2024 (11) TMI 399 - HC - Central Excise

Rejection of appellant s challenge to the arbitral award by way of a petition under Section 34 of Arbitration and Conciliation Act, 1996 - seeking reimbursement of the differential amount of excise duty paid on the goods supplied under the contract - interpretation of the Clause III.12.2 of the Purchase Orders - HELD THAT - The record reveals that in the present case the appellant has neither raised any dispute qua any of the invoices raised by the respondent nor has it amended any of the terms of the Purchase Orders. The only plea of the appellant both before the learned Single Judge and before us is that Clause III.12 of the Purchase Orders would not include a demand towards higher duty paid by the respondent due to change in classification of the goods - there are no merit in this plea, as the expression, change in taxes/ duties can also pertain to the change in classification. In any event, this being a plausible view arrived at by the learned Arbitrator and upheld by the learned Single Judge calls for no interference in the present appeal under Section 37 of the Act, where the scope is as it is very minimal. Though the learned counsel for the appellant had tried to urge that the interpretation of the Clause III.12.2 of the Purchase Orders given by the learned Arbitrator is incorrect, the said possible interpretation rendered by the learned Arbitrator cannot be appealed, which has also been accepted by the learned Single Judge. Reference may be made to the decision of the Hon ble Apex Court in MMTC LTD. VERSUS M/S VEDANTA LTD. 2019 (2) TMI 1085 - SUPREME COURT wherein it was held ' the Court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the Court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the Court under Section 34 and by the Court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.' There are no reason to interfere either with the impugned arbitral award or the impugned order passed by the learned Single Judge. The appeal being meritless is dismissed.

Summary

Issues:
1. Challenge to arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996.
2. Interpretation of Clause III. 12.2 (a) of the Notice Inviting Tender regarding change in taxes/duties.
3. Claim for reimbursement of excise duty based on change in classification of goods.
4. Scope of interference under Section 37 of the Act in challenging arbitral awards.

Analysis:
1. The case involved an appeal challenging an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, along with Section 13(1A) of the Commercial Courts Act, 2015. The appellant contested the order rejecting their challenge to the arbitral award dated 20.05.2024, which was related to a dispute over excise duty payment on goods supplied under a contract.

2. The dispute arose from a change in the classification of goods supplied, leading to a claim for reimbursement of excise duty by the respondent. The appellant argued that the change in classification did not constitute a change in law as per the contract terms. The clause in the Notice Inviting Tender (NIT) regarding changes in taxes/duties was central to the interpretation of the contractual obligations.

3. The respondent raised claims for refund of deductions made on excise duty, central sales tax, entry tax, and interest, based on the change in classification of goods. The arbitral award upheld the respondent's claims, citing the NIT clause and the classification of goods under specific tariff heads. The appellant disputed the validity of the excise duty certificate provided by the respondent, leading to the arbitration proceedings.

4. The High Court, while considering the appeal, emphasized the limited scope of interference under Section 37 of the Act concerning arbitral awards. It referenced previous judgments to highlight that interference is warranted only in specific circumstances, such as contravention of law, public policy, or when the award is patently illegal. The Court reiterated that it cannot reevaluate evidence or interpretations made by the arbitrator unless they exceed the scope of the law.

5. The Court, after detailed analysis, concluded that the interpretation of the NIT clause by the arbitrator was valid and fell within the contractual framework. It highlighted that the appellant's plea regarding the change in taxes/duties did not merit interference as it was a plausible interpretation by the arbitrator. The Court cited relevant legal precedents to support its decision and dismissed the appeal, affirming the arbitral award and the order of the Single Judge.