Refrigeration plants

LEGAL DIGEST

The Supreme Court last week dismissed the appeal of Commissioner of Central Excise rejecting his contention that refrigeration plants, cold storage plants, central air-conditioning plants and caustic soda plants were subjected to central excise. His contention was earlier rejected by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi.

His argument was that fabrication of these plants out of duty-paid, bought-out items amounted to manufacture of a new marketable commodity, inviting duty.

The tribunal as well as the Supreme Court held that these plants were basically systems comprising of various components and were thus in the nature of systems and were not machines as a whole. Therefore, they were not excisable goods.

Goods in transit

The Supreme Court last week set aside the ruling of the Calcutta High Court and allowed the appeal of Peacock Plywood Ltd against Oriental Insurance Co Ltd.

The case involved the interpretation of a policy of marine insurance entered into between the parties covering goods in transit. The plywood company bought logs from a Malaysian firm and loaded them in a ship.

It became unseaworthy and the cargo had to be sold in Singapore. Then the firm sued the insurance company for constructive total loss as the cost of bringing the goods to Kolkata would be more than the actual cost. The insurance company contested the claim.

The single judge bench of the Calcutta High Court allowed the claim of the firm after deducting the price recovered from the sale. The insurance company appealed to the division bench of the high court which reversed the order.

Therefore, the plywood firm appealed to the Supreme Court. It restored the order of the single judge allowing a claim of Rs 8.5 lakh for the constructive total loss.

Tender process

The Supreme Court has set aside the judgement of the Bombay High Court in the case of Rochem Separation Systems (I) Pvt Ltd vs Mazagon Dock Ltd, and asked it to reconsider the dispute raised by the company which specialises in membrane technology systems.

Mazagon Dock called for a tender for design, manufacture and installation of self-sustaining reverse osmosis plants for three destroyers of the Indian Navy.

The company responded with details, but after several clarifications and communications, the bid was given to another firm. Therefore, Rochem moved the high court challenging the action of the Mazagon Dock as discriminatory and biased. Terms were changed to suit the new firm. It also alleged malafides against Mazagon Dock.

The Supreme Court stated that the high court did not consider these aspects while dismissing the writ petition. Therefore, the case was remitted to the high court for reconsideration as early as possible in view of the national importance of the project.

Computer peripherals

Computer peripheral dealers got sales tax relief last week when the Supreme Court ruled that parts of the computer should be treated as computer and granted tax exemption under the second schedule of the Karnataka Sales Tax Act.

The Karnataka High Court had rejected the contention of the state government in the cases involving Intent Compu System, Balaji Computers and others.

The assessing authorities had issued notices to the dealers proposing to levy turnover tax on parts of the computer and computer peripherals. The dealers moved the high court challenging the demand. The court allowed their petition. The appeal by the government was dismissed by the Supreme Court.

Flood damage

The Supreme Court has dismissed the appeal of United India Insurance Co Ltd against the order of the National Consumer Commission and asked it to pay Rs 10 lakh to M/s Kiran Combers & Spinners to compensate flood damage. The mill had insured its building, stocks and fixtures for fire and floods. The property was affected by heavy floods.

When the mill made a claim for Rs 20 lakh, the insurer rejected on the basis of the surveyor's report the contention that the building was damaged due to structural defects caused by subsidence which was not covered by the policy. The commission rejected the defence.

The insurance company moved the Supreme Court. It upheld the commission's ruling asserting that the company could not repudiate the claim after certifying the building as a first class construction. It found that the damage was caused by floods, and not because of construction fault.

Signature verification

The Supreme Court ruled last week that in a dispute over the authenticity of a cheque, the criminal court can order verification of the signature by experts. This ruling in the Mrs Kalyani Baskar vs Mrs M S Sampoornam case reverses the order of the Madras High Court which did not allow such a procedure, interpreting Section 243 of the Code of Criminal Procedure.

In this case, the cheque was dishonoured by the bank for "insufficiency of funds". The payee filed a case against the drawer under the Negotiable Instruments Act.

The latter denied issuing such a cheque. She moved the magistrate's court for expert opinion on the genuineness of the signature. It was dismissed. The high court also rejected the plea. On appeal, the Supreme Court granted the request.

A person cannot be convicted without an opportunity being given to her to present her evidence. If it is denied to her, there is no fair trial, the court said.