Brief case: What is marketable is dutiable, says SC

Brief case is a weekly selection of key court orders

Perfumery compounds prepared for applying to incense sticks are subject to excise duty, though the final product, agarbattis, may be exempted, the Supreme Court (SC) has said. This is because the compound is capable of being sold as is and it wasn’t necessary to prove that the compound was indeed sold; “marketability is the test of dutiability”, the Supreme Court stated in its judgment, Commissioner of Central Excise vs Karnataka Soaps & Detergents. The court set aside the decision of the Excise Appellate Tribunal, which held the opposite view. In this case, the firm manufactured odoriferous compound in Bengaluru and transported it in liquid form to Mysuru, where it was applied to incense sticks to complete the manufacturing process. The revenue authorities demanded excise duty on the perfume compound because it was capable of being sold as a product. They pointed out that the compound was in fact sold to Tibetan Handicraft Centre in Mysuru. The firm contended that it was applied to the final product, and therefore it did not attract the levy. The court accepted the argument of the excise authorities.

Selection for defence equipment upheld 

The Delhi High Court last week dismissed a challenge to the selection of a firm by the defence ministry for supply of equipment and affirmed that the choice was not arbitrary or unfair. In this case, Vectra Advanced Engineering vs Union of India, Vectra argued that the evaluation of the bid was not done on a “cost to user” basis but on a “cost to state” basis whereby the Customs duty and taxes are not included as part of the bid. The end user was the state, and since the ministry in the present case is an instrumentality of the state, the inclusion of taxes and duties would be irrelevant to the bid, as it would not be paying itself the same. It further contended that if this factor was taken into account, its bid would be the lowest as Customs duty was a notional charge as it was a defence procurement entitled to get Customs duty exemption certificate. Rejecting the arguments, the court stated that the event of determining and re-evaluating the bid was not in the realm of the court. The court can only decide whether the application of the terms of the tender was reasonable and not arbitrary. The court upheld the selection of Span Industries as the lowest bidder for material handling cranes.

Singer wins trademark case against namesake 

The Delhi High Court last week passed a permanent injunction in favour of Singer, the sewing machine company, against a person who sold the same product in the name of Singer Agencies. The court held that it was violation of the trademark and the name would mislead the public. The machines were sold by Singer Agencies owned by the wife of a former dealer of the Singer company, whose relationship was terminated. After that, a different entity was established by the wife and she used a virtually identical trademark as that of the original owner in relation to identical products. The court stated that violators of the trademark adopted the name to ride upon the goodwill and reputation of the well-known firm.

Court appoints independent arbitrator

The Punjab and Haryana High Court nominated an arbitrator in the dispute between Thermax Ltd and the Municipal Corporation of Chandigarh as the firm alleged that the sole arbitrator named in the contract was directly involved in the dispute and therefore would not be impartial or neutral as mandated by the Arbitration and Conciliation Act. According to the contract, all disputes would be referred to the sole arbitrator who was the superintending engineer of the area. The court stated that though normally the arbitrator named in the contract should be chosen, when there is grave doubt about his independence and impartiality, the court can appoint a new arbitrator. This is the mandate of the amended arbitration Act. The court noted that in this case, the arbitrator named in the contract was fully and directly involved in the disputes between the parties, and therefore a third person should be nominated despite the contractual terms. A former judge of the high court was appointed in this case. 

Getting more than asked for

In awarding compensation under the Motor Vehicles Act, a tribunal can grant damages more than what is claimed by the survivors, the Allahabad High Court stated, citing Supreme Court judgments. The object of the law is to put the affected persons as far as possible in the same position as before the accident. Section 168 of the Act empowers the tribunal to award an amount that is “just” and there is no limitation on it. It should not be trammelled by technicalities, the high court stated in its judgment, ICICI Lombard General Insurance vs Baij Nath. The tribunal had awarded Rs 23 lakh for the road accident death of his 44-year-old wife. The insurance company appealed against it alleging, among other things, that the amount was excessive. Rejecting the appeal, the high court stated that the cost of living was steadily going up and the income was also rising. These factors should be taken into account while deciding what is “just and fair” compensation.

PAN card for wages of head loaders

The Kerala High Court has ruled that payment by employers of head loaders through their unions shall be made only through a bank account and on production of relevant details of Aadhaar card, linked PAN card, account number and the like. The high court noted there was a pernicious practice prevailing in the state by which the trade unions of loaders such as CITU and AICTU have to be paid a sum demanded by them even if a person makes his own arrangement for loading or unloading his goods. In this case, a timber merchant brought mechanised cranes to unload his goods, but the unions demanded exorbitant rates despite loaders doing no work. This practice has been prevalent for decades and is nicknamed “nokkukooli” (charge for merely looking at loading operations). The merchant moved the high court, which made harsh observations against such compulsion on employers.  The court also directed the police to take action against those who obstruct the work of cranes or other mechanical equipment which replace loaders. Those arrested can get bail only from the high court. If the police do not follow the directions, further steps will be taken against them, the order said.