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SUBMISSION OF THE RESPONDENTS

6. Per contra, the petitioner violated the terms of the contract. Upon failure of the petitioner to pass on the MGCC as provided under Article 2.1 of the contract, the respondents were entitled to deduct the amount of shortfall in MGCC. It is argued that Article 2.1 of the contract overrides the GCC. Further that, as per the petitioner, the shortfall in MGCC was due to variation in the rate of taxes but neither clause 14.6.2 was complied with by submitting proof of variation in the rate of taxes within the stipulated time nor such evidence was adduced before the arbitrator. It is canvassed that under clauses 14.6.1, 14.6.2 and 14.6.3, the contract price can be adjusted only in case of variation in the rate of taxes leviable on finished equipments and not on raw materials, parts, component, intermediate components, assemblies, sub-assemblies etc. 6.1 It is emphasized that the scope of interference is limited to the grounds available under Section 34 of the Act. The view taken by the arbitrator is plausible and no case is made out for interference by this court.

14.6.2 The adjustment in the Contract Price towards variation in the taxes shall be made by the Employer on production of the documentary evidences by the Contractor.

14.6.3 The Contract Price shall be adjusted towards variations in taxes in respect of only finished equipment supplied by the Contractor to the Employer. No adjustment in the Contract price shall be made for variations in the taxes on raw materials, parts, component / intermediate components, assemblies / sub-assemblies, etc."

20. The arbitrator erred in holding that the tax component formed part of the contract price and not the MGCC, whereas MGCC was the credit of excise duty paid which was part of the contract price.

21. The arbitrator relying upon clauses 11.2.1 and 14.5.2 of GCC and Article 2.1 of the contract rightly concluded that the petitioner had to ensure MGCC. However, while referring to clause 14.6.2 the arbitrator overlooked that no clause in the contract provides for deduction of shortfall in MGCC. On the contrary, under clause 14.5.2 in case of failure of the petitioner to submit documents enabling the respondents to avail CENVAT credit, the duty paid to that extent was not to be reimbursed. Moreover, clause 14.6.2 cannot be pressed into service in isolation and is to be read along with clauses 14.6.1 and 14.6.3. Clause 14.6.3 states that the adjustment in contract price would be made only for variation in taxes in respect of finished equipment supplied by the petitioner and not for variation in taxes on raw material, parts, component, intermediate components, assemblies, sub- assemblies etc., and is not applicable in facts of the present case.