|
Advanced Search Options
Case Laws
Showing 81 to 100 of 389 Records
-
1999 (5) TMI 536
Application under section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator - Held that:- The present proceedings, however, for the appointment of an arbitrator under section 11 of the Arbitration and Conciliation Act, have a very narrow scope and the same are not covered by section 22 of the Sick Industrial Companies (Special Provisions) Act. If, however, the respondents desire that the arbitration proceedings should not be proceeded with, it is open to them to take appropriate legal steps in that connection under the provisions of the Act and in accordance with law.
In the premises, by consent of both parties, Justice S. Ranganathan, retired judge of the Supreme Court of India is appointed as sole arbitrator, as prayed for in the arbitration petition.
-
1999 (5) TMI 535
Issues Involved:
1. Unpaid wages/salary for the period of illegal closure.
2. Ad hoc interim relief.
3. Retrenchment compensation.
4. Accrued holiday remuneration.
5. Compensation under the Workmen's Compensation Act, 1923.
6. Gratuity.
7. Bonus.
8. Notice pay.
9. Definition of "workmen" under section 529(3)(a).
10. Interest on dues of workmen/employees or secured creditors.
Summary:
(1) Unpaid wages/salary for the period of illegal closure:
The court concluded that the expression "all wages or salary ... in respect of services rendered to the company" u/s 529(3)(b)(i) includes wages payable for the period of illegal closure. The statutory fiction in section 25-O(6) of the Industrial Disputes Act must be read into the Companies Act, implying that workmen are entitled to wages for the period of illegal closure as if the undertaking had not been closed down.
(2) Ad hoc interim relief:
Ad hoc interim relief awarded by the industrial court is considered part of wages/salary under section 529(3)(b)(i). This relief, although termed interim, was intended to form part of the remuneration payable to the workmen.
(3) Retrenchment compensation:
Retrenchment compensation payable under any provisions of the Industrial Disputes Act is included in "workmen's dues" u/s 529(3)(b)(i). The period of illegal closure is to be included in the length of service for computing such compensation.
(4) Accrued holiday remuneration:
Accrued holiday remuneration payable to any workman on termination of employment before or by the winding-up order includes claims for the period immediately prior to closure but not for the period of closure, whether legal or illegal.
(5) Compensation under the Workmen's Compensation Act, 1923:
There is no controversy, and such compensation is admissible for priority u/s 529(3)(b)(iii).
(6) Gratuity:
Gratuity under the Payment of Gratuity Act, 1972, is covered by section 529(3)(b)(iv) irrespective of whether the company maintained a gratuity fund. The period of illegal closure is included in the qualifying period for computing gratuity.
(7) Bonus:
The claim for bonus, whether under the Payment of Bonus Act, 1965, or otherwise, is not admissible for priority under the Act. The court emphasized the narrower definition of "wages" under the Industrial Disputes Act over the wider definition under the Payment of Wages Act.
(8) Notice pay:
Notice pay under the Industrial Disputes Act or any other law is not admissible for priority under the Act. The Companies Act contemplates automatic discharge without the need for notice under sections 25F, 25FFA, and 25FFF of the Industrial Disputes Act.
(9) Definition of "workmen" under section 529(3)(a):
For textile companies in liquidation in Gujarat, "workmen" includes all employees except those in managerial, administrative, or supervisory capacities drawing basic wages exceeding Rs. 2,000. The court adopted a formula excluding eleven specific categories of employees.
(10) Interest on dues of workmen/employees or secured creditors:
The relevant date for computation of dues is the date of the first appointment of a provisional liquidator or the date of the winding-up order. No interest is awarded for the period after the relevant date unless there is a surplus. Interest prior to the relevant date is allowed only if the debts carry interest as per the contract terms.
Order:
The Textile Labour Association to resubmit claims for workmen's dues within two months. The official liquidator to verify and process these claims, and objections by secured creditors to be submitted within one month. Interim disbursement of 10% of revised claims to workmen and secured creditors, with specific conditions for secured creditors. The official liquidator is authorized to incur necessary expenses for these directions.
-
1999 (5) TMI 534
Issues:
1. Execution/enforcement of arbitral award under section 36 of the Arbitration and Conciliation Act, 1996.
2. Calculation and payment of interest on the awarded amount.
3. Interpretation of the arbitral award regarding the payment of interest.
4. Jurisdiction of the executing court to correct errors in the arbitral award.
Analysis:
1. The applicant filed applications under section 36 of the Arbitration and Conciliation Act seeking enforcement of arbitral awards totaling US $ 1,04,000 and US $ 88,250. The awards were final and binding on the parties as no objections were raised against them.
2. Disputes arose regarding the payment of interest on the awarded amounts. The applicant sought interest at 9% per annum from 27-12-1995 till the date of payment, while the respondent argued that interest should only be paid till 31-3-1998, citing a statutory fiction treating the award as a decree from that date. The Arbitral Tribunal had awarded interest at 9% per annum till the date of payment or decree, whichever is earlier.
