SC on Vinayaga case: Duty would depend on registration certificates

LEGAL DIGEST

The Supreme Court last week allowed the appeal of the Commissioner of Central Excise, setting aside the judgment of the Customs, Excise and Service Tax Appellate Tribunal, in the case against Vinayaga Body Building Industries Ltd.

The company is engaged in body building on duty paid chassis from Tata Motors and the activity amounted to manufacture. A show cause notice was issued in terms of Section 11A of the Central Excise Act demanding one per cent duty towards the National Calamity Contingency Fund. It was imposed on motor vehicles with seating capacity of more than 6 but less than 12.

The company argued that the job cards issued by it indicated that the orders were for fabrication of more than 16 seats and so no duty was payable. The court rejected the contention and underlined that the payability of duty would depend upon the registration certificates indicating the seats and not on the job cards.

Rexnord Electronics appeal rejected

The Supreme Court last week upheld the judgment of the Bombay High Court in the case of Rexnord Electronics and Controls Ltd vs Union of India, involving the interpretation of the provisions of Section 127A read with Section 127H of the Customs Act. The export company was issued two licences under Export Promotion Capital Goods Scheme and imported capital goods.

However, it could not meet the export obligations within five years and the terms of the bond. Therefore a demand notice was issued for payment of duty with interest.

The company moved the settlement commission which asked the company to pay the duty and interest. The company challenged the 15 per cent interest in the high court, but it was rejected. The Supreme Court rejected the appeal of the company.

Moriroku appeal allowed

The Supreme Court last week allowed the appeals of Moriroku UT India (P) Ltd and TS Tech Sun (India) Ltd against the UP government. Moriroku is a manufacturer of plastic automobile components. It produced such components for use in the Honda Siel cars as per designs and specifications given by Honda of tools, dies, moulds etc. free of cost.

The state revenue authorities imposed trade tax on the amortisation cost. "Amortisation", in accountancy parlance is a general expression, which basically means the writing off of the cost of an asset over a period of time.

The company challenged the duty in the high court but its petition was rejected. But on appeal, the Supreme Court set aside the high court judgment, ruling that amortisation cost of toolings was not includible in the sale price of auto components.

Tax department's appeal dismissed

The Supreme Court has dismissed the appeals of the Income Tax Department against several companies with foreign partners and reiterated that Double Taxation Avoidance Agreement entered into by the Government of India with other governments would override the provisions of the Income Tax Act.

In its judgment in Dy. Commissioner of Income Tax vs Torqouise Investment & Finance Ltd, the court stated that the provisions of the Agreement would prevail if they are at variance with the provisions of the IT Act.

The court, citing an earlier judgment, held that from a plain reading of Article XI of the Agreement, it was clear that dividend income would be taxed only in the country where such income accrued.

Claim can be revived even after signing discharge voucher for insurance

The Supreme Court has stated in its judgment, National Insurance Company Ltd vs Sehtia Shoes, that even after signing a discharge voucher for an insurance amount, the claim can be revived if the agreement is proved to be under coercion or against free will.

But the fact of coercion has to be proved. In this case, a shop was gutted. The company and the insured agreed on an amount and it was paid. Then the trader moved another petition complaining that the settlement was under coercion.

The consumer forums accepted the contention and raised the amount. The insurance company appealed to the Supreme Court which remitted the matter to the consumer forum to adjudicate specifically as to whether the discharge voucher was signed voluntarily or under coercion.