Suspicion vs Evidence

Written by Indu Bhan | Indu Bhan | Updated: Oct 26 2011, 09:11am hrs
Metal scrap

In a relief to cement manufacturers, the Supreme Court has held that metal scrap or waste generated while repairing worn-out machinery or parts of the manufacturing plant would not attract excise duty. Setting aside the 2008 judgement of the Rajasthan High Court that held contrary to this view in the case of Grasim Industries vs Union of India, the apex court said that the repairing activity in any possible manner cannot be called as a part of manufacturing activity in relation to production of end product. By no stretch of imagination can the metal scrap be treated as a subsidiary product to the cement which is the main product. The revenue authorities had demanded duty from Grasim on metal scrap or waste generated during repairs in its workshop during 1995 to 1999.

Invoice rejection

The Supreme Court has held that the revenue authorities cannot reject the authenticity of an invoice produced by the importers on the basis of a mere suspicion. While dismissing a batch of appeals of the department against the importers in the case of Commissioner of Customs vs M/s Aggarwal Industries Ltd, the apex court said that any doubt about the value of such invoice of the consignment has to be based on some material evidence and not on mere speculation.A mere suspicion upon the correctness of the invoice produced by an importer is not sufficient to reject it as evidence of the value of imported goods. The doubt held by the officer concerned has to be based on some material evidence and is not to be formed on a mere suspicion or speculation, it said. According to the court, where the department has doubt about the truth or accuracy of the declared value, it may ask the importer to provide further explanation. In this case, Aggarwal Industries in June 2001 had entered into a contract with a foreign suppliers M/s Wilmar Trading, Singapore, for import of crude sunflower seed oil. Under the contract, the consignment was to be shipped in July 2001 but as the mutually-agreed time for shipment was extended to mid August 2001, the goods were actually shipped on Aug 5, 2001. On finding certain discrepancies in the shipment period, the department had demanded customs duty, which was quashed by the sectoral tribunal.

Emerging economic order

The Supreme Court has rejected the allegation of the trade union of Siemens Ltd that the promotion scheme introduced by the company in May 2007 amounted to unfair labour practice under the industrial laws. While setting aside the judgments of the Bombay High Court and the Mumbai labour court that held in favour of the union, the apex court urged the courts below to note the evolving work culture of the company in facing the new challenge in the emerging economic order which has changed considerably since 1982 when a settlement was signed between the management and the workers union. The apex court in the case of Siemens Ltd. & another vs Siemens Employees Union & another said that even if it is assumed that the agreement still subsisted, the labour court and the high court should have considered it reasonably and harmoniously keeping in mind the vast changes in economic and industrial scenario and the new challenges which the company has to face in the matter of reorganising work in order to keep pace with the changed work culture in the context of scientific and technological development. The trade union had filed a complaint for unfair labour practices.