3. The Arbitral Tribunal's award language indicated that interest payment was based on the old Arbitration Act, which allowed for interest from the date of the decree till payment. The executing court cannot modify the award but can interpret it. The applicant did not utilize the provision under section 33 to correct or interpret the award, which could have clarified the interest payment terms.
4. The court held that interest at 9% per annum was payable by the respondent from 27-12-1995 till 31-3-1998, as per the awards of the Arbitral Tribunal. The respondent requested 15 days to obtain permission from the Reserve Bank of India for payment in foreign currency, which was granted. The execution petitions were disposed of with costs to the decree holder.
This detailed analysis covers the issues of execution/enforcement, interest calculation, award interpretation, and court jurisdiction regarding errors in the arbitral award as per the judgment of the High Court of Delhi.
-
1999 (5) TMI 520
Issues:
- Duty demand confirmation against the appellants
- Exemption claim under Notification No. 297/79 for fabrics processing
- Allegations of improper accounting and evasion of duty
- Classification of calendering machine used by the appellants
- Reliance on statements of suppliers and documents by the Department
- Existence of mens rea and evasion of duty
- Examination of fabrics received and processes undertaken
- Denial of existence of stentering book by the appellants
- Impact of factory flooding on fabric processing
- Consideration of evidence and submissions made
Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi stemmed from an Order-in-Original confirming a duty demand against the appellants, who were engaged in dyeing, bleaching, and printing of fabrics falling under Item 22 of the Tariff. The appellants claimed exemption under Notification No. 297/79 for calendering fabrics, subject to specific conditions. The Department alleged improper accounting and evasion of duty, citing that fabrics underwent processes beyond calendering. The appellants defended, stating that only calendering was conducted, not warranting duty payment. They disputed the classification of the calendering machine and highlighted inconsistencies in the Department's reliance on statements and documents.
The Department contended that the machine used was a felt calendering machine, contrary to the appellants' claim of a plain roller calendering machine. They argued that fabrics received were not solely for calendering, supported by statements and documents. The Tribunal assessed the evidence and submissions, emphasizing the need to prove charges of evasion and mens rea. The Department's failure to substantiate allegations led the Tribunal to grant the appellants the benefit of doubt, ultimately allowing the appeal and setting aside the impugned order with consequential benefits.
The Tribunal's decision rested on the lack of concrete evidence supporting the Department's claims, emphasizing that suspicion alone cannot replace proof. The appellants' reliance on approved classification lists and previous orders, coupled with the Department's inability to establish wrongdoing, led to the Tribunal's ruling in favor of the appellants. The judgment highlighted the importance of substantiated allegations and the burden of proof on the Department in cases of duty evasion, ultimately granting relief to the appellants based on the principle of doubt in their favor.
-
1999 (5) TMI 517
The judgment by Appellate Tribunal CEGAT, New Delhi addressed the includibility of wire ropes used for tying steel plates in the assessable value of steel plates. The appellant argued that the wire ropes were for securing goods during transport, not packing. Referring to a previous decision, the Tribunal ruled in favor of the appellant, stating that the cost of wire ropes should not be included in the assessable value of the steel products.
-
1999 (5) TMI 516
Issues:
1. Confiscation of HDPE granules with foreign markings.
2. Imposition of redemption fine and personal penalty.
3. Contradictory statements by the brothers during investigations.
4. Burden of proof on the Department regarding smuggled goods.
5. Interpretation of foreign markings on goods.
6. Applicability of Section 123 of the Customs Act, 1962.
7. Legal acquisition of goods in question.
8. Joint inspection of goods.
9. Relevant case laws and judgments.
1. Confiscation of HDPE granules with foreign markings:
The case involved the confiscation of HDPE granules packed in bags with "made in Korea" markings, valued at Rs. 90,000. The appellant, owner of a factory, faced confiscation and a penalty for these goods. The key contention was whether the goods were of foreign origin and smuggled, based on the presence of foreign markings.
2. Imposition of redemption fine and personal penalty:
The Deputy Commissioner adjudicated the case, confiscating the bags with an option for redemption on payment of a fine and imposing a personal penalty. The appeal against this decision was unsuccessful before the Commissioner (Appeals), leading to the present appeal.
3. Contradictory statements by the brothers during investigations:
The two brothers involved provided contradictory statements regarding the procurement of the goods, creating confusion about the origin and legality of the HDPE granules. This inconsistency raised doubts about the acquisition and importation of the goods.
4. Burden of proof on the Department regarding smuggled goods:
The Department had the burden to prove that the goods were smuggled into India, especially since the items were not notified under Section 123 of the Customs Act, 1962. The lack of tangible evidence regarding the tainted nature of the goods shifted the burden of proof to establish the smuggling.
5. Interpretation of foreign markings on goods:
The presence of foreign markings on the bags was not sufficient to prove the goods were smuggled. The Tribunal emphasized that foreign markings only indicated foreign origin, not necessarily smuggling. The significance of foreign markings in determining the nature of goods was a crucial aspect of the case.
