Treated rubber not an agricultural produce

LEGAL DIGEST

Rubber is not an agricultural produce for the purposes of entry tax, the Supreme Court ruled in the case, Falcon Tyres Ltd vs State of Karnataka.

The company is engaged in the manufacture of tyres of two-wheeler motor vehicles. Its factory is situated in Mysore. It claimed exemption from the tax on the value of rubber brought from Kerala maintaining that goods were agricultural in nature and exempted from tax under the law.

The authorities contended that the rubber purchased was subjected to treatment by sulphuric acid and smoke to make it into sheets and therefore it was not an agricultural product.

The dispute reached the Karnataka high court, which ruled in favour of the revenue authorities. The Supreme Court upheld this view.

Levy of duty on SSI unit upheld

The Supreme Court last week dismissed the appeal of the Commissioner of Excise against the ruling of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in its dispute with Action Construction Equipment.

The company manufactures mobile cranes. The allegation against it was that it had floated a non-functional dummy unit to evade excise duty on the cranes. The latter's unit was a small-scale unit. The cranes were first assembled in the company's premises, then they were knocked down and reassembled in the dummy unit.

They were cleared without payment of duty using the exemption available to SSIs. The authorities confiscated the cranes. The department assessed a duty of Rs 4 lakh, whereas the tribunal reduced it to Rs 3.5 lakh. The appeal against this order was dismissed by the Supreme Court.

Nod to NEPC trial for cheating

The Supreme Court allowed the appeal of the Indian Oil Corporation (IOC) against the Madras high court judgment and allowed the trial of NEPC India Ltd to go on for cheating and causing wrongful loss.

The IOC was supposed to supply aircraft fuel to NEPC but as the latter was not able to pay, it put strict conditions like the aircraft should not be moved out of Coimbatore and parts should not be removed.

The IOC filed two complaints alleging breach of these conditions. NEPC moved the high court for quashing the charges and it was allowed. The IOC appealed to the Supreme Court which overruled the high court.