Relief for supari makers

LEGAL DIGEST

The Supreme Court on Monday granted relief to the supari manufacturers by allowing them to re-classify their product under the Central Excise Tariff.

In the judgement in Crane Betel Nut Powder Works vs Commissioner of Central Excise case, the apex court accepted the argument of the company that the process of cutting betel nuts into small pieces and the addition of oils, menthol, sweetening agents and the like did not result in a new and distinct product having a different character.

The tribunal, however, took the view that the raw material and the ultimate product were different. If one asks a shopkeeper for betel nut, he will not give supari powder, it said. The Andhra Pradesh High Court upheld the tribunal's view. The Supreme Court reversed these rulings and allowed the appeal of the company.

Appeal in Centaur case dismissed

In the continuing tussle over the ownership of the disinvested Centaur Hotel in Juhu, Mumbai, the Supreme Court last week dismissed the appeal of Siddhivinayak Realities (P) Ltd against the seller, Tulip Hospitality Services Ltd.

Tulip agreed to sell the hotel for Rs 350 crore and under the agreement, two advocates were made escrow agents. In the event of default, the buyer would be entitled to invoke the escrow agreement and the buyer had the option to become a 50 per cent shareholder in Tulip and appoint majority shareholders.

After Rs 75 crore was paid, there was a news report in the media that the central government had referred the deal to the CBI for investigation. This development unsettled the agreement and the two parties began to spar over the roles of the escrow agents and the appointment of an arbitrator.

Ultimately, the arbitral tribunal restrained the buyer from proceeding before the escrow agents, pending arbitration. The buyer moved the Bombay High Court, which dismissed its appeal. The Supreme Court, while dismissing the appeal, made it clear that if the arbitrator found that there had been any default, the parties would be entitled to enforce the consequences arising out of the escrow arrangement, irrespective of the arbitral award.

Benefits to small-scale units

The Supreme Court last week dismissed the appeal of Meghraj Biscuits Industries Ltd against the judgement of CEGAT denying excise benefits to it under a notification granting benefits to small-scale units. The notification was issued in 1994 to help SSIs survive in the market dominated by big brands. The benefit was not available for goods bearing the brand name or trade name of another firm.

In this case, the company was selling biscuits under the name 'Meghraj'. The revenue department found that the brand name belonged to another firm and therefore it demanded differential duty from Meghraj. The latter challenged the demand before the commissioner, who confirmed it. The tribunal too confirmed it. The Supreme Court has upheld the tribunal's ruling.

CMC Ltd's plea rejected

The Supreme Court has dismissed the appeal of CMC Ltd against the appointment of an arbitrator in its dispute with Unit Trust of India over a technology upgrade project.

According to the arbitration clause, in case of dispute, each party shall appoint an arbitrator and the arbitrators shall choose an umpire. It also says that the arbitration proceedings shall be conducted in accordance with the rules of the Indian Council of Arbitration.

UTI appointed an arbitrator but CMC did not, arguing that the rules of the council had not been followed. UTI then invoked the Arbitration and Conciliation Act and got an arbitrator appointed by the high court. This was challenged by CMC in the Supreme Court.