6. Applicability of Section 123 of the Customs Act, 1962:
The goods in question were non-notified under Section 123, placing the onus on the Department to prove smuggling. The Tribunal highlighted the importance of this section in determining the burden of proof and the need for affirmative evidence to establish smuggling.
7. Legal acquisition of goods in question:
The lack of receipts or documentation showing legal acquisition of the HDPE granules raised questions about the lawful importation of the goods. The absence of proper documentation added complexity to the case and influenced the burden of proof.
8. Joint inspection of goods:
A joint inspection of the goods was proposed but faced challenges due to communication issues regarding the inspection date. The failure to conduct a joint inspection impacted the assessment of the goods' origin and legality, affecting the overall decision.
9. Relevant case laws and judgments:
The case referred to various legal precedents to support arguments on burden of proof, interpretation of foreign markings, and the significance of circumstantial evidence in determining smuggling. These references played a crucial role in shaping the Tribunal's decision to set aside the impugned order and allow the appeal.
This comprehensive analysis of the legal judgment highlights the key issues, arguments presented by both parties, and the Tribunal's reasoning in reaching the decision to set aside the impugned order.
-
1999 (5) TMI 498
Nature and character of State lotteries - gambling in nature or res extra commercium - violation of the article 14 of the Constitution - entrustment of power to the States under section 5 - sale of lottery tickets in India, both private and State lotteries - distinction between the State lotteries and other lotteries - Word "business" - Validity of specific conditions under Section 4 of the Act - HELD THAT:- We have no hesitation to hold that sale of lottery tickets organised by the State could not be construed to be trade and commerce and even if it could be construed to be so, it cannot be raised to the status of "trade and commerce" as understood at common parlance or "trade and commerce" as used under article 301. Hence, question of violation of either articles 301 and 303 does not arise. Strong reliance was placed on Khazan Singh case [1973 (12) TMI 94 - SUPREME COURT], if a State has a power to carry on trade in its own State it can carry on the same in every part of India. For the finding we have recorded that State lotteries (gambling) would not be "trade", this case would have no application. Hence, for these reasons, it is not necessary to go into various submissions pertaining to violation of articles 301 to 303 of Chapter XIII to the Constitution.
The State lotteries cannot be construed to be "trade and commerce" within the meaning of article 301, there could possibly be no question of any discrimination or violation of article 303. Even under article 14, there, possibly, could have been argued discrimination, if the discretion was left on the States to choose as to which State it likes to prohibit; but in the present case in section 5 the State could only exercise its discretion in case it decides to prohibit sale of lottery tickets of every other States. If this is so, there could possibly be no conceivable discrimination. Hence, we do not find that there is any discrimination either on account of article 303 or article 14 of the Constitution between States of the Union and the Bhutan lottery and from one State to other State.
We find on plain reading of section 5, it empowers the State Government within its State to prohibit the sale of tickets of the lotteries organised by every other States. There is also nothing in the language reading by itself so as to say, whether such power can be exercised by State while running its own lottery or can be exercised only where such State does not run its own lottery. This leads to two possible interpretation, as referred to above. In view of settled principle of interpretations, the interpretation given by the Union to read down the provision has substance. This would mean State could only exercise such discretion if it decides not to have any lottery within its territory including its own lottery. In this situation, the delegatee is tied down by this limitation which itself is a clear guide to a State hence cannot be said to be unbridled delegation. So even to the first part it cannot be said to be arbitrary nor unbridled. So, we have no hesitation to approve the interpretation given by the Union to uphold the validity of section 5.
Lastly, the challenge is to section 4(a), (g) and (h) of the Act. The main contention with some specific vehemence to which various counsel have referred to is condition (g) of section 4 which deals with place of draw to be located within the State concern. Argument is the condition of law and order in the State of Nagaland is not such where a draw of any lottery could be held. We do not find any merit in the submission. It is again a question of policy and it is for the State executive to take decision pertaining to law and order, for that reason no legislation can be held to be ultra vires or to be struck down. Similar condition of (a) that prizes shall not be offered on any pre-announced number or on the basis of single digit or that no lottery shall have more than one draw in a week; (h) or other conditions in section 4 are all those which cannot be said to be such to hold these provisions to be ultra vires or invalid. None of them are such which would constitute to be violative of any provision of the Constitution. Hence, we have no hesitation to conclude that this last submission is also without any merit.
In view of the findings recorded by us above, holding lotteries organised by the State is also gambling in nature, thus the principle as laid down in RMDC case [1957 (4) TMI 56 - SUPREME COURT] would equally be applicable to the case of State lotteries.
Thus, State lotteries cannot be construed to be a “trade and business” within the meaning of articles 301 to 303 of the Constitution of India. We also hold that the impugned provisions are not violative of article 14 nor the delegation of power by the Parliament to the State Government could be said to be delegation of its any essential legislative power or a delegation, which is unguided or unbridled. Thus, we uphold section 5 and various sub-clauses of section 4 to be valid piece of legislation.
