed that order, which was confirmed by the high court. The Supreme Court confirmed the order of the assessment officer to deposit the amount in the treasury.