Upholding the excise tribunals view, the Supreme Court said that KCP Ltd, engaged in setting up machinery for sugar and cement factories, is not entitled to Modvat credit as it did not pay any excise duty on the sugar plant set up by it in Vietnam. It said that for availing such benefit, two conditions need to be satisfied: (i) On the raw materials, i.e. on the inputs, the manufacturer must have paid duty and such raw material must have been used in the process of manufacturing the final product in his factory or premises, and (ii) excise duty must have been levied on the final product.
In this case, M/s KCP Ltd vs Commissioner of Central Excise, the firm had entered into a contract with M/s Vina Sugars for supply and installation of a sugar plant in Vietnam. For the purpose, it manufactured certain machines in its own factory and also purchased some from the market and shipped them together to Vietnam. The assessee then availed the Modvat credit declaring them as capital goods. However the department rejected the claim saying the purchased goods were used in its factory premises for manufacture of the final product and the role of the assessee was merely like a trader who exported the goods purchased from dealers exactly in the same condition along with the machinery manufactured by it for setting up a sugar plant in a foreign country.
Resolving the conflicting views in cheque bounce cases, a larger bench of the Supreme Court has held that a criminal complaint filed by a person who holds a power of attorney (PoA) on behalf of a complainant is perfectly legal and competent. It laid down that (i) a complaint about a bounced cheque can be filed by a power of attorney holder, and (ii) the PoA holder can depose and verify on oath before the court in order to prove the contents of the complaint if he had witnessed the transaction as an agent of the payee/holder in due course or possesses due knowledge regarding the transactions. It clarified that the attorney holder cannot file a cheque bounce case under his own name, as if he was the complainant, but he can initiate criminal proceedings on behalf of his principal. The top court further said that the functions under the general PoA cannot be delegated to another person without specific clause permitting the same in the PoA. Nevertheless, the general power of attorney itself can be cancelled and be given to another person, it added.
The clarification came while deciding two appeals against the judgments of the Bombay and Andhra Pradesh high courts. In the Mumbai case, AC Narayanan vs State of Maharashtra, Narayanan, the Managing Director of M/s Harvest Financials Ltd, had launched a scheme of investment and collected money from various persons in the form of loans and issued post-dated cheques in his personal capacity. After the cheques were dishonoured, one Doreen Shaikh, the PoA holder of six complainants, filed complaints in a civil court, which summoned the MD under Sections 138 and 142 of the Negotiable Instruments Act. The MD then moved courts for quashing of the complaints. However, his applications were dismissed by the trial and the HC. The Andhra case, G Kamalakar Vs M/s Surana Securities Ltd, was also similar to the Bombay case.
National Insurance Co held liable
The Supreme Court has upheld the Punjab and Haryana HC order that the National Insurance Company cannot be exonerated from paying the compensation as the intimation regarding dishonour of the cheque towards the issuance of policy was communicated to the policy-holder after the accident. It said that the insurer is liable to pay till then the insured was holding a valid policy.
In the case of National Insurance Company vs Balkar Ram, the company had challenged the decision of motor accident tribunal that ordered compensation to the victim on the grounds that the insurance policy was not valid since the cheque had been dishonoured prior to the accident. The victim argued that the cover note for the policy was issued on April 7, 2000, against which a cheque was issued by the vehicle owner. The cheque was dishonoured on April 17. Subsequently, the vehicle met with an accident on April 19. The intimation of the dishonour was conveyed on April 26, 2000. The apex court rejected the insurance firms stand that it was not liable to indemnify the claimants by paying the compensation which fell into its share and it is the owner which was liable to pay the entire amount.