Accordingly, the decision of the Gauhati High Court which holds the provisions of the Ordinance to be ultra vires and consequently staying the provisions of the impugned Act cannot be sustained which is hereby quashed. Any decision of any court or any interim order contrary to the decision, as aforesaid, are hereby set aside. The various petitions which have been transferred and which are subject-matter of decision, as aforesaid, stand disposed of in terms of this decision. We will be failing in our duty if we do not express our gratitude to learned counsel for the parties whose contribution to this vexed issue has been commendable. Their contributions helped us greatly to decide this case.
Thus, all the matters stand disposed of by upholding the impugned provisions and the Act to be valid.
-
1999 (5) TMI 492
The Appellate Tribunal CEGAT, Mumbai upheld the classification of technical grade pesticides under Chapter 3808.10, following the Delhi High Court's judgment. The Tribunal rejected the department's arguments and set aside the impugned orders, allowing the appeals.
-
1999 (5) TMI 485
The High Court of Kerala sanctioned a scheme of arrangement and compromise under section 391 of the Companies Act, 1956. The company proposed converting preferential shareholders' stake into a loan due to them. The proposal was approved unanimously by preferential shareholders, equity shareholders, and secured creditors. The court ruled that the scheme should be sanctioned as it was consented to by all relevant parties, including preferential shareholders. The company was ordered to make payments to preferential shareholders promptly.
-
1999 (5) TMI 484
Issues:
1. Application to recall an order granting permission to proceed with a suit against a company in liquidation.
2. Entitlement of defendants to be heard before granting permission under section 446(1) of the Companies Act, 1956.
3. Maintainability of the suit against guarantors.
4. Suit dismissal and restoration application.
5. Barred by time - application under section 446(1) of the Act.
Analysis:
1. The judgment pertains to an application seeking to recall an order allowing a bank to proceed with a suit against a company in liquidation. The court had granted permission for the bank to continue Suit No. 272 of 1987 against the company and its guarantors. The official liquidator opposed the application, arguing that the assets were already sold, and the bank's claim was filed. The court dismissed the application to recall the order, emphasizing the maintainability of the suit against the guarantors despite the company's liquidation status.
2. The issue of whether defendants, including guarantors, are entitled to be heard before granting permission under section 446(1) of the Companies Act was raised. The applicant, a guarantor and defendant, contended that rule 117 of the Companies (Court) Rules mandates notice to parties before such applications are allowed. The court acknowledged the applicant's right to be heard but upheld the previous order permitting the bank to proceed with the suit.
3. The judgment addressed the maintainability of the suit against guarantors despite the company being in liquidation. It was held that since the suit included claims against the guarantors, it was maintainable, thereby allowing the bank to pursue legal action against them even after the company's winding-up order.
4. Regarding the suit dismissal and restoration application, the court noted that while the suit was dismissed for non-prosecution, a restoration application was pending. The bank filed an application under section 446(1) of the Act to continue the suit while the restoration application was unresolved. The court clarified that the pending restoration application did not bar the bank from seeking permission to proceed with the suit.
5. The final issue revolved around the application being barred by time. The applicant argued that the bank's application under section 446(1) was filed after the winding-up order, exceeding the permissible time limit. However, the court rejected this argument, stating that the limitation period did not apply to applications seeking leave to continue suits initiated before the winding-up order. Citing relevant case law, the court emphasized that the grant of leave does not impact vested rights, thereby dismissing the contention of the application being time-barred.
-
1999 (5) TMI 483
Issues Involved:
Petitioner invoking inherent jurisdiction to set aside orders passed by Judicial Magistrate and confirmed by Sessions Judge regarding offenses under section 630 of the Companies Act, 1956.
Analysis:
1. Allegations and Legal Provisions:
The respondent company accused the petitioner of violating section 630 of the Companies Act, 1956, by wrongfully withholding company records and a motorcycle. The petitioner contested the allegations, claiming to still be a Director. The crux of the matter was whether the petitioner wrongfully withheld company property after allegedly ceasing to be a Director.
2. Legal Interpretation - Section 630 and Relevant Definitions:
Section 630 of the Act penalizes officers wrongfully withholding company property. The definition of an officer under section 2(30) includes directors. Section 283(1)(g) specifies conditions leading to vacation of a director's office. To establish an offense under section 630, it must be proven that property was wrongfully obtained or wrongfully withheld after termination of employment.
3. Petitioner's Defense and Civil Suit:
The petitioner argued that a pending civil suit challenged the claim of ceasing to be a Director, citing precedents where criminal courts were deemed unfit to decide civil disputes. The petitioner emphasized that until the civil court determined his directorial status, the criminal court should not have proceeded with the case.
4. Respondent's Argument and Legal Precedents:
The respondent contended that the petitioner's failure to return company records upon demand triggered section 630, irrespective of his directorial status. Citing legal precedent, the respondent asserted that filing a civil suit did not preclude criminal court proceedings, highlighting the need to prevent abuse of legal processes.
