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TMI Blog2023 (5) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners also invited our attention to certain supply orders made by SICOP to the local manufacturers in the year 1986 and 1987 to hammer the point that clause similar to Clause 13(v) providing for transfer of benefit under MODVAT scheme to the purchaser(s) was not incorporated in the supply orders issued to such local SSI units. The plea is refuted by the respondents - From the reading of pleadings of both the sides, it clearly transpires that there is no dispute with regard to the fact that the supply orders issued by appellant No. 2 directly to M/S Jaldara Conductors Pvt. Ltd, Jaipur, and M/S Ashok Transmission Wire Pvt. Ltd, Jaipur, dated 23rd August, 1986, did not contain any condition, as is contained in Clause 13(v) of the supply order dated 12th January, 1987 and Class (ii) of purchase orders issued by SICOP in favour of the writ petitioners. These supply orders were directly between appellant No. 2 and the units outside the State. From the reading of these two supply orders, it becomes abundantly clear that these were issued after initiating the process of tenders and receiving offers from the intending suppliers. The rates to be charged for different items of goods like AAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply orders issued by SICOP in favour of the writ petitioners and we find that these clauses incorporated in the supply orders were only as a bargain to seek some discount or concession from the suppliers in lieu of placing bulk supply orders with them without even inviting tenders and making the writ petitioners to compete with outside manufacturing units. The transfer of benefit of refund of excise duty by the writ petitioners to the Purchasing Department i.e., the appellants herein, was part of a bargain struck between the two parties under which one party i.e. SICOP, was to issue the supply orders for procurement of AAC/ACSR conductors in favour of the writ petitioners and the other party i.e. the writ petitioners herein, were to make supplies on the mutually agreed/settled rates of the items with a further benefit to the Purchasing Department in the shape of transfer of benefit of refund of excise duty available to the writ petitioners under MODVAT scheme. There are nothing wrong or unholy in the arrangement. The legal position in this regard is well settled. Unless the Court finds a condition in the contract entered into between the two parties unconscionable, it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r directed that in case the writ petitioners file their claim for refund, they would first show that they have not passed on the burden to the consumer. 2) The background facts leading to the filing of this appeal, to put in a nutshell, are that the writ petitioners are registered small scale industrial units established in Jammu and are engaged in the manufacturing of AAC/SCSR conductors. These articles are manufactured by the writ petitioners-SSI Units from the raw material imported from outside the State. Under the Central Excise Act, as it was then in force, excise duty was leviable on raw material so imported as also on the finished goods after their manufacturing. It is pleaded that at the relevant point of time, Government of India as also State Government had introduced various schemes envisaging various incentives and benefits for the SSI Unit set up in the State of J K. These benefits included the exemption from payment of sales tax, toll, price preference and refund of CST on raw material etc etc. Apart from the aforementioned benefits, the industrial policy of the Government of India also provided the central subsidy and credit of excise duty on raw material under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is claimed by the writ petitioners that on receipt of these purchase orders, they immediately reacted and made number of representations to the SICOP as also to other respondents for deletion of this clause. On the request of the writ petitioners, meetings of the Purchase Committee were held from time to time in which the representatives of the writ petitioners also participated. It was the case set up by the writ petitioners that though, Purchase Committee assured them to restore the benefit of MODVAT to the writ petitioners yet issue was not formally settled and on the contrary the SICOP continued to deduct benefit under MODVAT from the bills of the writ petitioners. It was, thus, pleaded by the writ petitioners that the benefit of exemption/refund of excise duty under MODVAT scheme was granted by the Central Government under the Central Excise Act and the Rules framed thereunder and, therefore, SICOP could not have put a condition in the supply order which had the effect of depriving the writ petitioners of the benefits available to them under a statute. Further case was set up by the writ petitioners that the appellant herein as also the SICOP had placed similar orders for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two counts; that the cost of raw materials including all expenses and 13% excise duty on raw material had been charged by the writ petitioners from the PDD and, therefore, there was no question of allowing the writ petitioners the benefit of MODVAT scheme. The Division Bench was also of the opinion that for impeaching a contractual obligation, the writ petition was not an appropriate remedy, more particularly when the writ petitioners had acted upon the purchase orders through out. 7) Feeling aggrieved, the writ petitioners approached the Hon ble Supreme Court of India by way of SLP (Civil) No. 14417/88, which was disposed of by the Apex Court vide order dated 08.02.1989. Hon ble the Supreme Court did not specifically set aside the judgment of the Writ Court (Division Bench of this Court) but remanded the matter back to the High Court to determine the issue whether the benefit of MODVAT scheme had been allowed to pass on to other industries similarly situated but not to the writ petitioners. The writ petitioners were allowed to urge this contention before the High Court. The parties were also given opportunity to supplement their pleadings by filing affidavits or otherwise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts had practiced discrimination while dealing with the writ petitioners, in that, the supply orders issued to the similarly situated SSI Units within and outside the State did not have the clause of passing on the benefit of MODVAT from the supplier to the purchasers. The plea of discrimination set up by the writ petitioners was held established by the Writ Court and on that account the impugned clause in the purchase order issued by appellant No. 2 to the SICOP was directed not to be given effect to. The clause (ii) of the purchaser orders issued by the SICOP in favour of the writ petitioners, however, escaped attention of the Writ Court for, the Writ Court did not specifically quash the said clause. The Writ Court also directed that in case the writ petitioners put up their claim for refund they will have to show that they have not passed on the burden of excise duty to the consumers. The writ petitioners are happy with the judgment and have accepted the same. The State, as noted above, has come up in appeal and this is how the matter came up for consideration before us. 10) Having heard learned counsel for the parties and perused the material on record, we noticed few anomal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 13(v) providing for transfer of benefit under MODVAT scheme to the purchaser(s) was not incorporated in the supply orders issued to such local SSI units. The plea is refuted by the respondents which, we have, already adverted to hereinabove. From the reading of pleadings of both the sides, it clearly transpires that there is no dispute with regard to the fact that the supply orders issued by appellant No. 2 directly to M/S Jaldara Conductors Pvt. Ltd, Jaipur, and M/S Ashok Transmission Wire Pvt. Ltd, Jaipur, dated 23rd August, 1986, did not contain any condition, as is contained in Clause 13(v) of the supply order dated 12th January, 1987 and Class (ii) of purchase orders issued by SICOP in favour of the writ petitioners. These supply orders were directly between appellant No. 2 and the units outside the State. From the reading of these two supply orders, it becomes abundantly clear that these were issued after initiating the process of tenders and receiving offers from the intending suppliers. The rates to be charged for different items of goods like AAC/ACSR and the terms and conditions of the supply were those which were mutually settled between the parties. 13) We ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as instrumental in shaping the supply order and laying down the terms and conditions of the contract, in its commercial wisdom, decided to issue supply orders to local SSI units on the pre-negotiated rates without even inviting tenders or quotations with the condition that these SSI units will reciprocate by providing relief to the Purchasing Department in the shape of transferring the benefit of refund of excise duty under MODVAT scheme. The writ petitioners accepted the supply orders and made the supplies strictly as per the terms and conditions laid down in the supply orders. However, later on, it seems finding that the appellants had directly placed certain orders with outside units without imposing such conduction, the writ petitioners made representation to the respondents. The representation made by the writ petitioners came under active consideration of the respondents, who, after weighing all pros and cons of the matter, concluded that it was not possible to revoke the condition which was included in the supply orders in consultation with the writ petitioners and more particularly when 80% of the supplies had already been made by the writ petitioners. 14) Viewed thus, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MODVAT scheme. 16) There was a Single Standard Supply order that was placed with all the petitioners by SICOP pursuant to request made by appellants for procurement of supplies. It is not anybody s case that in this transaction, any other SSI unit was favoured with a supply order sans the impugned condition. Equals have been treated equally and, therefore, no discrimination with anyone. 17) We find nothing wrong or unholy in the arrangement. The legal position in this regard is well settled. Unless the Court finds a condition in the contract entered into between the two parties unconscionable, it would be loath to interfere in the matter. The impugned condition, as we have elaborately discussed above, is found neither unconscionable nor in violation of any statutory provision. Rather this Court has found this condition a result of negotiations between two contracting parties which ultimately resulted into a concluded contract coming into existence between them. Comparing this contract with other contracts executed at different points of time and even between different parties would not be justified. The plea of discrimination raised by the writ petitioners is thus not support ..... X X X X Extracts X X X X X X X X Extracts X X X X
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