Electricity not an excisable commodity:SC

LEGAL DIGEST

The Supreme Court last week granted the benefit of MODVAT credit to several units generating electricity captively. The power was consumed for the manufacture of final products, such as caustic soda and cement.

The court dismissed the appeal, Collector of Central Excise Vs Solaris Chemtech Ltd. The judgment stated that electricity was not an excisable item. According to Rule 57A, furnace oil and low sulphur heavy stock used for generating power were entitled to MODVAT credit.

SC quashes Bombay HC judgment

The SC last week quashed the judgment of the Bombay High Court in Swan Mills Ltd vs Union of India, involving the question of benefits under the Kar Vivad Samadhan Scheme, 1998. The excise authorities had served notices for recovery of differential duty of approximately Rs 50 lakh. While this was being challenged, the scheme was introduced for five months.

The company sought the benefit of the scheme, but was denied on the ground that the period of the scheme had expired. The Bombay High Court confirmed this view. However, the Supreme Court ruled that since the dispute was pending, the company was entitled to the benefit.

IT commisioner's appeal allowed by Supreme Court

The SC allowed the appeal of the Commissioner of Income Tax in a case where an unregistered firm in south India, VV Enterprises, collected deposits from the public and failed to keep proper accounts. On a raid on its premises, Rs 1.18 crore were recovered.

The tax authorities treated the amount as undisclosed income of persons in whose names the deposits appeared. One of the employees in whose name some deposits were found moved the tribunal.

It held that it was not proper to treat the amount as undisclosed income of various assessees; it was necessary to link up all the amounts with the books of the firm.

The authorities challenged this finding. It said that the tribunal was wrong in directing the linking up of the deposits with the accounts of the firm. The onus of proving the source of deposits primarily rested on the persons in whose names they appeared in various banks.

Consumer Commission's decision upheld

The SC last week directed the United India Insurance Company to pay Rs 5 crore as compensation to Great Eastern Shipping Company for the loss of 12,000 metric tonne of sugar imported from China to Kolkata.

After taking the delivery of the consignment, the goods could not be transported from the dock because of the Durga Puja celebrations. During this period, the insurance was extended. However, the stock was destroyed by a fire.

The insurance company rejected the claim of the importer arguing that what was covered by the policy was the transit risk and not the storage risk. The National Consumer Commission asked the insurers to pay the amount estimated by the surveyors. The SC dismissed the appeal of United India.