5. Court's Decision and Justification:
The court noted the timeline of events, highlighting the delayed civil suit filing after the criminal case conclusion. Emphasizing the need to prevent miscarriage of justice, the court rejected the petitioner's argument that the civil suit automatically stayed criminal proceedings. The court upheld the lower courts' decisions, emphasizing that inherent jurisdiction could only be invoked in cases of legal process abuse, not to reevaluate evidence.
6. Final Judgment:
Both petitions were dismissed, and associated miscellaneous petitions were closed. The court's decision focused on preventing abuse of legal processes and ensuring timely resolution of disputes, affirming the lower courts' rulings on the alleged offenses under section 630 of the Companies Act, 1956.
-
1999 (5) TMI 480
Issues Involved:
1. Validity of the oral agreement superseding the memorandum of articles of association.
2. Legitimacy of the transfer of shares by respondents.
3. Validity of the removal of directors and appointment of new directors.
4. Legality of further share allotment.
5. Maintainability of the petition under sections 397 and 398 of the Companies Act, 1956.
6. Allegations of oppression and mismanagement.
Detailed Analysis:
1. Validity of the Oral Agreement Superseding the Memorandum of Articles of Association:
The appellants argued that no oral agreement could supersede the memorandum of articles of association and that shares could only be transferred to a person nominated by the directors. The CLB found an underlying partnership principle operating, evidenced by a hand-written note dated 2-8-1997 and the investment patterns of the groups, indicating an agreement for equal shareholding and majority on the Board for Group A.
2. Legitimacy of the Transfer of Shares by Respondents:
The CLB examined the transfer of shares by Respondent Nos. 7 to 9 and found that the provisions of the articles were not complied with, as the directors should have nominated the transferees. The requisite notice for the Board meetings on 13-4-1998 and 29-4-1998 was not given, rendering the resolutions passed on those dates null and void.
3. Validity of the Removal of Directors and Appointment of New Directors:
The CLB found that the removal of Petitioner Nos. 1 and 4 as directors and the appointment of additional directors in the Board meeting held on 29-4-1998 were null and void due to procedural irregularities. The CLB concluded that Group A had a majority on the Board, supported by evidence such as the attendance sheet of the Board meeting on 18-4-1997 and the statement made to the police on 12-4-1997.
4. Legality of Further Share Allotment:
The CLB declared the further share allotment by Group B on 8-5-1998 and 25-5-1998 invalid, as it was done without the approval of the general body and to preclude the allotment of shares to Group A. The CLB noted that the company had offered to refund the share application money to Group A, indicating no immediate need for funds.
5. Maintainability of the Petition Under Sections 397 and 398 of the Companies Act, 1956:
The CLB held that the petition was maintainable as Petitioner No. 1 held more than 10 per cent of the shares on the relevant date. The CLB differentiated between winding up proceedings and a petition under section 397, noting that oppression had to be established for relief under section 397.
6. Allegations of Oppression and Mismanagement:
The CLB found that Group B's actions, including the transfer of shares and further share allotment, were oppressive and lacked probity. The CLB concluded that there was an agreement for equal shareholding and majority on the Board for Group A, and the actions of Group B were contrary to this understanding.
Conclusion:
The CLB's order reconstituted the Board of Directors, directed the allotment of shares to Group A, and provided options for repurchase of shares by Respondent Nos. 7, 8, and 9. The High Court found no infirmity in the CLB's order and dismissed the appeals, upholding the CLB's findings and directions.
-
1999 (5) TMI 479
Issues:
- Compliance with SEBI regulations for bankers to an issue
- Imposition of penalty by Adjudicating Officer
- Legal status of rules and regulations
- Specific findings in each case of public issue
Compliance with SEBI regulations for bankers to an issue:
The appellant, a public sector bank, held a certificate of registration from SEBI as a Banker to an Issue. Upon seeking renewal, the respondent found the appellant had not fulfilled the condition of entering into agreements with issuer companies as required by regulations. The appellant argued that they had followed the regulations by providing documentation of agreements and compliance in various public issues. However, the respondent contended that the appellant had not met the requirements, leading to the penalty imposition.
Imposition of penalty by Adjudicating Officer:
The Adjudicating Officer imposed a penalty of Rs. 25,000 on the appellant for non-compliance with SEBI regulations. The appellant claimed the penalty was arbitrary and not in accordance with the factors provided in the relevant Act. The respondent justified the penalty, stating that the appellant had failed to fulfill the conditions of the registration, and the penalty amount was within the statutory limits.
Legal status of rules and regulations:
The appellant argued that SEBI rules and regulations were guiding principles and not mandatory. However, the court clarified that these regulations were mandatory and non-compliance constituted penal offenses. The court also emphasized that agreements could be formed through exchange of letters if the terms were clearly understood by both parties.
Specific findings in each case of public issue:
The Adjudicating Officer's order focused on three specific public issues involving the appellant. The court noted discrepancies in compliance with regulations in each case and emphasized the need for specific examination of relevant documents rather than relying on specimen letters or agreements. Consequently, the court set aside the impugned order and remanded the matter for further adjudication to ensure specific findings in each case.
