Calcutta High Court
Monarch Gold Mining Co. Ltd vs Hindustan Copper Ltd on 8 July, 2010
Author: Patherya
Bench: Patherya
1
A. P. No. 486 of 2009
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
PRESENT :
THE HON'BLE JUSTICE PATHERYA
MONARCH GOLD MINING CO. LTD.
VERSUS
HINDUSTAN COPPER LTD.
For the Petitioners : Mr. Sudipto Sarkar, Sr. Adv.,
Mr. Jishnu Saha, Adv.,
Mr. Soorya Ganguli, Adv.,
Mrs. Neelina Chatterjee, Adv.
For the Respondent : Mr. Ranjan Bachwat, Adv.,
Mr. Sourya Sadhan Bose, Adv., Mr. Sanjib Dawn, Adv.
Heard on : 07-06-10, 08-06-10, 22-06-10 and 24-06-10.
Judgement on : 8th July, 2010. PATHERYA J. :
This is an application filed under Section 9 of the Arbitration and Conciliation Act, 1996 (1996 Act) whereby the petitioner seeks payment of sums without any amount being deducted from the contract price. 2
The case of the petitioners is that the work order was issued to operate and maintain the Surda Mine and Mosaboni Concentrator Plant for supply of copper. The price to be paid was Rs.1,53,470/- per tonne of Metal in Concentrate. The concentrate production included mining of ore from the mine, beneficiation at the concentrate plant and transport to the smelter of the respondent. The general Terms and Conditions applicable contemplated payment as per tonnes Metal in Concentrate after withholding tax, duties, cess or fee at source and adjustment of penalty or bonus. The respondent was not entitled to deduct payment of excise duty, as such duty is not payable by virtue of exemption granted by notification dated 1st March, 2006. Chapter 26 of the Central Excise Tariff Act, 1985 makes no distinction between ores and concentrate. This will be evident from Entry No.2603 under Chapter 26 which has treated ores and concentrate as one. Therefore, the mention of ores alone in notification dated 1st March, 2006 bearing General Exemption No.47 also includes concentrate and the exemption granted to ores will also be extended to concentrate. As no excise duty is payable in respect of copper concentrate, the payment of excise duty by the respondent and foisting such liability on the petitioner is contrary to the exemption notification. In fact, payment has been made on account of excise under protest as mentioned in each of the invoices.
The only objection raised by the respondent is that in view of the award dated 24th July, 2009 no order can be passed on this application, and ore and concentrate being two separate products ore alone is entitled to exemption under 3 Entry No.2603 of the Central Excise Tariff Act, 1985. This argument of inapplicability of exemption is belied by decisions reported in 135 ELT 1342; 108 ELT 321 and 202 ELT 693. For all the said reasons, therefore, in view of the exemptions, the respondent is not entitled to deduct excise duty and the same be not deducted or realized from the petitioner.
Counsel for the respondent in opposing the said application submits that Chapter 26 deals with ores. Entry No.2603, deals with copper and concentrate. It is Metal in Concentrate which was to be delivered by the petitioner to the respondent. The question of exemption cannot be decided in a Section 9 application. In fact the petitioner voluntarily paid such excise duty. In the Arbitration proceeding initiated the only issue that arose for determination was whether payment of excise duty was the liability of the claimant (petitioner herein) or the respondent. This issue was decided by an award dated 24th July, 2009. The Excise Department is not a party herein and therefore the exemption issue cannot be decided. By the award dated 24th July, 2009 it has been held that the claimant is to pay the excise duty. Such award is under challenge under Section 34 of the 1996 Act. The Arbitrators cannot decide the issue of exemption in the absence of the Excise Department who are interested parties. As exemption is granted to ores under the 2006 notification, concentrate cannot get the benefit of exemption. By a letter dated 17-12-2007 an exemption was sought in respect of copper concentrate. Such request has been rejected by order dated 18-12-2007. The decision reported in 108 ELT 321 did not decide the 4 applicability of excise duty to ores and concentrate. Therefore, the question of exemption was not decided. For all the said reasons, no order be passed on this application.
Counsel for the petitioner in reply submits that in the event, the award was in its favour, the question of exemption and thereby not being liable to make payment would not have arisen. The deductions made are wrongful and this requires fresh adjudication. In aid of such adjudication this application has been filed and the intent to go to arbitration has been stated in paragraph 20 of the petition. Therefore, orders be passed as prayed.
Having considered the submission of the parties by the award dated 24th July, 2009 all claims made by the petitioner claimant was rejected. It was held that the price was inclusive of excise duty. The petitioner may be entitled to raise a dispute with regard to the deductions made from its bills on the ground of Metal in Concentrate being exempt from duty and seek reimbursement. In support of such relief an interim order is sought.
Much stress is placed on Sl. No.4 of General Exemption No.47 dated 01- 03-2006 which for convenience sake is set out hereunder :-
Notification New Delhi, the 1st March 2006. No.4/2006-Central Excise 10 Phalguna, 1927 (Saka) GENERAL EXEMPTION NO. 47 5 G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section
5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below read with the relevant List appended hereto, as the case may be, and falling within the Chapter, heading or sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), as are given in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified thereon under the First Schedule to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions specified in the Annexure to this notification, and the Condition number of which is referred to in the corresponding entry in column (5) of the Table aforesaid.
Table
S. No. Chapter or
heading or
sub-heading or Description of excisable goods Rate Condition
tariff item of No.
the First
Schedule
1. xxxxxxxxx xxxxxxxxx xxxxxxx xxxxx
2. xxxxxxxxx xxxxxxxxx xxxxxxx xxxxx
3. xxxxxxxxx xxxxxxxxx xxxxxxx xxxxx
4. 2601 to 2617 Ores Nil ---
The exemption issue was put to the department in December, 2007 by the respondent. This was rejected specifically by a letter dated 18-12-2007 which is also set-out below :-
GOVT. OF INDIA Office of the Commissioner of Customs Kachchh Commissionerate Custom House, Kandla, Kutch, Gujarat Tele. : 02836-271460 Fax : 02836-27146 By Speed Post / Fax No.S/20-242/ProvAssHCL./2007-Gr.VII Kandla dtd. 18.12.2007 6 To Ms. Hindustan Copper Ltd., Tamra Bhavan, 1-Ashutosh Chodhary Avenue, KOLKATA - 700019.
Sir, Sub : B/E No.221562 for Copper concentrate- Provisional assessment and calim of CVD exemption
-regd.
Please refer to your letter No. HCL/KDL/IMP/............. / 2007-08 dated 17.12.07 on the subject.
In this connection, your claim for CVD exemption under Ntfn No.4/06 CE dtd. 1.3.06(Srl. No.4) cannot be considered as the same is not covered by the said exemption.
(Ajay Kumar) Assistant Commissioner (Gr. VII), Customs House, Kandla.
Copy to - CHA M/s A. V. Joshi & Co. Gandidham for information please.
Therefore, the exemption claimed in respect of Serial No.4 of the general exemption notification dated 01-03-2006 was rejected.
In view of the said letter no order can be passed on this application for the present. The decisions cited, therefore, by the petitioner also do not come to its aid. For all the said reasons, this application is dismissed. 7 (Patherya J.)