In conclusion, the court allowed the appeal by way of remand, highlighting the importance of detailed examination and specific findings in cases of non-compliance with SEBI regulations by bankers to an issue.
-
1999 (5) TMI 459
Issues Involved:
1. Search Operations and Seizure of Documents
2. Taxation of 'On Money' Receipts
3. Application of Gross Profit Rate
4. Rejection of Books of Account
5. Allowance of Expenses Against 'On Money' Receipts
6. Interest Under Section 234B
Detailed Analysis:
1. Search Operations and Seizure of Documents:
The case involved two search operations on 21st August 1990 and 24th December 1992. During the first search, a computer sheet detailing 'on money' receipts amounting to Rs. 1,04,44,834 was found. In the second search, the director of the assessee company admitted to receiving Rs. 1,05,01,345 from prospective flat owners as of 30th November 1992. The total gross money receipts relevant to the assessment years 1990-91, 1991-92, 1992-93, and 1993-94 amounted to Rs. 2,09,46,179.
2. Taxation of 'On Money' Receipts:
The Assessing Officer (AO) held that 'on money' receipts of Rs. 35,85,595 were received from different prospective flat owners and not from the same persons who paid Rs. 35,57,500. Hence, he taxed Rs. 35,85,595 as unaccounted money receipts. The AO also did not accept that any expenditure was incurred in cash to earn 'on money' in the business.
3. Application of Gross Profit Rate:
The AO applied a gross profit rate of 12% on Rs. 5,86,67,554, giving credit for the amounts already taxed in 1990-91 and 1991-92. The profit for the year concerned was computed at Rs. 40,75,288 after setting off the amounts already taxed. The CIT(A) upheld the AO's application of a 12% rate, as confirmed by the Tribunal in their order for the assessment year 1991-92.
4. Rejection of Books of Account:
The AO rejected the books of account under section 145 of the Income-tax Act, stating that substantial receipts were kept outside the books of account, making them unreliable. The CIT(A) and the Tribunal upheld this rejection, noting that the auditors had also expressed their inability to comment on the unrecorded gross receipts and expenses.
5. Allowance of Expenses Against 'On Money' Receipts:
The CIT(A) directed the AO to allow a deduction of 12% out of cash receipts (i.e., 'on money' receipts). The Tribunal found no material brought by the Department to prove that a higher rate of gross profit should have been applied. The CIT(A) followed the decision of the Tribunal in ITA 1759 of 95 dated 7th August 1995, leading to the dismissal of the Departmental appeal.
6. Interest Under Section 234B:
Regarding the charging of interest under section 234B, it was held to have a consequential effect, and necessary relief was to be allowed to the assessee.
Separate Judgments:
- Judicial Member's View: The Judicial Member agreed with the AO and CIT(A) in rejecting the book results and applying a 12% profit rate on both recorded and unrecorded transactions.
- Accountant Member's View: The Accountant Member disagreed, emphasizing that the book results for recorded transactions should be accepted, and the 12% rate should only apply to unrecorded transactions.
- Third Member's Decision: The Third Member sided with the Judicial Member, agreeing that the book results could not be accepted due to the substantial omission of transactions, thus upholding the application of a 12% profit rate on both accounted and unaccounted turnover.
Conclusion:
The appeal of the assessee was allowed in part, while the appeal of the Revenue was dismissed. The Tribunal concluded that the rate of 12% should be applied to both accounted and unaccounted turnover of the assessee, rejecting the book results due to the substantial omission of transactions.
-
1999 (5) TMI 453
Issues:
Interpretation of Notification 341/76-Cus. for concessional rate of duty on imported goods described as 'both sides coated multi-layered pasted art board'.
Analysis:
1. Issue: Benefit of Notification 341/76-Cus. availability
- The Revenue argued that the benefit of Notification 341/76-Cus. was not applicable to the imported goods described as 'both sides coated multi-layered pasted art board' as the notification specifically mentioned concessional duty for multi-layered paper board or paste board without any mention of coated boards.
- The Revenue contended that the intention of the law maker was not to extend the benefit to coated multi-layered boards, and since the imported goods were described as art board, not specifically mentioned in the notification, the benefit should not be allowed.
- Additionally, the Revenue highlighted that the Collector (Appeals) relied on a decision in a previous case, which was under appeal in the Supreme Court, and argued that no samples were drawn in that case unlike in the present matter where samples confirmed the nature of the imported goods.
2. Issue: Nature of imported goods
- The Tribunal confirmed that the imported goods were indeed multi-layered paste-coated art board, as per the test report.
- It was established that the product fell under the category of multi-layered board, making it eligible for the notification's partial duty exemption, regardless of being coated on both sides.
- The Tribunal referred to a previous case involving art board where it was held that coating on both sides is a characteristic of art board, and such coating can be present on paste board and multi-layered boards without any restriction in the definition.
3. Decision and Conclusion
- Based on the analysis, the Tribunal rejected all three appeals filed by the Revenue, citing that the imported goods qualified for the benefit under Notification 341/76-Cus. as multi-layered paste-coated art board.
- The Tribunal emphasized that the decision in a previous case, which the Revenue contested, had not been overturned by the Supreme Court, and thus, there was no reason to interfere with the impugned orders.
- Furthermore, the Tribunal directed that the claim for refund should be processed considering the principle of unjust enrichment as per the Supreme Court's decision in the case of Mafatlal Industries Ltd. v. Union of India.
-
1999 (5) TMI 452
Issues Involved:
1. Clubbing of production of two units (CRI and DR).
2. Validity of the Show Cause Notice (SCN) issued by the Additional Collector.
3. Evidence supporting the clubbing of the two units.
4. Imposition of penalties on the proprietorship concern and its proprietor.
5. Imposition of penalties on the partners of DR.
Detailed Analysis:
1. Clubbing of Production of Two Units (CRI and DR):
The central issue was whether M/s. Continental Rubber Industries (CRI) and M/s. Dupont Rubber (DR) were independent entities or if their production should be clubbed for the purpose of excise duty. The SCN alleged that DR was not an independent unit but was artificially fragmented to evade Central Excise duty. Both units shared management, labor, machinery, and production facilities. The Collector confirmed that DR lacked independent manufacturing capacity, relying on statements from employees and partners that indicated shared resources and control by CRI. The Tribunal upheld this finding, noting the lack of independent infrastructure for DR and the shared use of machinery and facilities.
2. Validity of the Show Cause Notice (SCN) Issued by the Additional Collector:
The appellants contended that the SCN was invalid as it was issued by the Additional Collector rather than the Collector, a mandatory requirement under Section 11A of the Central Excise Act, 1944. Although a corrigendum was later issued to correct this, the appellants argued it was insufficient. The Tribunal found no invalidity in the SCN, citing Rule 2(ii) of the Central Excise Rules, which included the Additional Collector within the definition of 'Collector'. This was supported by the Karnataka High Court decision in Engineering Systems (P) Ltd. v. Union of India.
3. Evidence Supporting the Clubbing of the Two Units:
The appellants provided documentary evidence to show that CRI and DR were separate entities with independent machinery and infrastructure. However, the Collector relied on statements from employees and partners indicating shared use of facilities and machinery. The Tribunal found sufficient evidence of suppression and misrepresentation in the declarations under Rule 174A, justifying the extended period for duty demand. The Tribunal noted that the physical space available did not support the installation of two independent sets of machinery, reinforcing the conclusion that the units were not genuinely independent.
4. Imposition of Penalties on the Proprietorship Concern and Its Proprietor:
The Tribunal addressed the issue of imposing penalties on both the proprietorship concern (CRI) and its sole proprietor, Harish Mehra. It set aside the penalty on Harish Mehra, following the principle that penalties should not be imposed on both the entity and its proprietor. The penalty of Rs. One lakh on CRI was upheld.
5. Imposition of Penalties on the Partners of DR:
The penalties on the partners of DR, Ravinder Mehra and Lata Mehra, were also contested. The Tribunal found that the impugned order did not provide specific findings under Rule 209A against them. Consequently, the penalties on the partners were set aside due to the lack of detailed justification.
Conclusion:
The Tribunal upheld the duty demand of Rs. 4,68,547.75 and the penalty of Rs. One lakh on M/s. Continental Rubber Industries. However, it set aside the penalties on Harish Mehra, the sole proprietor of CRI, and the partners of DR, modifying the impugned order to that extent.
-
1999 (5) TMI 437
The issue in the case was the assessable value of motorcycles removed by the appellants from their manufacturing premises in Uttar Pradesh. The Central Excise authorities adopted the wholesale price in U.P. for all removals made to U.P. and a lower wholesale price for removals to dealers outside U.P. The Tribunal held that assessable value should be based on regional wholesale prices, so all removals to U.P. should be assessed at the U.P. wholesale price, and clearances to the rest of the country at the respective regional wholesale prices. The appeals were dismissed, and the impugned orders were confirmed.
-
1999 (5) TMI 436
Issues:
The issues involved in the judgment are whether the fabrication activity amounts to manufacture of excisable goods, liability to pay duty, suppression of facts, and the plea of limitation.
Fabrication Activity and Duty Liability:
The appellants were engaged in recommissioning a bridge and provided details of fabrication to the Central Excise department. The department alleged suppression and demanded duty, contending that the goods were excisable and dutiable. The Collector upheld the demand, stating that the appellants failed to declare the manufacturing activity, resulting in misdeclaration and suppression. The appellants argued that fabrication was not manufacturing and the duty liability was on independent subcontractors. The Collector imposed duty and penalty, leading to the appeal.
Plea of Limitation:
The appellants argued that the show cause notice issued after two years from the commencement of the enquiry was not sustainable due to the delay. The Tribunal referred to precedents where delay between department knowledge and notice issuance was fatal to the argument of suppression. Citing cases like J.S.L. Industries Ltd. and Mopeds India Ltd., the Tribunal held that the delay in issuing the notice rendered the plea of limitation valid. As a result, the appeal was allowed on the ground of limitation, without considering the merits of the case.
This judgment by the Appellate Tribunal CEGAT, Mumbai addressed the issues of fabrication activity constituting manufacture of excisable goods, duty liability, suppression of facts, and the plea of limitation. The Tribunal found that the delay in issuing the show cause notice after department knowledge rendered the plea of limitation valid, following precedents and holding in favor of the appellants on this ground.
-
1999 (5) TMI 420
Issues Involved:
Whether duty of Central Excise can be demanded at the tariff rate from an S.S.I. unit clearing goods at concessional rate without availing Modvat credit under Rule 57A of Central Excise Rules.
Detailed Analysis:
The Appellate Tribunal considered the issue of whether duty of Central Excise can be demanded at the tariff rate from an S.S.I. unit that cleared goods at a concessional rate without availing the benefit of Modvat credit under Rule 57A of the Central Excise Rules. The Tribunal noted that the Respondents paid duty at a concessional rate while clearing goods under Heading 48.19 of the Schedule to the Central Excise Tariff Act without utilizing the Modvat Credit scheme. Consequently, demands were made for payment of duty at the full rate. The Assistant Collector confirmed the duty demand and imposed a penalty, arguing that by not availing the Modvat Credit facility, the Respondents extended higher notional credit to their customers, causing a revenue loss to the Government. However, the Respondents contended that they were eligible for clearance of goods without payment of duty under Notification 175/86 as an S.S.I. unit. They cited relevant legal decisions to support their position. The Tribunal agreed with the Respondents, stating that if they did not opt for the Modvat scheme under Rule 57A, they were entitled to clear goods without duty payment up to the prescribed limit under the notification. The Tribunal emphasized that the notification allowed the option to avail the Modvat facility, and the mere filing of a declaration for Modvat credit did not negate the benefit of the notification. Additionally, the Tribunal highlighted Rule 57E in the Central Excise Rules, which empowered the department to vary the Modvat credit availed by the manufacturer. Consequently, the Tribunal rejected all appeals filed by the Revenue, upholding the impugned order that favored the Respondents.
This detailed analysis of the judgment showcases the Tribunal's thorough consideration of the legal issues surrounding the demand for Central Excise duty at the tariff rate from an S.S.I. unit that cleared goods at a concessional rate without utilizing the Modvat credit scheme. The Tribunal's decision, based on legal precedents and statutory provisions, provides clarity on the eligibility of manufacturers to avail benefits under specific notifications and rules, emphasizing the importance of understanding the nuances of excise duty regulations and the options available to manufacturers in such scenarios.
-
1999 (5) TMI 411
Issues:
1. Transfer of Central Excise license from one company to another.
2. Utilization of Modvat credit and money credit for duty payment.
3. Requirement of filing declarations under Rule 57G and Rule 57-O.
4. Denial of Modvat credit and money credit.
5. Procedural requirements for availing money credit.
Transfer of Central Excise License:
The case involved an arrangement between two companies for soap manufacturing, where one company leased its factory to the other. The dispute arose regarding the transfer of the Central Excise license to the leasing company. The Superintendent of Central Excise issued a license to the leasing company, making it the manufacturer from a specified date. The Collector confirmed the duty demand on finished goods and credit taken on inputs, leading to penalties on the companies and employees.
Utilization of Modvat and Money Credit:
The dispute revolved around the utilization of Modvat credit and money credit for duty payment during the period when the leasing company operated the factory. The Collector demanded duty payment on Modvat and money credit utilized by the leasing company, as no declaration was filed under Rule 57G or Rule 57-O. The appellants argued that the duty paid was valid, as the leasing company operated under the license, and previous declarations by the leasing company sufficed.
Requirement of Filing Declarations:
The Departmental Representative contended that without a declaration under Rule 57G or Rule 57-O, the Modvat credit and money credit could not be utilized for duty payment. The appellants argued that previous declarations by the leasing company were adequate, and the duty demand was unjustified.
Denial of Modvat and Money Credit:
The Collector disallowed the Modvat credit and money credit utilized by the leasing company, citing the absence of specific declarations under relevant rules. The appellants relied on tribunal decisions where a successor company was allowed to avail of proforma credit without specific permission, arguing that the leasing company should be entitled to utilize the credits.
Procedural Requirements for Availing Money Credit:
The case also discussed the procedural requirements for availing money credit, including the filing of declarations and obtaining acknowledgments. The Collector's delay in setting out procedural requirements and the subsequent trade notice were highlighted to support the appellants' claim that the demands for duty were not sustainable.
In conclusion, the appeals were allowed, the impugned order was set aside, and consequential relief was granted to the appellants. The judgment clarified the rights of a leasing company to operate under a transferred license and the applicability of previous declarations for credit utilization, emphasizing procedural and technical requirements for duty payment and credit utilization.
........
|
9911796707
